Results Presentation for the Year Ended March 31, 2008

Kurita Water Industries Ltd.
( Stock code : 6370 )May 9, 2008

Table of Contents

Ⅰ. Consolidated Financial Results for the Fiscal Year
Ended March 31, 2008

Ⅱ. Consolidated Business Plan for the Fiscal YearEnding March 31, 2009

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

【 1 】 Financial Highlights【 2 】 Business Development【 3 】 Orders, Net 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 】 Overseas Businesses【 9 】 Capital Expenditures, Depreciation, and R&D Expenses【10】 Assets, Liabilities, and Net Assets

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【1】 Financial Highlights(Billions of Yen)

2007/3

2008/3Year-on-yearchangeOrders

192.5

208.7+ 8.4%

Net Sales

197.1

204.9

+ 3.9%

Operating Income

24.3

30.5

+ 25.5%

Ordinary Income

25.2

31.2

+ 23.9%Net Income

14.2

18.3

+ 28.8%1

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【2】 Business Development

Water Treatment Chemicals Business Improved domestic product mix
 Overseas growth contributing to higher sales
 Absorb the surge in raw material prices by reducing costs, boosting revenue,
and improving product mix

Water Treatment Facilities Business Increased sales to electronics industries on the back of a favorable domestic
market environment
 Steady expansion in service businesses
 Improved hardware profitability2

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【3】 Orders, Sales, Operating Income, and Operating Income Margin
Water treatment chemicals

Water treatment facilities

TotalOrders(Billions of Yen)
200

192.5
56.6

*

denotes projections

Sales
208.7 211.0
59.0

59.1

100

(Billions of Yen)
200

197.1

204.9 207.0

56.7

58.6

140.5

146.2 148.3

2007/3

2008/3

58.7

100

136.0

149.7 151.9

2007/3

2008/300

Operating Income(Billions of Yen)

(%)

30.5

27.5

9.5

9.4

30

24.3

Operating Income Margin

18

15.5

8.8
1415

15.5

20.9

18.1

16.2 16.0
14.9 13.3
14.3 12.2

12.3
11.0
100

2007/3

2008/3

2007/3

2008/33

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【4】 Water treatment chemicals
Orders and SalesOrders*

Operating Income and Operating Income Margin

Sales

Operating income

denotes projections

Operating income margin*

denotes projections(Billions of Yen)

(Billions of Yen)

(%)

60

1020

15.5

16.2
16.0

30

56.6 56.7

59.0 58.6
59.1

05

58.7

8.8

10

9.5
9.4

0

2007/3

2008/3【Major areas of growth】
 Cooling water treatment chemicals; Paper/pulp
process treatment chemicals (Japanese market)
 Overseas subsidiaries

02007/3

2008/3【Major determinants of change】 Improved domestic product mix
 Surge in raw material prices
 Higher revenues overseas
4Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【5】 Water treatment facilities (for the electronics industry)
Orders and Sales
Orders*Operating Income and Operating Income Margin

Sales

Operating income

denotes projections*(Billions of Yen)

(Billions of Yen)

100

2050

77.9 77.0

88.1 91.2
91.1

Operating income margin
denotes projections
(%)

17.1

18.6
16.1

1010

16.9

93.2

13.1

15.0

00

2007/3

2008/3【Orders/sales growth areas】
 Wafers, semiconductors, ultrapure watersupply, tool cleaning (Japanese market)

200

2007/3

2008/3【Major determinants of income growth】
 Increased revenue / improved profitability
for domestic hardware Increased revenue from the ultrapure watersupply business5

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【6】 Water treatment facilities (for general industries)
Orders and Sales
Orders*Operating Income and Operating Income Margin

Sales

Operating income

denotes projections

Operating income margin*(Billions of Yen)

60

denotes projections(Billions of Yen)(%)

6107.35.630

58.1

63.5

61.5
60.8

355.1

5

3.7

55.1

4.0
2.3

3.1

00

2007/3

2008/3【Major areas of orders growth】
 Iron and steel, oil refining, petrochemicals

02007/3

2008/3【Major determinants of income growth】
 Improved hardware profitability【Major areas of sales declines】
 Iron and steel, food, public sector demand6

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【7】 Service Business Revenue
Service Business Revenue
in the Water Treatment Facilities BusinessWater treatment chemicals*Water treatment facilities (services)
Water treatment facilities (hardware)(Billions of Yen)

100
(Billions of Yen)

200

197.1

204.9

93.5 (+8.3)
85.2
16.5 16.8

Ultrapurewater supply
business

13.1

14.4 14.4

Tool cleaning

12.4

9.8

10.4

Soilremediation

49.9

54.1 51.9

Maintenance, etc.

2007/3

2008/39.8
56.7

denotes projections

58.6

50
100

85.2

55.2

93.5

52.8

00

2007/3

2008/37

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【8】 Overseas Businesses
Sales by Region

Asia

N. America*(Billions of Yen)30

29.52.2
1.3
3.4

Sales by Overseas Business Segment

EuropeOtherdenotes projections

31.3 33.0
3.1
1.7
2.8

2.4
1.7
3.2

15

Water treatment facilities

Water treatment chemicals*(Billions of Yen)

30

29.5

denotes projections

31.3 33.0

8.9

11.2 11.2

20.6

20.1 21.8

2007/3

2008/3

15

22.6

23.7

0

25.7

0

2007/3

2008/38

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008
【9】 Capital Expenditures, Depreciation, and R&D Expenses
Capital Expenditures and Depreciation

Capital expenditures Capital expenditures(ultrapure water(excl. ultrapuresupply business)water supply business)*

R&D Expenses

Depreciation

R&D Expenses

Percentage of net sales*

denotes projections

denotes projections(Billions of Yen)

(Billions of Yen)

(%)

30

64

23.3 36.0
19.0

2.2

2.3

3152

19.8 30.0
15.7

0

2.2

3.2

5.6

2007/3

4.4

4.6

2007/3

2008/3

4.7

8.5 8.0
6.0 3.5
2008/3009

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008【10】 Assets, Liabilities, and Net Assets

AssetsLiabilities and Net Assets(Billions of Yen)

235.143.6(Billions of Yen)

231.5
34.3
( - 9.3)

Cash,deposits andMarketablesecurities

235.1

231.5

76.9

60.4

Liabilities( - 16.5)

93.4

87.3

Other current
assets( - 6.1)

67.3

82.0

Tangible
fixed assets

158.2

171.1

Net assets( + 14.7)

30.8

27.9

Mar. 2007

Mar. 2008( - 2.9)

Other fixedassets( + 12.9)

Mar. 2007

Mar. 200810

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【 1 】 Overview【 2 】 Key Assumptions【 3 】 Strategic Focuses for the Fiscal Year Ending March 31,2009(1) Expansion of Service(2) Overview of the Ultrapure Water Supply Business(3) Ultrapure Water Supply Business (Trends)(4) Ultrapure Water Supply Business (Trends)-2(5) Expand Ultrapure Water Supply Business(6) Expand Overseas Businesses【 4 】 Orders , Sales, Operating Income, and Operating Income Margin【 5 】 Water treatment chemicals【 6 】 Water treatment facilities (for the electronics industry)【 7 】 Water treatment facilities (for general industries)【 8 】 Capital Expenditures, Depreciation, and R&D Expenses【 9 】 Profit Distribution Policy

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【1】 Overview(Billions of Yen)

2008/3

2009/3(Projected)

Year-on-yearchangeOrders

208.7

218.0+ 4.5%

Net Sales

204.9

213.0+ 4.0%

Operating Income

30.5

32.0+ 5.0%

Ordinary Income

31.2

32.3

+ 3.4%Net Income

18.3

18.5+ 1.1%

11

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【2】 Key Assumptions

Water Treatment Chemicals Business Operating rates maintained in the domestic materials sector and at electronics
plants Client companies: continued strong productivity increases, cost cutting efforts,
and environmental requirements
 Continued expansion of Asian economies
 Continued rise in raw material prices

Water Treatment Facilities Business Growing demand in the ultrapure water supply business Temporary pause in large capital expenditures in the domestic electronics industry
 Overseas capital expenditure: Signs of a recovery for LCDs; Uncertainty forsemiconductors
 Continued capital investment in the domestic materials sector

12Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(1) Accelerate Expansion of Service Businesses
Ultrapure water supply business
Water treatment chemicals
Water treatment facilities (services)

Service Business Revenue in theWater Treatment Facilities Business

Water treatment facilities (hardware)

104.4 (+10.9)(Billions of Yen)

(Billions of Yen)

204.9

213.0

100

93.5

Tool cleaning

24.0

200

16.8
58.6

60.7
14.4

15.0
10.5

Soil remediation

51.9

54.9

Maintenance, etc.

2008/3

2009/3(Projected)

10.4
50
100

93.5

104.4

52.8

47.9

2008/3

2009/3(Projected)

0013

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(2) Overview of the Ultrapure Water Supply Business
Rawwater

KuritaPretreatment facility

・ Construction（CAPEX）
・ Ownership（Capitalize）
・ Operation/Management
・ MaintenanceWastewater
reclaim system
Reclaimedwater

Client Factory

Ultrapure waterproduction system

Wastewater
treatment facility

Semiconduction/FPD
manufacturing processsupply ofultrapure water
payment offees

ClientPays fees based on volume of water used

Wastewater

Discharge

14

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(3) Ultrapure Water Supply Business (Trends)【 to domestic large-scale LCD plants 】【 to domestic large-scale plasma display panel (PDP) plants 】【 to domestic large-scale LCD plants 】【 to domestic semiconductor plants 】【 to domestic wafer plants 】【 to domestic semiconductor plants 】【 to domestic large-scale LCDplants 】【 to LCD plants in Singapore 】

2002/3

2003/3

2004/3

2005/3

2006/3

2007/3

2008/3

2009/315

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(4) Ultrapure Water Supply Business (Trends)-2

Completed LCD industrial complex (conceptual image)16

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(5) Expand Ultrapure Water Supply Business
Capital Expenditures andTotal Cumulative Investment
Capital expenditure(left axis)

Sales

Total cumulative investment(right axis)(Billions of Yen)

60

(Billions of Yen)

(Billions of Yen)

120

2460

12106

59
30

40

24.0

47.0

16.8

24
11.90

2006/3

15.7
2007/39.8

19.8

2008/3

5.7
2009/3(Projected)

00

2006/3

2007/3

2008/3

2009/3(Projected)

17

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009(6) Expand Overseas Businesses
Sales by Region

Asia

N. America

EuropeSales by Overseas Business Segment

Other

Water treatment chemicals(Billions of Yen)

(Billions of Yen)

40

40

29.5
2.2
1.3
3.4

31.3
3.1
1.7
2.8

32.5

200

29.5

2.7
1.9
2.6

Water treatment facilities

31.3

32.5

8.9

11.2

12.5

20.6

20.1

20.0

2007/3

2008/3

2009/3(Projected)

2022.6

23.7

25.3

2007/3

2008/3

2009/3(Projected)

018

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【4】 Orders, Sales, Operating Income, and Operating Income Margin
Water treatment chemicals

Water treatment facilities

Orders(Billions of Yen)
200

Sales

208.7

218.0

59.0

60.8

149.7

157.2

2008/3

2009/3 (Projected)

100(Billions of Yen)

204.9

213.0

58.6

60.7

146.2

152.3

2008/3

2009/3 (Projected)

200

10000

Operating Income(Billions of Yen)

Total

30.5

30

9.5

32.0

Operating Income Margin(%)
1716.6

10.1

16.2
1515

20.921.9

2008/3

2009/3 (Projected)

15.0
14.9
14.3

14.4

130

2008/3

2009/3 (Projected)

19

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009【5】 Water treatment chemicals
Orders and Sales
Orders

Sales(Billions of Yen)

Operating income

Operating income margin(Billions of Yen)

60

30

Operating Income and Operating Income Margin(%)

1059.0 58.6

60.8 60.7

516.2

16.6

9.5

10.1002008/3

2009/3 (Projected)【Major areas of growth】
 Japan: Cooling water treatment chemicals,
paper/pulp process treatment chemicals
 Overseas: China, Thailand, Europe

201002008/3

2009/3 (Projected)【Major determinants of change】
 Improved domestic product mix
 Higher revenues overseas
 Surge in raw material prices20

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【6】 Water treatment facilities (for the electronics industry)
Orders and Sales
Orders

Sales(Billions of Yen)

Operating income(Billions of Yen)

20

10050

Operating Income and Operating Income Margin

88.1 91.2

95.0 92.4

Operating income margin

18.6

19.0

16.9

17.5

10(%)

2008/3

2009/3 (Projected)【Major determinants of change】
 Decrease in domestic hardware Growth in the ultrapure water supply business

1000020

2008/3

2009/3 (Projected)【Major determinants of change】
 Decreased revenue from domestic hardware Increased revenue from the ultrapure watersupply business21

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009【7】 Water treatment facilities (for general industries)

Orders and Sales
Orders

Sales(Billions of Yen)

60

Operating Income and Operating Income Margin
Operating income(Billions of Yen)

(%)

610

7.3

30

61.5

55.1

62.2 59.9

Operating income margin7.4534.0

4.40002008/32009/3 (Projected)【Major areas of sales growth】
 Iron and steel

2008/32009/3 (Projected)【Major determinants of change】
 Increased revenue from domestic hardware

22

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【8】 Capital Expenditures, Depreciation, and R&D Expenses
Capital Expenditures and Depreciation

Capital expenditures(ultrapure watersupply business)

Capital expenditures(excl. ultrapure
water supply business)(Billions of Yen)

R&D Expenses

Depreciation

51.050R&D Expenses(Billions of Yen)

(%)

642.2
25

47.0

23.3Percentage of net sales

2.232

4.6

4.8

19.8

0

3.5

8.5

2008/311.5
4.0
2009/3 (Projected)

00

2008/3

2009/3 (Projected)
23

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009
【9】 Profit Distribution Policy
(Yen)

40

32
28
20

22
18+434+2+6+4+20

2005/3

2006/3

2007/3

2008/3

2009/3(Projected)

Basic Dividend Policy
Kurita’s basic policy is to maintain stable dividends, and the company will work to increase
dividends while giving due consideration to trends in results and investments in its businesses.

24Reference Materials

Reference Materials
Analysis of Changes in Operating Income for the Fiscal Year Ended March 31, 2008

Rise in prices of primary chemical
products resulting from the surge inraw material prices(Billions of Yen)

30+ 2.3

+ 5.4

24.3

- 0.6

- 0.8

 Increase in personnel
expenses Increase in advertising andpromotional expenses
 Increase in research anddevelopment expenses

150

2007/330.5

 Improved domestic
product mix in chemicals
 Improved cost ratio forthe hardware segment of
the facilities business0.00.00.00.0

Higher costof rawmaterials

Higher
SG&A
expenses

Effect ofimproved
cost ratio*

Effect ofhigher
income*2008/3* Effects of improved cost ratio and higher income are calculated using the gross profit margin.
“Cost ratio” refers to the sales-to-cost ratio.

25

Kurita Water Industries Ltd.
■ U R L ■http://www.kurita.jp/■ M A I 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.