Summary of the Q&A Session
Financial Results Briefing for Fiscal Year Ended March 2024
Date and Time: May 10 (Fri.), 2024 9:00- 10:00
Notice: This summary is a reference designed for the convenience of those who could notattend the financial results briefing stated above. Please note that this is not a word-for wordtranscript of all remarks made at that session, but is a summary prepared by Kurita Water
Industries Ltd.
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With regard to increasing precision tool cleaning sites, how are you thinking about
strategies and regions for expansion? Also, I understand profitability is challenging at
the moment but do you believe the business can return to previous levels of profitability?
Does the forecast for the fiscal year ending March 2025 assume that profitability will
recover?
First, with regard to regions, the timing for expanding sites is tied to the timing of new
fabs being built by customers. Specifically, we are preparing new sites in Europe andthe southern area of the US. On profitability, in the fiscal year ended March 2024, inaddition to a downturn in demand for tool cleaning due to the impact of the silicon cycle,
the decline in sales led to a significant drop in profitability, reflecting the labor intensive
nature of the precision tool cleaning business. To address such structural issues, we areconsidering a number of initiatives including cleaning methods that do not rely on human
input, to bring the business profit in line with past levels. In the final year of PSV-27 (fiscalyear ending March 2028), our goal is to achieve a margin level which is higher than theoverall consolidated BPM of 16%, by establishing an optimal approach for order intake
and new customer acquisition.
In the fiscal year ending March 2025, we are seeing good signs but I don’t believe thatthe silicon cycle will fully recover. Our full-year plan assumes a gradual improvement inprofitability in the later part of the fiscal year.

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Please elaborate on the background of the electronics industry project win in North
America and provide an indication of scale in value terms. Please also discuss thebusiness development potential going forward. I have high expectations that Kurita'stechnology is being recognized in the US and that there will be further expansion.
First, in terms of scale, it is similar to the scale of what we would call a large-scale projectin Japan. We had already received advance orders for around 20% - 30% of the overall
project; we aim to make progress on construction after acquiring the order for theremaining portion of the project in the fiscal year ending March 2025.
I believe that the customer rated our EP + Module approach highly in choosing to award
the order to Kurita. This approach not only leads to a reduction of the onsite burden for
Kurita but also benefits the customer by making it possible to shorten onsite construction
time and facilitate rapid assembly. Our success this time confirms our view that the EP+ Module approach is correct.
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Investments related to semiconductors in the US are very active. We are moving forwardwith proposal activity with a view to acquiring the next project.
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On the progress Kurita has specifically made in the Electronics Industry segment in thefirst year of PSV-27, did demand trends and profitability differ from initial assumptions?
Currently, a full recovery in the investment cycle for the precision tool cleaning businessis not expected until the next fiscal year or beyond. Taking into account the strong levelof facilities orders near term, isn't it possible that this could have a negative impact on
BPM relative to initial assumptions? Please also comment on how you are feeling about
winning new water supply service projects and your expectations.
I believe we are making solid progress toward achieving the PSV-27 plan. In theelectronics industry, my impression is that customers' capital expenditures are higher
than expected, but our approach is unchanged. Our aim is to continuously provide value
to our customers. There have been some government moves to provide subsidies forthe semiconductor industry which might lead to an increase in cases where customers
choose facilities over water supply services, but in undertaking facilities projects we will
focus on how best to have facilities business lead to service businesses.
For the precision tool cleaning business, the need for cleaning will grow in line with theexpansion of customers' production bases. However, it won't be possible to have 100%coverage, so in preparing sites, we will need to focus on building in optimal locations at
the optimal time and optimal cost. In this way, I want to expand our business while being
mindful of efficiency.
On the water supply service, we were able to win 2 new customers in the fiscal year
ended March 2024. For one of the projects, we were successful because we proposeda new, unprecedented approach that contributes to reducing environmental burden. I
believe this represents a significant step forward. We intend to continue to develop adiverse range of water supply services; we are also seeing good response to new typesof services which are smaller in scale or contribute to local communities.

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I want to ask about capital expenditures for the electronics industry segment. During
PSV-27, you are guiding for 300 billion yen in investments over a 5-year period. Do you
expect capital expenditures going forward will increase further? In particular, will it benecessary to expand facilities in North America to grow the electronics industry facilities
business?
In terms of capital expenditures for the electronics industry business, we are building
plants for the precision tool cleaning business in several phases. Continuing on from thefiscal year ended March 2024, we will keep investing to expand the number of sites. Ourpolicy is to undertake necessary capital expenditures going forward for not only theprecision tool cleaning business but also to expand the service business.
With regard to North America, we don't believe there is a need for new capital
expenditures for the electronics industry facilities business. For the time being, webelieve that we can address our needs through the use of Kurita America's existing
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facilities. In future, if the scale of the business grows significantly, we may need to review
our thinking but within the scope of the businesses we currently target, we believe wecan use existing facilities.
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For the electronics industry segment, the forecast for the fiscal year ending March 2025
assumes that Kurita will acquire a certain scale of facilities projects. While new facilities'
project wins will make a positive contribution to absolute profits, how are you thinking
about this from the perspective of achieving your BPM target?
As you have alluded to in your question, the profitability of the facilities business is lower
than the BPM target of 20% for the electronics industry segment in the final year of PSV27. However, the reduction of overall production lead times resulting from production
process reform initiatives will obviously contribute to lower costs. We think this will leadto improvements in profitability. In addition, as noted earlier, our aim is not to expand thefacilities business in and of itself, but to look beyond the facilities business to acquire
service business opportunities that provide long-term value to our customers. In this way
the facilities business can contribute to enhancing profitability.
Do you expect to be able to win service business on the back of the electronics facilities
project in North America for which you won the advance order in the fiscal year ended
March 2024?
We are very focused on capitalizing on the project we acquired this time to solidly win
maintenance or precision tool cleaning business.
Liquid immersion cooling for servers has recently been in the spotlight. Are there
chemicals used to cool liquids for which this could be a business opportunity? Do you
feel there are areas of potential interest for Kurita?
Internally, we did examine and consider possible responses to liquid immersion cooling.
We understand that users are experiencing issues related to ease of use in immersion
cooling but opportunities will probably depend on whether immersion cooling takes off
in a significant way. Currently, we understand that conventional solutions in use to datemake a larger contribution from the customers' perspective, including reducingenvironmental burden.
You indicated that one reason why electronics industry segment orders in the fiscal year
ended March 2024 exceeded plan was the higher-than-expected orders for facilities inChina. Please discuss what changed. Was your plan conservative to begin with, or was
the order environment better than expected?
Semiconductor investment in China is firm, primarily because of continuing capital
expenditures for non-leading edge semiconductors. In China, there are many customers
that rate Kurita highly. This is the backdrop to the good progress on orders in the fiscalyear ended March 2024. It may be that there was some frontloading of projects.
Why do Chinese customers want to frontload orders? Given the situation in the previousyear, does that suggest that there is room for upside in the fiscal year ending March2025 as well?
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I think the customers want to start production as quickly as possible. In terms of ourforecast for the fiscal year ending March 2025, I think our guidance is realistic.

Q.

Sales for the CSV business fell short of plan in the fiscal year ended March 2024. You
indicated that the issue was that it takes time for customers to truly recognize the effectof solutions. Is this because it takes time to gather the data necessary to show efficacy?
Or, is it that having seen the data, customers feel that the cost is not aligned with theresulting effect? I want to understand this better.
For the CSV business, even with customers that understand the benefits when wepresent a proposal based on our track record and scientific data, many want to evaluate
effectiveness at their own plants. The data collection required for this evaluation cantake several months or, in some cases, more than 6 months, depending upon thecustomers' plant. While we have made progress on getting the customer to understandthe efficacy, it takes time for them to truly feel the effect. That said, if we can develop atrack record, it would be very likely to lead customers to decide to adopt a solution
immediately. We are now starting to see this happen; we have expectations that thistrend will accelerate going forward.

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Does the data collected on site through the evaluation process match the data used inproposals?
There have been a few instances that did not go to plan but there have been only a small
number of cases where the data was significantly different from the content of ourproposals.
In the facilities business you indicated that acquiring projects is not the objective but thatthe focus is on how to leverage facilities business to win service business which leads
to a sustainable relationship with customers. If that is the case, it seems to me that there
will come a time in future where you could propose and take orders for precision toolcleaning as a package as well. Is there anything you have seen near term that suggests
this might be the case? It seems like this could be a comprehensive business model thatis similar to a recurring contract-based service.
I think that is a good idea. In the past, for the engineering portion of water treatment
facilities, we had considered tying facilities projects to post-handover services. An
approach where we offer a package of cleaning services for parts used in customers'
own production equipment where water treated in Kurita’s facilities is in use is apossibility. I would like to propose this to our customers to drive further growth of ourservice business.
If such a comprehensive service were created, would this enhance Kurita's competitive
superiority?
Yes, it would. I believe we can leverage the fact that we do precision tool cleaning as acompetitive advantage for Kurita. Currently, we are conducting joint research with SPE
manufacturers at Kurita Innovation Hub, our innovation base in Tokyo. We are looking
at a number of initiatives, such as considering how to reduce the frequency of cleaningor how to maintain a clean environment to improve yields. We are also considering ideas
4 / 5beyond the conventional approach of sending out tools for cleaning, such as ways where
we can address the need for cleaning within the clean room.
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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