Organo Corporation
Report on the Financial Results for
the Fiscal Year Ended March 31, 2016
and Medium-term Management Plan

May 16, 2016

Contents
Corporate Outlines3

Scope of Consolidation

4

Financial Results
for the Fiscal Year Ended March 31, 2016

5

Medium-term Management Planand Plan for the Fiscal Year Ending March 31, 201715

Initiatives for Corporate Governance Code41

References

442

Corporate Outlines

Corporate Name

Organo Corporation

Head Office

1-2-8, Shinsuna, Koto-ku, Tokyo 136-8631, JAPAN

Establishment

May 1, 1946

Representative

Yasuyuki Koie (President)

Capital
Number of
Employees

Business Lineup¥ 8,225,499,312
2,088 (Consolidated) * as of the end of March 2016
Water
Treatment
Engineering

Plant
Business

Manufacturing and Sales of Large-scale Water
Treatment Plants

Solution
Business

Maintenance, Operation, Refurbishment, etc. of
Water Treatment Plants

Functional Product

Major Business
Offices

Manufacturing and Sales of Standardized Water
Treatment Equipment, Water Treatment
Chemicals, and Food Processing Materials

Head Office (Tokyo), R&D Center (Kanagawa),
Tsukuba Factory (Ibaraki), Iwaki Factory (Fukushima),
Hokkaido Branch (Hokkaido), Tohoku Branch (Miyagi),
Kanto Branch (Tokyo), Chubu Branch (Aichi), Kansai Branch (Osaka),
Chugoku Branch (Hiroshima), Kyushu Branch (Fukuoka)

3

Scope of Consolidation

Non-Consolidated
Subsidiaries

Consolidated Subsidiaries

Area

Japan

Overseas

Construction and Maintenance ofWater Treatment Plants

Organo Food Tech Corporation

Manufacturing and Sales of Food
Processing Materials

Organo Eco Tech Corporation

Design and Sales of Wastewater
Treatment Plants

Organo Acty Corporation

Printing, Insurance Brokerage, etc.

Organo (Suzhou) Water Treatment Co., Ltd.

TaiwanOrgano Technology Co., Ltd.

Southeast
Asia

Major Business

Organo Plant Service Corporation

China

Japan

Overseas

Company Name

Organo (Asia) Sdn. Bhd. <Malaysia>

Water Treatment Engineering

Organo (Thailand) Co., Ltd. <Thailand>
PT Lautan Organo Water <Indonesia>
Hostech Corporation

Southeast
Asia

Organo (Singapore) Pte Ltd <Singapore>

South
Asia

Murugappa Organo Water Solutions Private
Limited <India>

Organo (Vietnam) Co., Ltd. <Vietnam>

Manufacturing of Standardized
Water Treatment Equipment

Water Treatment Engineering
4

Financial Results
for the Fiscal Year Ended March 31, 2016

 Summary Results
 Results by Business Segments
 Sales by Business Areas and Customers[Water Treatment Engineering Segment]
 Sales by Business Areas [Functional Product Segment] Business Description of Functional Product Segment
 Sales by Regions
 Analysis of Operating Income by Factors
 Balance Sheet
5

Results for the Fiscal Year Ended March 31, 2016

Summary
Business Environments
Forecast at April, 2015
 Production continues to recover and capital
investment increases overall in Japan.
 Economic growth continues overseas (Asia).
 The water treatment business continues toexperience a challenging situation as competition
intensifies.

Actual Situation

Active capital investment in Japan and Taiwan in theelectronics industry.
Some nuclear power plants have restarted operation.
Capital investment in Japan is not gaining momentum
in industries overall.
China’s sluggish economy and a decline in resource
prices, among other factors, have affected the global
economy significantly.

Highlights
 Water Treatment Engineering Segment : Increased in Sales and Operating Income< Japan > Grew mainly for plants and maintenance for all industries, especially the electronics industry.
< Overseas > Increased for plants for the electronics industry in Taiwan.

 Functional Product Segment：Slightly Increased in Sales and Operating Income
Sales of water treatment equipment and chemicals were solid as the capacity utilization rate at
customers’ plants improved moderately.

Consolidated Financial Results:
Increased in Both Sales and Operating Income Year on Year

6

Results for the Fiscal Year Ended March 31, 2016

Results(millions of Yen)

03/2015
Result03/2016
InitialPlan

03/2016
RevisedPlan

03/2016
ResultY/Y
ChangeChange from
Initial Plan

Orders Received

77,87375,00075,00076,485- 1,388+ 1,485

Net Sales

68,74177,00079,00078,719+ 9,978+ 1,719

Gross Profit(%)

15,544(22.6)

16,700(21.7)

17,400(22.0)

17,749(22.5)+ 2,205(- 0.1pt)+1,049(+ 0.8pt)

SG & A

13,14514,00013,90013,802

+ 657

- 198

Operating Income
(%)

2,398
(3.5)

2,700
(3.5)

3,500
(4.4)

3,947
(5.0)

+ 1,549(+ 1.5pt)+1,247(+ 1.5pt)

Ordinary Income

2,465

2,600

3,400

3,871

+ 1,406+ 1,271

Net Income
Attributable to
Owners Parent

1,085

1,680

2,250

2,485

+ 1,400+ 805
7

Results for the Fiscal Year Ended March 31, 2016

Results by Business Segments(millions of Yen)

Orders Received

Operating Income

Net Sales
80,00080,00070,000

4,000

+ 437

70,000

+ 402

3,500

60,00060,0003,000

50,00050,0002,500

40,00040,0002,000

30,00030,0001,500

20,000- 1,789

10,0000
Total
Functional
Product
Water
Treatment
Engineering

20,000+ 9,540

10,00003/2015
77,87303/2016
76,485

15,554

15,95662,31860,5290
Total
Functional
Product
Water
Treatment
Engineering

+ 16

1,000

+ 1,532500
03/2015
68,741

03/2016
78,71915,374

15,81153,36762,9070
Total
Functional
Product
Water
Treatment
Engineering

03/2015
2,398

03/2016
3,947

1,377

1,393

1,021

2,553

[ Functional Product Segment ]Operating income: Remained almost unchanged, reflecting increase in SG&A expenses forbusiness expansion, despite increased sales.

[ Water Treatment Engineering Segment ]Orders received: Declined in plants for the electronics industry in Japan.
Sales: Increased in plants/maintenance for the electronics industry in Japan and abroad.
Operating income: Increased due to increased sales for the electronics industry.

8

Results for the Fiscal Year Ended March 31, 2016

Sales by Business Areas and Customers[ Water Treatment Engineering Segment ]Sales by Business Areas

Sales by Customers

70,00070,00060,00060,00050,00050,000+ 2,050

40,00040,00030,00030,00020,000+ 7,490

Total
Solution Business
Plant Business- 3,001+ 4,328+ 8,21420,00010,00010,0000(millions of Yen)

0
03/201553,36729,02524,34303/2016
62,90731,07531,833

Total
GeneralPower Plants +Water & SewerageElectoronics

03/201553,367
23,591

03/2016
62,907
20,5907,631

11,95922,14530,359[Solution][General Industries]

Increased in maintenance for the electronics industry inJapan and abroad, and power plants in Japan.

Declined for plants for pharmaceutical and wastewater treatment.

[Power Plants + Municipal Water and Sewerage][Plant]Sales increased in maintenance.

Increased for the electronics industry in Japan and abroad,and at municipal water plants.

[Electronics Industry]
Increased for plants/maintenance in Japan and abroad.

9

Results for the Fiscal Year Ended March 31, 2016

Sales by Business Areas[ Functional Product Segment ](millions of Yen)

16,00014,000- 303

12,00010,000
8,000

+ 376

6,000
4,000
+ 364

2,000
0
Total
Food Processing Materials
Water Treatment Chemicals
Standardized Water
Treatment Equipments &Filters

03/2015
15,3746,013
4,484

03/2016
15,811
5,710
4,860

4,877

5,241

10

Results for the Fiscal Year Ended March 31, 2016

Business Description of Functional Product Segment

Standardized Water
Treatment Equipment

Standardized Water Treatment
Equipment & Filters
Pure water/ultrapure waterproduction units for experiments,
analyses, and inspections
undertaken at research institutions,
hospitals and other organizations.

Water Treatment
PlantsManufacturing
Buildings

Wastewater
Treatment Plants

for RO Systems

Water purification filters forconvenience stores, kitchens,
cup-type vending machines, etc.

Filters

Water Treatment Chemicals

for
Wastewater
Treatment

Boiler Chambers

Cooling Towers

for
Coolant Waterfor Machine
Cleansingfor
Boiler Water

Food Processing Materials
Main Products
Quality improvement materials for hams,sausages, instant noodles, etc.
Gelators and thickeners for jellies, sauces,etc.
Food ingredients such as protein, fibers,etc.

Applied Areas

Processed foods,
foods for theelderly/nursing care,and health foods, etc.
11Results for the Fiscal Year Ended March 31, 2016

Sales by Regions(millions of Yen)

Sales by Overseas Regions

Domestic & Overseas Sales
40%

80,00070,00020,000+ 6,00960,000+ 17130%

15,00020%

10,00050,00040,000+ 3,129+ 3,968

30,00010%

20,0005,000+ 2,471

10,000
0

03/
2013
Total
66,718Overseas
10,793
Domestic
55,924
Overseas Ratio 16.2%

03/
2014
62,096
14,09048,005
22.7%

03/
2015
68,741
12,39056,351
18.0%

03/
2016
78,71918,39960,319
23.4%

0%

0

03/
2013
Total
10,793
Other Areas
153
China
1,519
Taiwan7,045Southeast Asia 2,075

03/
2014
14,090
396
1,993
8,352
3,349

03/
2015
12,390
256
2,076
6,999
3,057

03/
2016
18,399496
2,247
10,1285,528

12

Results for the Fiscal Year Ended March 31, 2016

Analysis of Operating Income by Factors(millions of Yen)

Increase inSales+ 2,256

5,000

Profit Ratio
Decrease
- 50

4,000

3,000

3,947
SG & A
Increase
- 657

2,398
2,000

1,000

0
03/2015

03/2016* The increase in sales and profit ratio decrease are calculated using the gross profit margin.

13

Results for the Fiscal Year Ended March 31, 2016

Balance Sheet(millions of Yen)

AssetsLiabilities and Net Assets

100,000
90,00080,000+ 12,848

70,00070,000Notes andAccounts
Receivable - trade:+ 5,885

60,00050,00060,00050,000+ 155
40,00040,00030,00020,00010,000

Lease investment
assets:+ 5,809

30,000+ 70

10,00020,0000

Total
Cash on Hand
and Deposits
Current Assets
and Others
Fixed Assets

Short-term
Borrowings:+ 5,295
Notes andAccounts Payable- trade:+ 3,22290,000- 1,732

80,0000+ 9,772

100,000

03/2015
83,60903/2016
94,795

8,939

7,207

50,354

63,202

24,31624,386

計
Current
Liabilities
Long-term
Liabilities
Net Assets+ 1,259

03/2015

03/2016

83,60994,79528,23038,002

10,070

10,22545,30846,567* Lease investment assets : The Company’s own facilities installed incustomers’ factories to conduct consigned water treatment

14

Medium-term Management Planand Plan for the Fiscal Year Ending March 31, 2017
 Medium-term Management Plan
- Situation of Medium-term Management Plan
- Forecasts of Business Environment- Revision of Medium-term Management Plan

 Plan for the Fiscal Year Ending March 31, 2017
- Plans- Plans by Business Segments- Sales by Business Areas and Customers [Water Treatment Engineering Segment]- Sales by Business Areas [Functional Product Segment]- Sales by Regions- Analysis of Operating Income by Factors- Orders Received and Net Sales for the Electronics Industries- Progress of Orders Received, Net Sales and Orders on Hand
- Major Indicators

15

Medium-term Management Plan
Situation of Medium-term Management Plan
1. Outline of Medium-term Management Plan Started from April 2015
Based on “one-stop solutions,” which we have promoted from FY2013,
through selection and concentration, we focus on the three businesses wastewater treatment, water treatment chemicals, and overseas –thereby accelerating the shift of the business portfolio and expanding thesolution business to develop a stable revenue base.
Areas of
Focus

Priority Measures

Wastewater
Treatment Expanding by enhancing personnel/structure.
 Promoting differentiation through the unique technologies, including Moving Bed
Anaerobic Bio-Reactor and Fat Decomposition Treatment Technology.
 Expanding business overseas by establishing a task forces.

Water
Treatment
Chemicals Expanding by enhancing personnel/structure.
 Expanding business for new slime control chemical containing hypobromite-based
oxidants in Japan and overseas.
 Improvement of an overseas supply system and full-scale entry into the business.

Overseas Strengthening overseas subsidiaries through cooperation with the divisions in Japan.
 Fostering local managers and alliances with partner companies to expand non-Japanesecustomers.
 Continuously considering the establishment of new business bases.

16Medium-term Management Plan
Situation of Medium-term Management Plan
2. Progress of Medium-term Management Plan Started from April 2015

(millions of Yen)

03/2015
Result03/2016
Result03/2018(Plan as of 04/2015)

Orders Received

77,87376,48582,000Net Sales

68,74178,71982,000Gross Profit(%)

15,544(22.6)

17,749(22.5)

19,100(23.3)

SG & A

13,14513,802

15,000Operating Income
(%)

2,398
(3.5)

3,947
(5.0)

4,100
(5.0)

Ordinary Income

2,465

3,871

4,000

Net Income
Attributable to
Owners Parent

1,085

2,485

2,600

17

Medium-term Management Plan
Situation of Medium-term Management Plan
2. Progress of Medium-term Management Plan Started from April 2015
(millions of Yen)(millions of Yen)

Net Sales

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

90,00080,00070,00060,00050,00040,00030,00020,00010,000003/2015Net Sales

68,741

03/2016
78,71903/2018(plan as of
04/2015)
82,000Operating Income
(%)

(%)

Operating Income

03/2015

03/2016

2,398
3.5

3,947
5.0

03/2018(plan as of
04/2015)
4,100
5.0

9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Steady progress in the aspect of numerical result
 Relied on the electronics area and functional products business, which had
long been the main source of revenue.
 Does not mean that we have made a good start for the shift from the previous
business portfolio.

18

Medium-term Management Plan
Situation of Medium-term Management Plan
3. Problems of Medium-term Management Plan Started from April 2015
Areas of
Focus

Evaluation/Progress

Wastewater
Treatment

Sales and operating income fell short of the plan

Water
Treatment
Chemicals

Sales and operating income fell short of the plan

Overseas

Sales increased significantly y/y, and operating income surpassed the plan
⇔ relied on the remarkable increase in sales for semiconductors in Taiwan

 Did not achieve the expected progress in the areas of focus (wastewater,
chemicals and overseas business). A sharp increase in earnings cannot be
expected going forward.
 Revenues were generated steadily in areas where we have long-standing strengths
such as the electronics area and small pure water production equipment.
 The business environments changed drastically in Japan and abroad.

The re-establishment of business strategies is essential.

19Medium-term Management Plan
Forecasts of the Business Environments
1. Global Market of Water Business

2. Global Market of Industrial Water & WastewaterIndustrial Water & Wastewater(billions of Yen)

Sewerage(trillions of Yen)

Municipal Water

80

AverageAnnual Growth Rate(2011-2018)

70

7.1%

60
50

3.9%

Area

2011

AverageAnnualGrowth Rate(2011-2018)2018

East Asia andOceania

340

649

9.7%

South Asia

63

126

10.3%

Western Europe

212

298

4.9%

Middle East andNorth Africa

42

66

6.7%

North America

268

360

4.3%

Latin America

131

213

7.2%

40
30
3.2%

20
10
0
2011

2018

Source: Compiled from the Project of Surveys on the Promotion of theExport of Infrastructure Systems in FY2014 (survey on trends in the waterbusiness market) issued by METI (March 2015).

20

Medium-term Management Plan
Forecasts of the Business Environments(billions of Yen)

3. Industrial Water and Wastewater Market in Japan

300
250
200
Industrial Wastewater

150

Industrial Water
100
50
0
2007

2010

2013

Source: Compiled from the Project of Surveys on the Promotion of theExport of Infrastructure Systems in FY2014 (survey on trends in the waterbusiness market) issued by METI (March 2015).

21

Medium-term Management Plan
Forecasts of the Business Environments
4. Cumulative Gross Power Capacity Additions(from 2013 to 2035)(GW)

NuclearCoal

5. IC Market and IC Production Trend in China（Billion US$）

Gas

MarketProduction

160

500

140

400

120
300

100

200

80

100

60
40

0
China
North Europe Asia
East
America
Oceania Europe/
Eurasia
OECD

India
Asia

OthersMiddle Africa Latin
East
America200

Non-OECD

Source: Compiled from World Energy Outlook 2013by International Energy Agency (November 2013).

2006

2008

2010

2012

2014
2018
(Forecast) (Forecast)

Source: Compiled from Research Bulletin : DRAM,
China, and Leading-Edge Foundry Driving IC
Industry in 2014 by IC Insights (October 8, 2014).

22

Medium-term Management Plan
Revision of Medium-term Management Plan
1. Outlook of Business Environments

Japan

Tough conditions will prevail in the capital investment environment Company policies that aim at achieving growth through M&As instead of thecapital investments
 Promotion of consolidation of production bases and overseas relocation.

Overseas A prolonged slowdown of the Chinese economy, sluggish resource prices
and a decline in IT-related demand.
 Investments in semiconductor-related products will increase in China as thecountry facilitates the domestic production.
 The construction of coal-fired power plants will increase in Asia, including
China and India.
 Markets of water businesses will increase at an annual rate of approximately
10% in various types of industries in East Asia and South Asia.

General Difficulties in making forecasts due to a significant change in the market
environment accompanied by intensifying competition.

23

Medium-term Management Plan
Revision of Medium-term Management Plan
2. Outline of Re-establishment of Business Strategies
Points[Period of Market Expansion]More opportunities are available to expand
businesses (wastewater, chemicals andoverseas) whose market shares are small.
<Conventional concept>[Period of Market Shrinking]Efforts to expand market shares and securerevenues from businesses that feature thestrengths of the Company group are more
effective for future growth.

 Planning and formulation of strategies and measures with a focus on
businesses that feature the strengths of the Organo Group.
 Final fiscal year will not be fixed, and management plan will be renewed
every year, so that the Group can respond to the fluctuating businessenvironments, and continue to conduct business based on a three-year plan
constantly.
24Medium-term Management Plan
Revision of Medium-term Management Plan
2. Outline of Re-establishment of Business Strategies
Areas in which the Organo Group has strengths[Understanding of current situation and potential]

Power Plants

 Records of many installations and a dominant market share in Japan High-level technological competitiveness Expansion of solution businesses in response to the progress in therestart of nuclear power plants
 Strong growth potential in power generation facilities in Asian countries
including India and China

Electronics

 High-level technological competitiveness High market share and records of many installations in thesemiconductor area in Japan
 Stable revenue bases
 Strong growth potential in the Chinese market

Functional
Products

 Stable revenue bases
 Sales network covering nationwide
 Development of functions and market cultivation of functional materials
such as ion exchange resins25Medium-term Management Plan
Revision of Medium-term Management Plan
2. Outline of Re-establishment of Business Strategies
Management
VisionMetrics on
Management
Objectives

A profitable engineering company that can supply waterat the most reasonable cost and in the timeliest manner,with the quality required by industries,
in the main Asian economic zones.
 Aim to achieve ROE of 5% or more consistently by FY2018 and 8% or morelong term.
 To meet the targets, consider operating income as the most important metric onmanagement objectives and have established a revenue structure to achieve
5% or more stably in and after FY2018.

[Concept on the improvement of ROE]
Profitability

ROE=

Net Income=

Net Income

Asset Efficiency

×

Sales

Financial Leverage×

Total Assets
Net Worth

Net Worth

Sales

FY2014

2.4%

1.6%

0.82

1.8

FY2015

5.4%

3.2%

0.83

2.0

Total Assets

Focusing on an increase in profits for improvement of ROE

26

Medium-term Management Plan
Revision of Medium-term Management Plan
3. Revised Management Indexes for the Term Ending March 2019(millions of Yen)

03/2016 Result

03/2017 Plan

03/2018 Plan

03/2019 Plan

Orders Received

76,48576,50080,00086,000Net Sales

78,71979,00081,00084,000Operating Income

3,947

3,000

3,400

4,200

Operating Income
Ratio(%)

5.0

3.8

4.2

5.0

ROE (%)

5.4

4.1

4.5

5.3

(%)

(millions of Yen)

80,0008.0

60,000

6.0

Orders Received
Net Sales

40,000

4.0

Operating Income
Operating Income Ratio

20,0002.0

0

0.0
03/2016

03/2017

03/2018

03/2019

ROE

27

Medium-term Management Plan
Revision of Medium-term Management Plan
3. Revised Management Indexes for the Term Ending March 2019
Orders Received(millions of Yen)

Net Sales

Operating Income

100,000

100,000

5,000

90,00090,0004,500

80,00080,0004,000+ 3,044

70,00070,000+ 3,189

3,500

60,00060,0003,000

50,00050,0002,500

40,00040,0002,000+ 6,471

30,000+ 2,093

30,0001,500

20,00020,0001,000

10,00010,000

500

0
Total
Functional
Product
Water
Treatment
Engineering

03/2016
76,48503/2019
86,00015,95619,00060,52967,0000
Total
Functional
Product
Water
Treatment
Engineering

03/2016
78,71903/2019
84,00015,811

19,00062,90765,000

+ 807

0
Total
Functional
Product
Water
Treatment
Engineering- 553

03/2016
3,947

03/2019
4,200

1,393

2,200

2,553

2,000

28

Medium-term Management Plan
Revision of Medium-term Management Plan
4. Sales by Overseas Regions(millions of Yen)

25,00020,00015,00010,000

5,000

0
Total
Other Areas
China
TaiwanSoutheast Asia

03/2013
10,793
153
1,519
7,045
2,075

03/2014
14,090
396
1,993
8,352
3,349

03/2015
12,390
256
2,076
6,999
3,057

03/2016
18,399496
2,247
10,1285,528

03/2017
18,500
130
2,700
8,900
6,770

03/2018
20,000
300
3,400
7,000
9,300

03/2019
21,000
1,100
3,600
6,500
9,800

29

Medium-term Management Plan
Revision of Medium-term Management Plan
5. New Important Measures to Promote Medium-term Management (1)
Areas
Power
PlantsElectronics

Measures
Consistent development of domestic businesses.
Promotion of the establishment of businesses in overseas areas where
electric power demand is expanding.
Enhancement of an equipment and system business to supply washing
agents including ultrapure water.
Development and functional improvement of products with a focus on
standardized water treatment equipment.

Functional
Products

Development of the functions of functional materials such as ion
exchange resins.
Expansion of a business scale by cultivating businesses in new areas.

30Medium-term Management Plan
Revision of Medium-term Management Plan
5. New Important Measures to Promote Medium-term Management (2)Areas

MeasuresResearch andTechnological
Development

Allocation of resources to the development of highly unique andinnovative technologies that contribute to long-term growth.
<Priority Themes>- Enhancement of products and technologies for the manufacturing
process of semiconductors.
- Continuous development of new water treatment chemicals that offerdifferentiation.
- Development of functions and new applications for various types offunctional materials.

Profitability

Optimal distribution of resources and cost reductions⇒Focus on highly profitable businesses and growth businesses.
Development of strategies to adapt to the local markets throughcollaboration between the domestic divisions and local subsidiaries.

Overseas

Strengthening of competitiveness by facilitating the development oftechnologies that reflect areas’ characteristics.
Development of local managers with a view to increasing the numberof non-Japanese customers.

31

Plan for the Fiscal Year Ending March 31, 2017

Plans


Summary

Improvement in the earning capacity, creation and improvement of technologies
and products that strengthen existing businesses, and allocation of resources tothe enhancement of R&D activities to attain growth on a long-term basis.
 Plan for the fiscal year ending March 31, 2017: Sales will remain almost
unchanged. Operating income is forecast to decline.
(millions of Yen)

03/2016
Result03/2017Plan

Y/Y
ChangeOrders Revised

76,48576,500+ 15

Net Sales

78,71979,000+ 281

Gross Profit(%)

17,749 (22.5)

17,300(21.9)- 449(- 0.6pt)

SG & A

13,802

14,300+ 498

Operating Income
(%)

3,947
(5.0)

3,000
(3.8)

- 947
(- 1.2pt)

Ordinary Income

3,871

2,900

- 971

Net Income Attributableto Owners Parent

2,485

1,950

- 535
32

Plan for the Fiscal Year Ending March 31, 2017

Plans by Business Segments(millions of Yen)

Orders Received
80,00080,00070,00070,000+ 294

60,000Operating Income

Net Sales
4,000

+ 439

3,500

60,0003,000

50,00050,0002,500

40,00040,0002,000

30,00030,0001,500

20,000- 279

20,000

- 157

1,000

10,00010,000

500

0

0

0

Total
Functional
Product
Water
Treatment
Engineering

03/2016
76,48503/201776,50015,956

16,25060,52960,250Total
Functional
Product
Water
Treatment
Engineering

03/2016
78,71903/201779,00015,811

16,25062,90762,750+ 27

Total
Functional
Product
Water
Treatment
Engineering- 973
03/2016
3,947

03/2017
3,000

1,393

1,420

2,553

1,580

[ Functional Product Business ]Operating income: Will remain almost unchanged due to the increased fixed cost, although sales will increase.
[ Water Treatment Engineering Business ]Sales: Will increase in plants for the general industries, but decrease in plants for the electronics industry.
Operating income: Will decline, mainly due to decrease in sales of solution businesses.

33

Plan for the Fiscal Year Ending March 31, 2017

Sales by Business Areas and Customers[ Water Treatment Engineering Segment ]Sales by Customers

Sales by Business Areas
70,00070,00060,00060,00050,000- 1,575
40,000+ 5,320- 979

30,00020,000+ 1,417

10,000

Total
Solution Business
Plant Business

50,00040,00030,0000(millions of Yen)

20,000- 4,499

10,00003/2016
62,90731,07531,83303/201762,75029,50033,250[ Solution Business ]Decrease chiefly in maintenance for the domestic
electronics industry.
[ Plant Business ]Increase in wastewater plants for generalindustries in Japan and abroad despite a decreasein the electronics industry in Japan and abroad.

0

Total
GeneralPower Plants +Water & SewerageElectronics

03/2016
62,907
20,59003/201762,75025,91011,95910,98030,35925,860[ General Industries ]Increase chiefly in wastewater plants.
[ Electronics Industry ]Decrease in plants/maintenance in Japan and abroad.

34

Plan for the Fiscal Year Ending March 31, 2017

Sales by Business Areas[ Functional Product Segment ](millions of Yen)

18,00016,00014,000- 50

12,00010,000
8,000

+ 330

6,000
4,000
+ 159

2,000
0
Total
Food Processing Materials
Water Treatment Chemicals
Standardized Water
Treatment Equipments &Filters

03/2016
15,8115,710
4,860

03/2017
16,250
5,660
5,190

5,241

5,400

35

Plan for the Fiscal Year Ending March 31, 2017

Sales by Regions(millions of Yen)

Sales by Overseas Regions

Domestic & Overseas Sales
40%

80,00020,00018,00070,000
+ 101

+ 453

16,00030%

60,00014,00050,00012,00040,00020%

10,00030,000

+ 181

8,000

20,00010%- 1,2286,000+ 1,242
4,000

10,000
2,000
0
Total
Overseas
Domestic
Overseas Ratio

03/
2014
62,096
14,09048,005
22.7%

03/
2015
68,741
12,39056,351
18.0%

03/
2016
78,71918,39960,319
23.4%

03/
2017
79,00018,50060,500
23.4%

0%

0

03/
2014
Total
14,090
Other Areas
396
China
1,993
Taiwan8,352
Southeast Asia 3,349

03/
2015
12,390
256
2,076
6,999
3,057

03/
2016
18,399496
2,247
10,128
5,528

03/
2017
18,500
130
2,700
8,900
6,770

36

Plan for the Fiscal Year Ending March 31, 2017

Analysis of Operating Income by Factors(millions of Yen)

5,000

4,000

3,947

Increase in
Sales
＋63

Profit Ratio
Decrease- 512

SG & A
Increase
- 498
3,000

3,000

2,000

1,000

0
03/2016

03/2017* The increase in sales and profit ratio decrease are calculated using the gross profit margin.

37

Plan for the Fiscal Year Ending March 31, 2017

Orders Received and Net Sales for the Electronics Industry(millions of Yen)

Net Sales

Orders Received
35,00035,00030,00030,00025,00025,00020,000- 2,293- 579

20,00015,00015,00010,00010,000119- 3,920+ 1,701
5,000

5,000
0
Total
Overseas
Domestic

03/2014
19,7459,240
10,50503/2015
30,335
11,25019,08503/2016
24,12715,0239,104

03/2017
23,535
12,73010,8050
Total
Overseas
Domestic

03/2014
19,275
10,033
9,242

03/2015
22,145
8,406
13,73903/2016
30,35913,164
17,19503/2017
25,86012,585
13,27538

Plan for the Fiscal Year Ending March 31, 2017

Progress of Orders Received, Net Sales and Orders on Hand
(millions of Yen)

80,00070,00060,00050,00040,00030,00020,00010,0000Orders Received
Net Sales
Orders on Hand

03/2013
60,23866,71834,64503/201465,50162,096
39,212

03/2015
77,87368,741
48,732

03/2016
76,48578,71946,64003/201776,50079,00044,14039

Plan for the Fiscal Year Ending March 31, 2017

Major Indicators
03/2017(plan)

03/2016
Capital Investment

603

800

1,407

1,550

950

950

17,412

17,800

Number of Employees

2,088

2,110

Dividend per Share

9

10

5.4

4.1

(millions of yen)Technological Development
Expenses(millions of yen)

Depreciation(millions of yen)Interest-bearing Borrowings(millions of yen)

(yen/year)

ROE

（％）

40

Initiatives for Corporate Governance Code41

Corporate Governance CodeInitiatives for Corporate Governance Code (1)Items

Outlines

Organo’s corporate
governance code

Established in December 2015
A questionnaire was collected from the Directors and Auditors (April 2016).
・Effectiveness of Board of Directors’ Meetings
・Members comprising Board of Directors’ Meetings
・Management of Board of Directors’ Meetings
・Support system for outside
・Relations and dialogs with investors and shareholders
Remedial measures will be discussed for issues raised through the questionnaire (June 2016).

Analysis andevaluation of theeffectiveness ofBoard of Directors’Meetings< Main issues and details to be discussed >(i) Clarification of the social
significance of thecompany and corporate
objectives

Discussion on the review of the corporate concept, management
philosophy and CSR, among other issues.

(ii) Selection of Directors

Discussion on the clarification of standards on desired aptitudes andcapabilities.

(iii) Compensation for
Directors

Discussion on the establishment of a compensation committee,
increase of the performance-linked ratio and a certain degree of
disclosure of compensation criteria.

(iv) Relations and dialogs
with investors andshareholders• Implementation of a briefing for shareholders from this fiscal year.
• Discussion on the method of collection of opinions and giving
information from/to shareholders and investors.

42

Corporate Governance CodeInitiatives for Corporate Governance Code (2)Items

Outlines

Clarification of policies
and standards of theselection of officers

Clarification of standards for the aptitude of Directors and thePresident, as well as the aptitude and capability of Executive Officers(May 2016).
Establishment of a compensation committee (April 2016).

Review of thecompensation system for
Directors

Increase of the performance-linked ratio in compensation(strengthening of incentives) is under consideration.
* We aim to introduce a compensation system linked to mid- to longterm business performance in FY2017.

Focus on capital efficiency

Achievement of a consistent ROE of 5% or more by FY2018.
(Set as a metric of management index in the Medium-termManagement Plan)

Constructive dialogs with
Shareholders

Enhancement of IR activities is under consideration.
A briefing for shareholders will be held in June 2016.

Evaluation of strategic
shareholdings

Evaluations will be implemented based on clarified standards in andafter June 2016.
43

References Situation of a Joint Venture in India
 Progress of Corporate Performance

44References
Situation of a Joint Venture in India

FY2015

 Commenced a JV with the Murugappa Group (Sep. 2015 ~ ） Technical transfer from Organo is underway.
 Responded to a many inquiries received mostly from general industries(foods, beverages and pharmaceuticals, etc.).

 The industry keeps expanding.
 Expansion of the water businessmarket supported by governmental
Mid-term
policies.
business- Tightening of regulations forenvironments
wastewater- “Make in India” policy : Moreentries by foreign manufacturers

Goals to beachieved inthree years

Measures Strengthening of relationships
with main consulting companies.
 Promotion of the introduction ofdifferentiated technologies.
 Improvement of delivery
processes and QC.

 Securing of the position of a main player for water treatment in the target markets.
 Establishment of a system that supports the process from order receipt to delivery
to achieve further growth.
 Orders received and sales: Grow to the level of two billions yen per year.
45References
Progress of Corporate Performance(millions of Yen)

Orders Received
Operating Income Ratio (%)
Overseas Net Sales Ratio

Net Sales
ROE(%)(%)

25

100,000
90,00020

80,00070,00015

60,00050,00010

40,00030,00020,0005

10,0000003/2005 03/2006 03/2007 03/2008 03/2009 03/2010 03/2011 03/2012 03/2013 03/2014 03/2015 03/2016

Increase inlarge-scale
projects forthe electronics
industry

Decrease incapitalinvestment due
to the Global
Financial Crisis

Increase in large-scale projects
for the electronics industries inJapan and abroad/Great East Japan Earthquakes

Decrease inmaintenance projects
for power plants in
Japan

46

Organo Corporation
Corporate Planning Department
1-2-8, Shinsuna, Koto-ku, Tokyo 136-8631, Japan
TEL +81-3-5635-5111
FAX +81-3-3699-7240
URL http://www.organo.co.jp

This document includes forecasts of future developments made by management basedon their assumptions, forecasts and plans at the time of writing. Actual performance may
differ materially from the above projections due to a variety of factors.

47