Kurita Water Industries Ltd.
Results Presentation for the First Halfof the Year Ending March 31, 2017
(Securities code: 6370)

November 1, 2016

Table of Contents

IConsolidated Financial Results for the First Half of the YearEnding March 31, 2017

IIConsolidated Business Plan for the Fiscal YearEnding March 31, 2017

III Priority Measures
Reference Material

I. Consolidated Financial Results for the First Halfof the Year Ending March 31, 2017
1. Financial Highlights
2. Orders, Sales, Operating Income, and Operating Income Margin
3. Water Treatment Chemicals
4. Water Treatment Facilities (for the electronics industry)
5. Water Treatment Facilities (for general industries)

6. Service Business Revenue
7. Overseas Business Sales
8. Capital Expenditures, Depreciation, and R&D Expenses
9. Financial Condition

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

(Billions of Yen)
Fiscal Year to
March 2016
First Half Actual

Fiscal Year to
March 2017
First Half Initial
Projections

Fiscal Year to
March 2017
First Half ActualYear-on-Year
ChangeOrders

110.0

112.0

112.5

+2.3%

Net Sales

97.9

104.0

103.8

+6.0%

Operating Income

9.1

9.5

9.6

+5.6%

Ordinary Income

9.5

9.7

9.6

+1.6%

Profit attributable toowners of parent

5.8

6.2

6.5

+13.5%

 Orders increased due to growth in water treatment facilities for general industries.
 Net sales rose, thanks to steady progress in construction in the Water Treatment Facilities business.
 Operating income increased, reflecting the effect of higher sales and the absence of temporary impact of PPA(Purchase Price Allocation).
1

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

Water treatment chemicals

Water treatment facilities

Total*Orders(Billions of Yen)
120

Sales

110.0112.5112.0

41.3

42.0

43.1

600

(Billions of Yen)
120

68.7

70.5

09/2015

09/2016

9.1
3.6

103.8

104.0

40.6

41.5

42.6

57.3

62.4

61.4

09/2015

09/2016

68.90

Operating Income Margin
9.6
4.1

9.5

(%)
10

9.7

4.3

50

97.9

60

Operating Income(Billions of Yen)
10

denotes initial projections

95.5

5.6

09/2015

09/2016

9.9 10.2

9.3

9.3

9.1

8.9

8.9

8.4

5.2
809/2015

09/20162

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

(Billions of Yen)

Orders

40200

42.0

41.309/2015

 Domestic orders increased, reflecting a recovery in the production
activities of some customers and the development of newcustomers.

43.1

 Overseas orders rose slightly because a fall in yen-equivalentorders due to the stronger yen was offset by the effect ofacquisitions in Europe.

09/2016(Billions of Yen)

Sales

40

 Ditto

40.6

41.5

09/2015(Billions of Yen)

09/2016200

42.6(%)

69.9

8.9

10.2

30

Operating Income10 Operating income increased due to the effect of higher sales.
53.6

4.1

09/2015

09/2016

Operating income margin*43

 Temporary costs associated with PPA due to the acquisition ofbusinesses in Europe, which had been recorded in the firsthalf last year, ceased to exist.

0denotes initial projections

3

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017
(Billions of Yen)

Orders40

 Orders for hardware overseas declined in China andTaiwan.
20

38.4

34.6

 Orders for maintenance services in Japan decreased.

36.6

 Orders in the ultrapure water supply business declined dueto the effect of the expiration of contracts.

009/2015(Billions of Yen)

09/2016

Sales40

 Sales of hardware overseas increased due to progress inconstruction.
2033.236.0

09/2015(Billions of Yen)

09/2016

16.4

15.40838.0

 Sales in the ultrapure water supply business declined due to theeffect of the expiration of contracts.
(%)

14.8

40

 Sales of maintenance services in Japan increased due toprogress in construction.

 Income declined due to smaller sales in the ultrapure watersupply business and higher costs.
105.5

5.5

09/2015

09/2016

Operating income margin*

Operating Income

205.6

 Income increased, thanks to higher sales and improved
profitability in overseas businesses.

0denotes initial projections

4I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

(Billions of Yen)

Orders40

 Orders for large projects were received in water treatment facilities
for thermal power plants and in soil remediation.
20

35.8

30.3
009/2015(Billions of Yen)

 Orders for maintenance services increased in response to theaging of facilities and demand for improved efficiency.

32.3

09/2016

Sales30

 Sales of electric power industries hardware declined.
1526.424.1

 In general industries hardware and maintenance services,
construction made steady progress.

23.4

 Sales of soil remediation increased.
009/2015(Billions of Yen)
0.209/2016(%)

 Operating income declined in maintenance services for publicoffices.

0.1

0.1

-2.0

0.0

-0.5

0.2

0.1009/2015
Operating income margin

Operating Income

0.4

0.309/2016*

 Operating income deceased in electric power industries
hardware due to smaller sales.

0.0

denotes initial projections

5

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

Service Business Revenue
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)(Billions of Yen)

50
(Billions of Yen)

100

103.8

97.9

44.8

0

87.6

85.4

50

16.1

41.5

40.6

46.2

12.5

16.2

09/2015

09/2016

44.8

25Servicebusiness
revenue

3.3

25.4

009/2015

46.2
15.2

Ultrapure watersupply business3.1

Tool cleaning

27.9

Maintenance, etc.

09/2016

 Construction made progress in maintenance services for the electronics industry.
 In maintenance services for general industries, projects increased while construction made progress.
6I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

Sales by Region
Asia

North America

Overseas Sales by Business Segment

EMEA (formerly Europe)

Other

Water treatment chemicals

Water treatment facilities(Unit: billions of yen)

(Unit: billions of yen)

1.2

1.5

7.3
11.4

10.3

9.2

26.5

1.0

09/2015

30.9

14.9

26.5

30.9

18.4

19.5

19.2

1.0

09/2016

09/2015

09/2016

 Sales increased in both the Water Treatment Chemicals and the Water Treatment Facilities businesses.
 Although yen-equivalent sales declined due to the appreciation of the yen, its impact on income was minor.

7

I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

Capital Expenditures and Depreciation
Capital expenditures(ultrapure watersupply business)

Capital expenditures(excl. ultrapure watersupply business)

R&D Expenses

Depreciation(Billions of Yen)
9.0
8.3

R&D expenses(Billions of Yen)
3.4

Percentage of net sales

(%)
3.0

2.7
2.3

4.5

7.1
6.5

0.0

1.7

3.8
6.7

1.5

2.62.409/2015

09/2016

2.4

1.2

1.4

09/2015

09/20160.0

 Capital expenditures declined in the ultrapure watersupply business.

0.0

 R&D expenses remained lower than initially projected.

8I. Consolidated Financial Results for the First Half of the YearEnding March 31, 2017

AssetsLiabilities and Net Assets(Billions of Yen)

298.1
65.9

285.6
71.4
(+5.5)

84.6

77.7

Cash, deposits
andmarketablesecurities(Billions of Yen)

298.1

285.6

69.1

62.4

Liabilities(-6.7)

Other currentassets(-6.9)

78.4

74.2

Property, plantand equipment

229.0

223.2

Net assets(-4.2)

69.2

62.3(-6.9)

Mar. 31, 2016

Sep. 30, 2016

Othernoncurrent
assets(-5.8)

Mar. 31, 2016

Sep. 30, 2016

 Property, plant and equipment declined because the depreciation of facilities for the ultrapure water supply business
was larger than capital expenditures.
 Assets in foreign currency and foreign currency translation adjustments declined due to the appreciation of the yen.
 Investments and other assets and valuation difference on available-for-sale securities declined due to a fall in
unrealized gains on investment securities.

9II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017
1. Key Assumptions
2. Overview
3. Orders, Sales, Operating Income, and Operating Income Margin

4. Water Treatment Chemicals
5. Water Treatment Facilities (for the electronics industry)
6. Water Treatment Facilities (for general industries)

7. Service Business Revenue
8. Sales Forecast in Ultrapure Water Supply Business9. Overseas Business Sales

10. Capital Expenditures, Depreciation, and R&D Expenses

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

Water treatment chemicals
 Production activities in the domestic manufacturingindustry are expected to remain generally flat.

 Growth in the Chinese economy and other emerging
countries will slow.
 The European economy will recover moderately.

Water treatment facilities
 Production activities in the domestic electronics industry willslow.
 Investment in the replacement of old facilities in domestic
general industries will continue.
 Semiconductor- and LCD-related investment in East Asia
will continue.

10II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

(Billions of Yen)
Fiscal Year toMarch 2016
ActualFiscal Year to
Fiscal Year to
March 2017 InitialMarch 2017
Projection
Revised Projection

Year-on-Year
ChangeOrders

221.3

223.0

218.0

-1.5%

Net Sales

214.4

222.0

216.0

+0.8%

Operating Income

19.8

21.5

18.5

-6.7%

Ordinary Income

20.4

22.0

19.0

-7.0%

Profit attributable toowners of parent

12.6

14.0

12.0

-4.6%

 Initial projections for orders and net sales have been revised downward due to the revision of projections for the Water
Treatment Chemicals business overseas and the ultrapure water supply business.
 The projection for operating income has been revised downward due to the revision of projections for the Water
Treatment Chemicals business overseas, the Water Treatment Facilities overseas and the ultrapure water supply
business.

11II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

Water treatment chemicals

Water treatment facilities

Total*Orders(Billions of Yen)
240

Sales

221.3

218.0

223.0

83.4

82.7

85.9

(Billions of Yen)
240

137.8

135.3

03/2016

03/2017
Projection

137.1
0

Operating Income(Billions of Yen)
20

19.8
6.5

216.0

222.0

83.7

82.7

85.9

130.7

133.3

136.1

03/2016

03/2017
Projection

Operating Income Margin
18.5

21.5

7.5

8.0(%)
1110.2
910

13.4
0

214.4

120

1200

denotes initial projections

11.0

13.5

03/2017
Projection

9.1
8.6
8.3

7.7
703/2016

9.3

03/2016

9.3
9.7
9.9

03/2017
Projection
12II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017
(Billions of Yen)

Orders90450

 Yen-equivalent orders will decline due to the appreciation of theyen.

83.4

82.703/2016

03/2017
Projection

85.9

 Orders will not achieve the projection at overseas Kurita Groupcompanies despite growth in orders in local currencies.
 The projection for the domestic business has been revisedupward.

(Billions of Yen)

Sales

90

 Ditto
450

83.7

82.7

03/2016

03/2017
Projection

85.9(Billions of Yen)
10(%)

9.1

7.7

9.3

50

5

6.5

7.5

03/2016

03/2017
Projection

Operating income margin*

Operating Income

108.0 The income projection for overseas Kurita Group companies has
been revised downward.
 The projection for the domestic business has been revised
upward.

0

denotes initial projections

13

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017
(Billions of Yen)

Orders8040079.173.1

03/2016

03/2017
Projection

 The projections for orders for hardware and maintenanceservices in Japan have been revised upward.
 The projection for orders for maintenance overseas has beenrevised downward.
 The projection for the ultrapure water supply business in Japan
has been revised significantly downward due to the review ofcontracts by a certain customer.

75.3(Billions of Yen)

Sales

80

40

0

76.1

74.2

03/2016

03/2017
Projection

 Sales of hardware in Japan and overseas will remain as initiallyprojected.

78.1

 The initial projection for sales from maintenance in Japan hasbeen revised upward.
 The projection for sales in the ultrapure water supply business inJapan has been revised downward.

(Billions of Yen)

(%)

18

18

16.7
912.7
003/2016
Operating income margin

13.1

15.8

9.7

12.3

03/2017
Projection*

9

Operating Income
 The income projection for the ultrapure water supply businesshas been revised downward.
 The projected amount for the income improvement effect ofoverseas businesses has been reduced.

0denotes initial projections

14

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017
(Billions of Yen)

Orders7035062.2

58.803/2016

 Regarding orders from the electric power industry, the effect ofelectric power deregulation is expected, in addition to results inthe first half.

61.7

 With respect to orders for general industries hardware, demand
for the replacement of old facilities in the industrial complexes
market is expected.

03/2017
Projection(Billions of Yen)

Sales

60

30

0

54.6

59.1

03/2016

03/2017
Projection

57.9

(%)

2.2

2

2.0

1.2

1.3

03/2016
Operating income margin

03/2017
Projection*

Operating Income

2.6

1.3

0.70 Sales of general industries hardware will increase as initiallyprojected.
 The initial projection for sales of maintenance services and soil
remediation has been revised upward.

(Billions of Yen)

1

 Sales to the electric power industry will decline as initiallyprojected.

 Improvements in operating income are expected to expand as
the increase in net sales outstrips the initial projection.

1.20.0denotes initial projections

15

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

Service Business Revenue
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)*denotes initial projections(Billions of Yen)
100

(Billions of Yen)
220

180.1

146.4

90.3

0

150.4

91.5

32.2

180.8

98.9

50

8.5

8.1

98.1
101.2

32.0

28.6
32.2

6.3

187.1

182.6
110

31.6

85.9

60.0

58.8

32.4

82.7

83.7
56.1

91.5

222.0

189.4

178.1

90.3

216.0

214.4

94.9

8.3

6.3
6.9

Ultrapurewater supply
businessToolcleaning

154.9

94.9

98.9

98.1
101.2

33.6

27.7

34.5

31.8

03/201303/201403/2015

03/2016

Servicebusiness
revenue

49.4

51.8

54.4

03/201303/201403/2015

60.6

63.2
62.0

Maintenance,etc.

35.2
34.903/2017
Projection

003/2016

03/2017
Projection

 The projection for the ultrapure water supply business has been revised substantially.
 Maintenance services in Japan remain firm.
16II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

(Billions of Yen)
40

32.0

+3.8-3.6+3.2-3.6

New andadditional
business, etc.

Expirationof contracts

32.2
-3.0
28.6

Review ofcontracts

20003/2016
Actual03/2017
Projection*

denotes initial projections

17

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017

Sales by Region
Asia

North America

EMEA (formerly Europe)*

Overseas Sales by Business Segment
Other

63.9
3.0
20.7

23.90

denotes initial projections(Billions of Yen)

70

30.5
3.0
1.2
2.3

Water treatment facilities*

denotes initial projections(Billions of Yen)

35

Water treatment chemicals

33.6
3.3
1.3
1.8
27.2

39.1
3.5
1.6
2.0

32.1

2.4

66.0 70.3
2.8 3.5

70

63.9

66.0 70.3

20.1 21.5
39.1

2.3 3.5
35

30.5

41.2

39.2 42.8

33.6
17.3

37.8

40.8 41.8

03/2013 03/2014 03/2015 03/2016 03/2017Projection

0

12.0

15.9

18.5

17.7

21.8

22.7

26.8 27.5

03/2013 03/2014 03/2015 03/2016 03/2017
Projection

 Sales in the Water Treatment Chemicals business are projected to decline due to a decrease in yen-equivalent sales.
 Sales in the Water Treatment Facilities business are expected to grow, mainly in China and South Korea.
* New geographical segments have been applied from the fiscal year ended March 31, 2016,
and they are applied to the fiscal year ended March 31, 2015 retroactively.

18

II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2017
Capital Expenditures and Depreciation
Capital expenditures Capital expenditures(ultrapure water(excl. ultrapure watersupply business)
supply business)*(Billions of Yen)
20

R&D Expenses

Depreciation

R&D expenses

Percentage of net sales*

denotes initial projections

denotes initial projections(Billions of Yen)7

18.8

2.3(%)
3

2.5

2.5

2.5

8.4

11.4
10

15.8

8.5
14.4

6.7

13.4

6.0

3.5

4.2

13.6 13.6

1.5

4.4

5.3

5.4

03/2016

03/2017
Projecton

5.5

4.20

2.5

3.003/2015

03/2016

4.7
03/2017
Projection

 The initial projection has been revised upward, reflecting
the decision to make an additional investment in theultrapure water supply business.

0003/2015

 The focus will be on the generation of synergy with
KEG and the development of new business.

19III. Priority Measures

1. Expansion of the Water Treatment Chemicals business overseas

2. Change of the service business, using IT
3. Promotion of services in the Water Treatment Facilities business4. Improvement of Capital Efficiency

III. Priority Measures

Expansion of synergy with
KEG in products,development and production

Establishment of a
local subsidiary inVietnam

Searching ofM&A in North
AmericaRebuilding and strengtheningof the base function inSoutheast Asia
Strengthening of businessin the Middle East
Establishment of a local
subsidiary in UAE
20

III. Priority Measures

Data collection

SensorCloud
Monitor screen

Customer’sfacilities such as
boilers, cooling
tower and water
treatment facilities

Proposal

Analysis
Real-time monitoring

Optimum chemical dosing control
and maintenance

Creation ofcompetitive advantage

Change of the way of working
and how to proceed with work
Establishment ofthe IT Strategy Division21

III. Priority MeasuresUltrapure water supply business
KuritaCustomers’
Semiconductor/LCD manufacturing
plant
Ultrapure
water

More aggressive overseas
development

Exploitation of the small andmidsize market by KWSS
(Kurita Water Supply Service)

Payment

Build, own, operate
and maintain

Exploitation of other markets
that use ultrapure water22

III. Future Priority Measures

Uses of Cash (policy)¥85.0 ‒ ¥88.0 billion¥85.0 ‒ ¥88.0 billion
Dividends

M&A Prioritize investment in promising businesses
and consider share buybacks using surplusfunds.
 Consider M&A in North America.

CapitalExpenditures

 Invest in the ultrapure water supply business,among other businesses, in Japan andoverseas.

Share buybacks
Operatingcash flow

Generation of cash

 Strive to continue raising dividends, aiming fora payout ratio of 30-50% over 5 years.

Uses of cash

For three years from the fiscal year ended March
31, 2016 to the fiscal year ending March 31, 2018

 We will endeavor to curb surplus funds and increases in shareholders’ equity upon securing
operating funds and contingency funds.
 We will maintain ROE at a level that exceeds cost of shareholders’ equity and will strive toincrease it.
23

Reference Material(Unit: billions of yen)

+1.8
9.1

Impact of increase
in revenue

-1.3

-0.0

Effect of change
in cost of sales ratio

Increase inSG&A expenses

09/2015

9.6

09/2016

Note: The effect of change in the cost of sales ratio is calculated using the gross profit margin.
24

■URL■

http://ir.kurita.co.jp/en/■ M AI L ■ir@kurita.co.jp

Forward-looking Statements
This presentation contains forward-looking statements, business plan projections, and judgments based on
information available to management at the time of writing. Due to the existence of a variety of risk factors
and uncertainties, actual results may differ from those specified or implied by these forward-looking
statements and projections.