Kurita Water Industries Ltd.
Earnings for the Six Months
Ended September 30, 2013
First Half of the Fiscal Year Ending March 31, 2014

( Stock code : 6370 )November 1, 2013

Table of Contents
Ⅰ First-half Results for the Fiscal Year Ending March 31, 2014
Ⅱ Full-year Business Plan for the Fiscal Year Ending March 31, 2014
Ⅲ Future Outlook and Initiatives

Reference Material

First-half Results for the Fiscal Year Ending March 31, 2014

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 Businesses (sales by region and business & map of Asian locations)
8 . Capital Expenditures, Depreciation, and R&D Expenses
9 . Financial Condition

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

1. Financial Highlights(Billions of Yen)

Fiscal year to
March 2013
First-half results

Fiscal year to
March 2014
Initial first-halfprojection

Fiscal year to
March 2014
First-half results

Year-on-yearchangeOrders

94.1

96.5

89.7

- 4.6%Net Sales

90.2

90.582.8- 8.3%

Operating Income

10.9

10.0

6.7

- 38.3%

Ordinary Income

11.3

10.2

7.2

- 36.9%Net Income

4.9

6.1

4.1

- 15.6%1

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

2. Orders, Sales, Operating Income, and Operating Income Margin
Water treatment chemicals

Water treatment facilities

Total*Orders(Billions of Yen)
100

94.1
28.7

89.7

96.5

29.3

30.4

90.2

82.8

90.5

28.8

30.4

61.6

54.0

60.1

03/2013First-half results

03/2014First-half results

28.75065.4

60.403/2013
First-half results

03/2014First-half results

66.1
0Operating Income(Billions of Yen)
12Sales
Sales(Billions of Yen)
100500Operating Income Margin(%)
1710.9
4.7

6.7

10.0

610

4.4

5.1

2.3

4.9

16.3

03/2013First-half results

03/2014First-half results3

15.4 16.8

12.0
10.0

6.2
0

denotes initial projections

03/2013First-half results

8.1

11.0

4.2

8.2

03/2014First-half results2

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

3. Water Treatment Chemicals
Orders*Operating Income andOperating Income MarginSales

denotes initial projections*denotes initial projections*

Operating income
Operating income margin
denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

3030

62016.3

15029.3 30.4

28.703/2013
First-halfresults

03/2014First-halfresults

15028.703/2013
First-halfresults[Major areas of change in Orders / Sales] Japan : Decline in core products (-)
 Overseas : Growth in China and Southeast Asia (+)
Foreign currency translation gains (+)

28.8 30.4

03/2014First-halfresults

15.4 16.8

30104.7

4.403/2013
First-halfresults

03/2014First-halfresults5.10[Major determinants of change] Increase in SG&A expenses (-)

3

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

4. Water Treatment Facilities (for the electronics industry)
Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections*(Billions of Yen)

40

(Billions of Yen)

(Billions of Yen)

40

6

Operating income
Operating income margin
denotes initial projections
(%)

14.7

16

10.1 12.9
20

36.7

20

32.7 37.6

36.2

3

31.9 37.5

8

5.3
3.2

003/2013
First-halfresults03/2014
First-halfresults

003/2013
First-halfresults[Major areas of change in Orders / Sales] Decline in hardware (-)
 Decline in ultrapure water supply business (-)

03/2014First-halfresults

003/2013
First-halfresults

03/2014First-halfresults

4.8
0[Major determinants of change] Impact of decline in revenue (-)
 Deterioration of cost of sales ratio (-)
 Increase in SG&A expenses (-)

4

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

5. Water Treatment Facilities (for general industries)
Orders*Operating Income andOperating Income MarginSalesdenotes initial projections*

denotes initial projections*

Operating income
Operating income margin
denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

30

30

15

3.3

1528.7

27.7 28.5

15025.3

0.8

0-1.0 0.1

22.1 22.6-4.3 0.3
003/2013
First-halfresults

03/2014First-halfresults[Major areas of change in Orders] Decrease in hardware for general industries (-)
 Decrease in hardware for electric powerindustry (-)
 Decrease in maintenance services (-)

003/2013
First-halfresults

03/2014First-halfresults[Major areas of change in Sales] Decrease in hardware forelectric power industry (-)
 Decrease in maintenanceservices (-)-1

03/2013First-halfresults

03/2014First-halfresults-5[Major determinants of change] Impact of decline in revenue (-)
 Deterioration of cost of sales
ratio (-)
 Increase in SG&A expenses (-)

5

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

6. Service Business Revenue
Water treatment chemicals

Service Business Revenue
in the Water Treatment Facilities Segment

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

denotes initial projection

denotes initial projection

50(Billions of Yen)

100

43.7

43.1

16.8

15.9

15.8

Ultrapurewater supply
business

4.3

4.3

4.1

Tool cleaning

22.5

23.5

23.2

Maintenance,
etc.

90.2
90.5

82.8

28.7
30.4

28.8
25

72.3

50

71.9
43.6
43.7

17.9
043.6

03/2013First-half results

16.4

43.1

Servicebusiness
revenue

10.9

03/2014First-half results

003/2013
First-half results

03/2014First-half results
6Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

7. Overseas Businesses (sales by region and business & map of Asian locations)(Billions of Yen)
Asia

Europe0.6

0.6
12.003/2013
First-halfresults

N. America

03/2014First-halfresults

10.8

DalianTianjin

03/2013First-halfresults

03/2014First-halfresults

SuzhouGuangzhou

Business Segment

9.2

14.9

5.8

SouthKorea

Shanghai

0.903/2013
First-halfresults

1.1
03/2014First-halfresults

TaiwanOtherThailand

7.0 14.2 7.2
1.4

Malaysia

1.6

Singapore

03/2013First-half results

03/2014First-half results

Water treatment chemicals
Water treatment facilities

Water treatmentchemicals locations
Water treatment
facilities locations

Indonesia

03/2013First-halfresults

03/2014First-halfresults

7Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

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

Capital expenditures(ultrapure watersupply business)

Capital expenditures(excl. ultrapurewater supply business)

R&D Expenses

Depreciation
R&D Expenses(Billions of Yen)

(Billions of Yen)

83

Percentage of net sales

(%)

2.7

3

2.4

4

2.9

1.5

7.4

0.9

1.5

7.1
2.2

2.02.20.8
2.0003/2013
First-half results

1.103/2014
First-half results

003/2013
03/2014First-half results First-half results

08

Ⅰ. First-half Results for the Fiscal Year Ending March 31, 2014

9. Financial Condition
AssetsLiabilities and Net Assets(Billions of Yen)

263.6

77.0

(Billions of Yen)

266.0

85.8

Cash, deposits
andMarketablesecurities

263.6

266.0

54.5

51.5

Liabilities(- 3.0)(+ 8.8)

69.8

65.9

Other current
assets(- 3.9)

209.1

86.8

81.9

214.5

Net assets

Tangible fixedassets(- 4.9)29.9Mar.31, 201332.4(+ 2.5)

Sep.30, 2013

Other fixedassets(+ 5.4)Mar.31, 2013

Sep.30, 2013
9Full-year Business Plan for the Fiscal Year Ending March 31, 2014
1 . Overview
2 . Key Assumptions
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 . Overseas Businesses (sales by region and business)
9 . Ultrapure Water Supply Business10 . Capital Expenditures, Depreciation, and R&D Expenses
11 . Dividend PolicyⅡ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

1. Overview(Billions of Yen)
Fiscal year toMarch 2013
ActualFiscal year to
March 2014
Initial projection

Fiscal year to
March 2014
Revised projection

Year-on-yearchangeOrders

186.7

197.0

181.0

- 3.1%Net Sales

180.1

191.0

176.0

- 2.3%

Operating Income

21.0

23.5

15.0

- 28.5%

Ordinary Income

22.0

24.0

15.8

- 28.3%Net Income

11.5

14.0

9.0

- 21.6%

10Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

2. Key Assumptions
We believe that corporate earnings will recover on the back of the government’s economic stimulus
measures and the correction of the yen’s appreciation, and that customers’ capacity utilization andcapital investment will gradually recover, but it will take time for this to translate into earnings for
the Company.

Water Treatment Chemicals Segment
 Domestic customers’ capacity utilization will graduallyrecover Concern about a slowdown in economic growth in emerging
countries

Water Treatment Facilities Segment
 There is some capital investment activity in thesemiconductor/LCD industries, but the overall level is low Capital investment in general industries will be sluggish forthe time being

11Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

3. Orders, Sales, Operating Income, and Operating Income Margin
Water treatment chemicals

Water treatment facilities

Total

Orders(Billions of Yen)
200

186.7

181.0 197.0

56.0

58.5

(Billions of Yen)
24

180.1

176.0 191.0

56.1

58.0

60.8

124.1

118.0

130.2

03/2013
Actual03/2014
Projection

100

130.70denotes initial projections

SalesSales(Billions of Yen)
20060.8100*03/2013
Actual122.5 136.2003/2014
Projection

Operating Income(%)
1621.0
8.3

12Operating Income Margin
14.9

15.0

23.5

8.3

9.9

6.7

13.6

10

14.3 16.3

11.7
10.2
8.5

12.3

5.7

10.4

12.6
003/2013
Actual03/2014
Projection

403/2013
Actual03/2014
Projection

12

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

4. Water Treatment Chemicals
Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections*

Operating income
Operating income margin
denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

6060

1018

14.9

30

056.003/2013
Actual58.5 60.803/2014
Projection

30056.103/2013
Actual58.0 60.803/2014
Projection[Major areas of change in Orders / Sales] Japan : Delay in recovery of customers’ capacity utilization (-)
 Overseas : Continued growth particularly in Asia (+)

14.3 16.3

5098.38.303/2013
Actual03/2014
Projection

9.90[Major determinants of change] Impact of increase in revenue (+)
 Improvement in cost of sales ratio (+)
 Increase in SG&A expenses (-)

13

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

5. Water Treatment Facilities (for the electronics industry)
Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections*(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

80

80

12

Operating income
Operating income margin
denotes initial projections
(%)

18

15.7

10.1 15.2
40

75.4

70.8 80.1

40

73.3

70.2 79.5

69

11.5

7.4 12.0003/2013
Actual03/2014
Projection003/2013
Actual

[Major areas of change in Orders / Sales] Decrease in hardware (-)
 Decrease in maintenance services (-)
 Decrease in ultrapure water supply business (-)

03/2014
Projection

003/2013
Actual03/2014
Projection0[Major determinants of change] Impact of decline in revenue (-)
 Deterioration of cost of sales ratio (-)
 Increase in SG&A expenses (-)

14

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

6. Water Treatment Facilities (for general industries)
Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections*

Operating income
Operating income margin
denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

60

60

1.230

30

055.3

51.7 56.150.7(%)

32.2

1.10-0.7 1.6

47.8 50.7-1.6 3.1
003/2013
Actual03/2014
Projection[Major areas of change in Orders] Decrease in hardware for generalindustries (-)
 Decrease in hardware for electric
power industry (-)

003/2013
Actual03/2014
Projection[Major areas of change in Sales] Decrease in hardware forelectric power industry (-)
 Decrease in hardware forgeneral industries (-)-1.2

03/2013
Actual03/2014
Projection-3[Major determinants of change] Impact of decline in revenue (-)
 Deterioration of cost of sales
ratio (-)
 Increase in SG&A expenses (-)

15

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

7. Service Business Revenue
Water treatment chemicals

Service Business Revenue
in the Water Treatment Facilities Segment

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

98.4

100.5
96.1
90.3

(Billions of Yen)
200

92.8

193.8
181.2

178.5

180.1

34.6

176.0
191.0

34.8
35.1
32.4

56.4
56.1

58.0
60.8

10.2

157.0
152.1

100

31.7
31.6

56.7

53.7

90.5

9.3
9.7

8.550
146.4

152.8

Ultrapurewater supply
business

8.1

Tool
cleaning

8.7

148.5

100.5
98.4

90.3

96.1

90.5
92.8

0Servicebusiness
revenue

53.6

51.3

56.4

49.4

50.7

Maintenance,
etc.

52.5

37.4

26.4

28.4

36.7

33.6

27.5

03/201003/201103/201203/201303/2014
Projection

003/2010

03/201103/201203/201303/2014
Projection

16

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

8. Overseas Businesses (sales by region and business)
Sales by Region

Asia

Sales by Overseas Business Segment

N. AmericaEuropeOther*denotes initial projections

Water treatment chemicals*(Billions of Yen)

(Billions of Yen)

4040

Water treatment facilities
denotes initial projections

33.7 41.0

29.3
26.4

20

19.0

3.1
1.3
2.8

3.0
1.4
2.3

30.5
3.0
1.2
2.3

3.3
1.6
3.0

29.3

22.5

23.9

30.5

26.4

20

2.6
1.4
1.6
19.2

3.4
1.4
2.0

33.7 41.0

19.0

11.5

12.0

17.8

18.5

15.2 15.5

10.9

9.4

26.9 33.1

15.5

13.4

18.5 25.6

9.6
003/201003/201103/201203/2013

03/2014
Projection

003/2010 03/2011 03/2012 03/2013 03/2014
Projection17

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

9. Ultrapure Water Supply BusinessSales*

Capital Expenditures

denotes initial projections*(Billions of Yen)

(Billions of Yen)

40

620

3

34.6

35.1

34.8

32.4

5.7

denotes initial projections

5.3

5.0

31.7 31.6

1.4

3.9
3.2

003/2010

03/201103/201203/201303/2014
Projection

003/2010

03/201103/201203/201303/2014
Projection18

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 2014

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

Capital expenditures(ultrapure watersupply business)

R&D Expenses

Depreciation
Capital expenditures(excl. ultrapure
water supply business)* denotes initial projections

R&D Expenses

Percentage of net sales*denotes initial projections(Billions of Yen)

(Billions of Yen)

165(%)

2.7

3

2.4

2.4
2.2

8

7.7

8.0
15.4

5.30

6.1 14.5

4.0

2.5

14.4 14.4

4.2

4.403/2012

03/2013

4.7

1.5

4.5

5.0
3.2

2.4

2.903/2012

03/20131.4

3.0
2.603/2014
Projection003/2014
Projection019

Ⅱ. Full-year Business Plan for the Fiscal Year Ending March 31, 201411. Dividend Policy
(Yen)
50

32

2825

22

18+434+236+238+240+244

42+2+2+6+4+20

03/2005

03/2006

03/2007

03/2008

03/2009

03/201003/201103/201203/201303/2014
Projection

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.
20

Future Outlook and Initiatives

1 . Domestic Demand Outlook
2 . Overseas Demand Outlook
3 . Operating Income Margin
4 . Profitability Enhancement
5 . Initiatives by Overseas Region

Ⅲ. Future Outlook and Initiatives

1. Domestic Demand Outlook
Domestic Sales of Water Treatment Chemicals
and Index of Industrial Production(Year-on-year change)(%)

Domestic sales ofwater treatment chemicals

Index ofindustrial production

20

Domestic Sales of Water Treatment Facilities(Billions of Yen)

70

1035

Stable sales centeredon the ultrapure watersupply business

0-10

03/201103/201203/201303/2014
Secondquarter003/2012
03/201303/2014First Second First Second First Second-half
half
half
half
half
half projection

21

Ⅲ. Future Outlook and Initiatives

2. Overseas Demand Outlook
Overseas Sales ofWater Treatment Chemicals(Billions of Yen)

Overseas Sales ofWater Treatment Facilities(Billions of Yen)

8124

6003/201203/201303/2014First Second First Second First Second-half
half
half
half
half
half
projection

003/2012
03/201303/2014First Second First Second First Second-half
half
half
half
half
half
projection

22

Ⅲ. Future Outlook and Initiatives

3. Operating Income Margin(%)
18

17.8
16.4

16.2
15.5
14.7

14.6

15.2
14.4
14.9
14.0
14.3
13.8

14.0

15.0

14.8
14.6

15.2

14.9
14.3

14.7
13.7

11.7

12.3
11

9.9

10.0
11.0

9.2

10.2
8.5
Operating income margin (water treatment chemicals)

7.7

7.8

Operating income margin (total)

6.9

Operating income margin (water treatment facilities)

5.7
4

Medium-termManagementPlan

03/2004

03/2005

PA - 503/2006

03/2007

03/2008G-8

03/2009

03/201003/2011MP - 1103/2012

03/201303/2014
Projection

TA - 1423

Ⅲ. Future Outlook and Initiatives

4. Profitability Enhancement

Current Issues and Challenges
 Lower order prices due to fierce competition
 Lower profitability due to projects becoming smaller Additional costs

Initiatives
 Leverage the Group’s comprehensive capabilities to provide high-value-added solutions,
including new products and new services, based on the Group’s technical capabilities
 Promote teamwork among sales, design and production units to improve cost of sales
through normalization and standardization
 Localize design, procurement and installation management24

Ⅲ. Future Outlook and Initiatives

5. Initiatives by Overseas Region
Initiatives to Enhance Profits by Region

China /South Korea

Taiwan Bolster collaboration with Kurita Water Industries (Suzhou) Ltd., Kuritec(Shanghai) Co., Ltd., and Hansu Technical Service Ltd.
Expansion of the maintenance service business, such as consumables,
standardized systems, and renovation work Launch joint project by sales division and production division aimed at reducing
costs of facilities
Quickly standardize, localize, and bolster purchasing power to become morecompetitive than other companies Place an oversight executive officer in Singapore, strengthen teamwork among
business locations and leverage synergies among chemicals, facilities, andmaintenance services

SoutheastAsia Enhance and improve the frameworks of business locations in the region
 Concentrate production of each business location’s successful products, purchaseraw materials in bulk, and utilize employees assigned from Japan and local staff
within the region25

Reference Material
Analysis of Changes in First-half Operating Income for the Fiscal Year Ending March 31, 2014
(Billions of Yen)

1110.9- 1.9
Effect ofdecline inrevenue*

5.5003/2013
First-halfresults- 1.4
Effect ofchange in costof sales ratio*

- 1.0

- 0.1

+ 0.2

Increase inSG&A
expenses

Effect of raw
materials
pricesOther

6.7

03/2014First-halfresults*The effects of decline in revenue and change in the cost of sales ratio are calculated using the gross profit margin.

26

Kurita Water Industries Ltd.
U R L

h t t p : / / i r. k u r i t a . c o . j p /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.