Summary of the Q&A Session at theFinancial Results Conference Call for the First Quarter of theFiscal Year Ending March 31, 2022

Date and Time: August 2 (Mon.) 10:00 - 10:50
Notice: This summary is a reference designed for the convenience of those who could notattend the financial results conference call stated above. Please note that this is not aword-for-word transcript of all remarks made at that session, but is a summary prepared byKurita Water Industries Ltd.

Q. SG&A expenses increased on a year-on-year basis. Please explain the background.
A. The higher 1Q SG&A reflects a rebound in expenses on the back of the recovery from thepandemic conditions, the impact of new consolidations, as well as the reclassification ofsome manufacturing expenses to SG&A. We had anticipated all of these elements; this isin line with our assumptions.
Q. Trends in order intake were strong. Please discuss customer trends by industry andproject profitability.
A. There was an increase in electronics industry orders in East Asia: we received large scale
semiconductor-related orders from Chinese and Korean customers with whom we havestrong relationships. There is also strong appetite from domestic semiconductor andelectronic components customers for both capex and refurbishment work. As the orders
were mainly projects for existing customers with whom we have strong relationships, weare not stretching in terms of profitability. The increase in orders will lead to higher sales
going forward, which is positive for earnings, in our view.
Q. The margin for the Water Treatment Chemicals segment appears to be lower than yourexpectations. Please comment on progress in improving margins by region.
A. Raw materials prices rose in 1Q. In the regions where we were able to respond swiftly,
progress on margin improvements was in line with our expectations. However, for regions
where we were slow to respond, progress was limited. In addition, margins were also
affected by the new consolidation of Middle Eastern subsidiaries. The magnitude of salesof some products with suboptimal CoGS ratios was larger than we had expected,impacting margins.
Regionally, in East Asia, we saw a recovery in Korea and solid progress in China, backed
by strong activity levels in manufacturing. However, for Japan, the recovery in production
activity has not been as strong as we had expected; the domestic business is also being
affected by rising raw materials prices. In ASEAN, initiatives to raise prices and new
remote service capabilities have contributed to improvements in profitability. In Europe,
we had already made progress on improving the CoGS ratio in the previous fiscal year.
We have also been able to respond to rising raw materials prices with price hikes from thebeginning of the fiscal year and changes to our sales structure. Progress has been good.
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While the U.S. economy has been recovering, logistics costs and raw materials prices
increased before our customers were able to raise capacity utilization. As such, progressis lagging slightly.
Q. Please describe profit margin trends for the Water Treatment Facilities segment, broken
down into the domestic electronics industry and general industry, and overseas.
A. For the electronics industry, both domestic and overseas customers have strong appetites
for facilities upgrades and refurbishments, which is creating an opportunity to transition
from conventional EPC sales to contract-type business including services. For generalindustry, capex appetite from customers in oil refining, steel-making, pulp & paper andother industries is rising. We expect to see a recovery, primarily in maintenance service.
For the overseas business, although we incurred additional costs in the U.S. in theprevious fiscal year, the situation is now normalizing.
Q. Despite the strength in the electronics industry business, my impression is that the Water
Treatment Facilities segment margin is not that high. Were there special negative factorsthat impacted the general industry business?
A. In general industry, we did temporarily incur unexpected additional costs, which depressed
the overall margin for the Water Treatment Facilities segment. We do not expect these
additional costs to recur in 2Q and beyond.
Q. The electronics industry Tool Cleaning business reported a strong performance. Is thisstrength sustainable in 2Q and beyond?
A. New investments by existing customers have led to an increase in the volume of tools tobe cleaned. This is behind the strong performance. Also, when U.S. customers export
facilities to Japan, in some instances the tool cleaning is done in Japan. We expect thisstrength to be maintained going forward.
Q. Please comment on the competitive environment for the Tool Cleaning business.
A. This is a business where margins are generally stable because customers tend to workwith vendors with whom they have strong and established relationships.
Q. You mentioned that you are making progress in transitioning from EPC sales to service
contract-type business. Please comment on the status of progress by region.
A. When customers are expanding capacity, they are increasingly open to considering KWSS
(pure water supply service), Ultrapure Water Supply Service or specialized operations andmaintenance services, even those customers that had typically chosen EPC in the past.
By region, we continue to propose such services to electronics industry customers in East
Asian countries such as Japan, China, Korea and Taiwan.
Q. Can you discuss the specifics of the additional costs incurred in 1Q and why you do not
expect a recurrence in 2Q or beyond?
A. We incurred additional costs of ¥0.4 billion on a general industry project related to biogas
power generation. By nature, it is not possible to fully eliminate the possibility of additionalcosts in EPC sales. However, biogas power generation is currently a focus area for Kurita.
We are undertaking a rigorous review of the issue to ensure it will not recur.
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Q. The forecasts for 2Q imply a YoY decline in profits: can you comment on whether you
consider your forecasts to be reasonable?
A. In May, when we disclosed our full-year forecasts, we indicated that the 1H plan for theWater Treatment Facilities segment was conservative. Given the increase in orders in 1Q,
our forecast has become even more conservative. We chose to leave the 1H forecast
unchanged because of the continued pandemic situation. Also, in trying to assess
progress in the Water Treatment Chemicals segment, given that 2Q is peak demandseason, we felt it was necessary to see how 2Q played out before making any decisions.
Q. We have seen the emergence of negative factors, such as the additional costs incurredin the Water Treatment Facilities segment and rising raw materials prices in the Water
Treatment Chemicals. Against this backdrop, what is your assessment of the progress
made in 1Q?
A. Our overall assessment is positive given that we were able to grow profits YoY despite thenegative factors. The additional costs are a temporary factor, and while rising raw
materials prices will persist, we believe we can control the impact through measures suchas price hikes.
Q. Please comment on Kurita AquaChemie's current market share and your target going
forward. Also, please describe the competitive environment.
A. The mainstay products are water treatment chemicals for use in petrochemical plants, oil
refineries and desalination plants. Our competitors are the global water treatment
chemical companies. We estimate the current market share to be around 4-5%. We aim
to raise the market share to around 10% in 3-4 years' time.

Business forecasts presented and other statements relating to the future made in thisdocument are based on information currently available and certain assumptions theCompany considers reasonable. A variety of factors may cause actual financial results andother forward-looking statements to differ materially from the forecasts.

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