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Yoshiharu Izumi

Working toward sustainable water andenvironmental infrastructure
Yoshiharu Izumi, who is currently working as an analyst, conducted an interview with President Nakamura via video conference,asking about the progress of the “Mid-Term Management Plan 2020” and METAWATER’s initiatives toward achieving its goals forthe final year of the plan.

Yasushi Nakamura

Yoshiharu Izumi

METAWATER Co., Ltd.
President and Representative Director

Corporate Research Department, SBI SECURITIES Co., Ltd.
Senior Analyst

After graduating from Faculty of Letters, Doshisha University, he joined Elco International (now KyoceraElco). He received his MBA from the University of Birmingham in the UK. Since 1991, he has been involved inindustry and corporate analysis for industrial electronics, consumer electronics, semiconductors and electronic
components at UBS Phillips & Drew Securities (now UBS Securities) and J.P. Morgan. He took up his current
position in April 2018. He is an accredited analyst with the Securities Analysts Association of Japan.

What can you tell us about efforts regarding
PPP (public-private partnership) projects, which
are areas of growth?
Two concessions are currently under way: the “Miyagi

The fiscal year ended March 2020 was thesecond year of the “Mid-Term Management Plan
2020” (FY ended March 2019 to March 2021). Could you
summarize the company’s performance for thisimportant period?
The long-term vision of the “Mid-Term Management Plan
2020” is achieving sales of 200 billion yen. To accomplish
this, companywide we are focusing on key measures: (1)strategic development investments such as the developmentof new products and incorporating cutting-edge technologies
such as AI and ICT, (2) business strategy (strengthening coreareas and expanding growth areas), and (3) engaging incontinued ESG initiatives.
For the fiscal year ended March 2020, our second year, sales
increased favorably in both the PE business (domestic EPC,
overseas) and the SS business (O&M, PPP). As for profit,
after making the strategic development investments asplanned, we achieved increases in operating profit, ordinary
profit, and net profit. Both sales and profits were generally inline with the forecast (October 29, 2019). Orders received for
waste recycling facilities were strong, exceeding both theprevious fiscal year results and the forecast, and the orderbacklog remained at a high level.
In the fiscal year ending March 2021, the final year of theplan, in addition to an increase in sales, we expect an
improvement in profitability due to an increase in the numberof highly profitable completed projects and a reduced impact
from low-gross margin projects. We will continue our■ Trend regarding number of PPP projectapplications and participation by our company
in the water supply and sewage field

to “wider area management + further
comprehensiveness”(Example)● Projects from facility design and construction to operation,

Operation and maintenance

WOODAP

Procurement

Training the operators
responsible for equipment
operation in each region

Knowledge center

Centralization of
procurement and supplyof repair parts, etc.

Operation

Supporting the accumulation, sharing,and handing down of project operations knowledge
for the different entities in each region

maintenance, and management● Projects undertaken by local governments for management,planning support, collection of fees, resident support, etc.

75

Supply center forparts

Training center for
facility operators

Of the approximately 60 applicationsin the water supply and sewage field,
our Group is participating in 31 ofthese projects(Cumulative
total)■ Mass benefit management corresponding

People / Information / Goods

50

An ICT platform for sharing
information in real time, as
well as for analyzing andutilizing collected information

Number of applications (Cumulative total)
METAWATER participation (Cumulative total)

25

company-wide efforts to achieve the plan.
0
FY200511

METAWATER REPORT 2020

Facility A
FY2007

FY2009FY2011FY2013

FY2015FY2017FY2019FY2021

Facility D
Facility B

Facility C

Prefecture integrated water supply, industrial waterworks,
and sewage public-private partnership management project”
and the “Kumamoto Prefecture Ariake/Yatsushiro industrial
waterworks operation project”. These two projects areimportant for predicting whether PPP will accelerate in thisManagement and Operations Overview

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field or whether the current situation will continue for thetime being.
The Group has involved in a number of further
comprehensiveness projects, including some where wehave been entrusted with everything from the design andconstruction of facilities to their operation and maintenance,
as well as others where we provide services traditionally
undertaken by the local governments, including management
and planning support, collection of fees, and resident
support. In anticipation of the full-scale implementation ofwider area management projects, in addition to establishing
the three centers, “Training center for facility operators”,“Supply center for parts”, and “Knowledge center”, weare working on reducing construction costs and improving
operation and maintenance through the incorporation of
cutting-edge technologies such as AI and ICT. In addition,
our company has established a unique code of conduct
called “WOODAP”, dealing with design, construction,
operation, and maintenance centered around quick recovery
of water and sewage facilities in the event of a disaster. By
establishing a concrete code of conduct that can be sharedby all Group employees, we are finally ready to enter the PPP
market, which we have been aiming for since the company
was established.

What kind of method is WOODAP?
Together with PDCA (Plan, Do, Check, Action), which has
traditionally been regarded as a problem-solving process,
OODA (Observe, Orient, Decide, Act) has recently attracted
attention. This method starts with observing the site
(Observe), identifying the situation and guiding the direction(Orient), making a quick decision (Decide), and executing

METAWATER REPORT 202012

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disasters of a similar scale, we set a recovery timeline ofthree days and then train for this situation over and overbe reconstructed next?”, and “Should spare parts be kept
individually or at a parts center widely?”, from a perspective(removing impurities from water), demonstrating our value
through the filtration technology. The METAWATER Group

that soldiers could respond quickly by making decisions on
the spot based on thorough observation, instead of needing
to wait for approval from headquarters each time.

again. As individual issues pop up in training, such as “Whatabout electricity?”, “What about piping?”, or “What about
the operators?”, the results of OODA training, primarilyof flexible resilience, which focuses less on “How can we
prevent it from breaking?” and more on “What should bedone for immediate recovery if it does break?”calls this the “Remove strategy” and allocates management
resources in a graded manner. The reason why we arefocusing on filtration technology is because of our unique“WOODAP” is “W + OODA + P”, with the “W” standing for
Wisdom and effort, and the “P” standing for Preparation.
OODA is sandwiched between “wisdom” and “preparation”.

the “Observe” aspect, are reflected in the next iteration oftraining. The concept is to link the large, slow PDCA cycle ofthe Head Office with the OODA loop, which enables a site

With the progression of PPP, we would like to respond tothe concerns of citizens and the question of “Can we leave
water to the private sector?” by clarifying our code of“ceramic membrane”. Rather than lifting up our weaknesses
to be on par with others, we want to maximize our strengths
so that they can’t be imitated. We want people all overA timeline with clear goals are set, and preparations are
made to achieve them. It is necessary for everyone to share
their wisdom so that accurate decisions can be made onsite in an emergency and preparations can be made forto act promptly, by “picking out the best parts”. In addition,
activities for considering the ideal way to implement
these so-called “high-speed recovery” operations expand
beyond the framework of operations to include design

conduct. That code of conduct is “WOODAP”.

the world to rely on us, so that when they think “I want toget something out of the water”, they think “Let’s talk to
METAWATER.” As such, we have inevitably decided to focus

a solution. For example, let’s assume a meter of flooding
caused by a catastrophe. Recalling past experience withand construction as well. This is reflected in questions
such as “What should be standardized?”, “What should

W h i l e t h e M E TAWAT E R G r o u p ’s a i m i n J a p a n i s“comprehensive strength”, covering everything from design

on M&A in promoting “Deep Technology” and the “Remove
strategy”.
In addition to incorporating the U.S. wastewater treatment

and construction to on-site operation and management
regarding water and sewage systems, our aim overseas is
the pursuit of “Deep Technology”. As the Group still lacks
a track record of “comprehensive strength” in Japan, we
are unable to implement strategies that take advantage ofour track record, as the overseas “Water Majors” corporategroup does. With the current situation, we believe that it
is important to compete with technological capabilities
that quickly lead to high evaluations in order to build
up achievements overseas and raise awareness. Of all
our technological capabilities, we will focus on filtrationengineering company Aqua-Aerobic Systems (AAS) into
our Group, in May 2019, we added the German company
FUCHS Enprotec (FUCHS), and in April 2020, we added the
U.S. company Wigen Companies (Wigen) to our Group as
well. FUCHS has strengths in the development, design, andmanufacture of air diffusers and agitators for wastewater
treatment, while Wigen specializes in the development,
design, and manufacture of water treatment equipment suchas membrane treatment and ion exchange. As a result, theGroup now has a strong sales channel covering the entire
United States and we are able to respond to a wider range■ Linking the PDCA cycle and the OODA loop
PDCA cycle

OODA loop
Observe

Head Office

Plan

Do

Set a timeline

Train

P

One meter offlooding

D

OrientOn siteCollect objective
information

Analyze information,assess the situation,and set a direction

O

O

O

O

O

O

A

D

A

D

A

D

Electricity?

Piping?

Operators?

What can you tell us about initiatives in theoverseas business, another area of growth?

Management and Operations Overview(Act). It was originally used during war, especially on thefront lines where the situation was constantly changing, so

How can we recover in three days?
A

C

ActionCheck

PrepareStudy

Layout changes
Preparation of
spare parts

Cycle : Several months to a year

……… ?

……… ?

……… ?

O

O

O

O

O

O

A

D

A

D

A

D

Act

DecideExecuteMake decisions
based onspecific measures

Cycle : One hour to several months■ Our Group and partner companies in the overseas business

EuropeNorth America
Provision of business resourcesAsia■ Timeline control

Fast recovery toa specified service level

Disaster occurs

Development of core products
Development oftechnologies and products™

SupplyAllow for a certain
amount of “fragility”

Conventional
TargetLimit

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METAWATER REPORT 2020

Time

TargetConventional

Limit

MECANA
FUCHS
RWB
PWNT

(a subsidiary of AAS)
(a subsidiary of AAS)
(capital and business alliance partner)(partner company: a subsidiary of the Dutch water authority)

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Filtration technology

Pretreatment(REMOVE)

Post treatment

track record, and disseminating information, which will leadto trust in our Group. We believe that developing this way

Lastly, what is your message to shareholders,investors, and other stakeholders?

of thinking will contribute to the sustainable growth of theworld as a whole and lead to the realization of sustainablegrowth as a company. As such, we are positioning three

With the spread of the novel coronavirus, drinking
water (water supply) and sanitation (sewage) are beingof the Sustainable Development Goals (SDGs), which are
advocated by the United Nations, as priority areas.
One specific initiative is the development of a membrane
Ozone treatment
equipment*1

Batch-type sewage
treatment devices

Air diffusion andagitator equipment

Aerobic granularsludge treatment devices(AquaNereda®)

Cloth Media Filter*2

Ceramic membrane
filtration system*1

Companies with core technology
AAS

FUCHS

Wigen

of customer needs by mainly using our strength in filtration
technology to handle advanced water treatment processes
such as reclaimed wastewater. Although the United States
is a large market with 40 billion dollars in annual watersupply and sewage related investment and has numerous
competitors, many of their facilities are aging and there isgreat potential for the Group’s equipment and facilities to beinstalled. We will work to achieve steady growth with AAS
as a base, and through Wigen we will devise new growthstrategies to build a foundation for the field of reclaimed
drinking water.
In Europe, the market is expanding due to population growth,

Microfiltration membrane /Ultrafiltration membrane +Reverse osmosis membrane
filtration system

Ion exchanger

LED UV
irradiation equipment*1: In North America, the ozone and ceramic membrane businesses were transferred to AAS*2: In Europe, sold by Mecana Umwelttechnik GmbH (MECANA)

Overseas, there are several major companies that offer acomprehensive range of services, from water infrastructure
facilities to operation services. Chinese and South Korean
companies are also expanding their businesses, taking
advantage of their low-costs. The Group, however, aims to
expand business by emphasizing the “Remove strategy” and“Deep Technology”, while ultimately aiming for businessexpansion in the unique direction of “strong and flexible
comprehensive social infrastructure”, which is somethingthat can only be achieved by Japan, having experienced theGreat East Japan Earthquake.

and environmental regulations are being tightened, requiring
more advanced water treatment process than ever before.

What is METAWATER’s approach to the SDGs
advocated by the United Nations?

The Group will further strengthen our collaboration withpartner companies, led by Mecana Umwelttechnik GmbH
(MECANA), a subsidiary of AAS, and the newly added
FUCHS, in order to expand the applications of our proprietary

In Japan, there is a saying, “Sanpoyoshi (Good for the buyer,
good for the seller, good for society)”. It means that not only

technologies such as ceramic membranes and cloth media
filters. Demand for water supply and sewage systems is
also increasing in Asia and other regions. We are promoting
initiatives related to infrastructure development projects
in Asian countries utilizing ODA (Official Development
Assistance).

is the buyer and seller happy, but society (the whole world)
is happy as well. At the METAWATER Group, we consider
CSR to be a modern version of “Sanpoyoshi”.

filtration system called the “CPCM (Container Package
Ceramic Mobile)”, which is packaged with our ceramic
membrane.
The idea is to make it possible to move water treatment
plants (facilities), which are a part of the social
infrastructure, like the Marunouchi Line trains that wereonce active in Tokyo and are now active in emerging
countries. As one measure against the frequent occurrenceof natural disasters in recent years, CPCMs will be
introduced in medium and large cities, and later, they will be
used as normal water treatment facilities in small cities andemerging countries. We are proposing sustainable social
infrastructure through large loops such as this.

forward. Contributing to the development of a prosperous
and sustainable society has been and will continue to be our
mission. We have renewed the belief that we must further
focus our efforts on this.
We are also actively engaged in activities aimed at reducing
environmental impacts and contributing to local communities
as part of our “ESG”* initiatives. The METAWATER Groupwill continue to cooperate with local governments, local
residents, and our domestic and overseas partners inbusiness operations to contribute to the sustainability ofwater and environmental infrastructure around the world.
We look forward to your continued support.
*Environment, Social, Governance■ SDGs being focused on
Analyst Comment“Expectations for METAWATER”- Becoming a globally attractive company We will strive to achieve the SDGs by ensuring access to clean water andsanitation for all people and creating a community where everyone cancontinue to live with comfort and peace of mind, through partnerships withpartner companies, citizens, local governments, and local companies all
working together.

Senior Analyst, Corporate Research Department,
SBI SECURITIES Co., Ltd.

Yoshiharu Izumi
Water infrastructure is important, and is required by everyone on

Ceramic membrane

We believe that supporting social infrastructure, suchas the water supply, sewage works and waste recycling,
contribute to both our customers and citizens as a whole. I am
confident that every one of our employees is conscious of
CSR, naturally practicing “Sanpoyoshi”, building up a steadyreconsidered as cornerstones of public health. As stated in
Goal 6 of the SDGs, access to “clean water and sanitation”
will become even more important as the world moves

Management and Operations Overview■ Core technologies possessed by AAS, FUCHS, and Wigen

Container Package
Ceramic Mobile (CPCM)

Emergency ceramic
membrane filtration system

Earth. In developed countries, the challenge is to maintain andrenew aging existing facilities without delay. On the other hand,emerging countries face challenges such as expanding water
demand due to population growth and needing to deal with waterpollution. I expect that METAWATER will be able to use the knowhow it has cultivated up to now to solve these problems. For thisreason, I would like for them to become not only a top-class water
infrastructure company in Japan, but a company that attracts
attention from around the world. In this sense, the long-term visionof achieving sales of 200 billion yen in the fiscal year ending March2028 is an important milestone. I will be closely watching whether
they can win orders for large-scale PPP projects and realize mergers
and acquisitions both in Japan and overseas without damaging
their financial base.

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