Organo Corporation
Report on the First Half Financial Resultsof the Fiscal Year Ending March 31, 2017

November 8, 2016

Contents
Corporate Outlines

3

First Half Financial Results of the Fiscal YearEnding March 31, 20177

Forecasts for the Fiscal Year Ending March 31, 201717

Efforts in Medium-term Management Plan

26

2

Corporate Outlines

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

Corporate Outlines

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Corporate Outlines
Business Description of Water Treatment Engineering Segment
Plant Business

Applied Areas Water production (pure water, ultrapure water, etc.)
 Wastewater treatment and recovery
 Valuable resource recovery
 Process-related (sugar purification, etc.)
Water treatment plants appropriate for various uses
based on combinations of the advanced technologies

Solution Business Maintenance Operation management
 Refurbishment
 Contract water treatment service

Electronics industries
Semiconductors, liquid crystal,electronic components, etc.

Power plants
Thermal power plants, nuclear power
plants, etc.

Municipal waterand sewerage
Water and sewerage treatment

General industries
Food, beverages, pharmaceuticals,
chemicals, machinery, etc.

Provides solutions to achieve optimal operation ofwater treatment plants

5Corporate Outlines
Business Description of Functional Product Segment

Standardized Water
Treatment Equipments

Standardized Water Treatment
Equipments & Filters
Pure water/ultrapure waterproduction units for experiments,
analyses, and inspections
undertaken at research institutions,
hospitals and other organizations.
High-purity water
optimal for use inexperiments andanalyses

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

Water Treatment Chemicals
Water Treatment
PlantsManufacturing
Buildings

Wastewater
Treatment Plants

for RO Systems

for
Wastewater
Treatment

Boiler Chambers

Cooling Towers

for
Coolant Waterfor Machine
Cleansingfor
Boiler Water

Chemicals that help achieve optimal water quality
management in factories and buildings

Filters

Food Processing Materials
Safe and tasty water
appropriate fordrinking water,coffee, etc.

 Gelatinizing agents and thickeners for jellies, etc.
 Food ingredients such as protein, fibers, etc.
Materials that meet the need of the times
such as food for the elderly and nursing care(prevention for aspiration, etc.)6First Half Financial Results

First Half Financial Resultsof the Fiscal Year Ending March 31, 2017 Business Environments
 Results
 Results 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
 Balance Sheet Analysis of Cash Flow7

First Half Financial Results
Business Environments
Mid-long Term Forecasts
as of the April 2016

< Japan >• Promotion of consolidation of production bases
and overseas relocation• Company policies that aim at achieving growththrough M&As instead of the capital investments⇒Tough conditions will prevail in the capital
investment environment< Overseas >• China: prolonged economic slowdown /investments in semiconductor-related industries
will increase• East and South Asia: water business market will
increase

Actual Situationsin First Half
< Japan >• Electronics industry: large capital investments
decreased / maintenance and refurbishments
increased• General industries: investments were mainly
related to maintenance or replacement / large
investments for capacity enhancement such as
facilities extensions were slow
< Overseas >• China: concerns over economic slowdown due tostreamlining of excessive production facilities /
capital investment increased in semiconductor
industry• Emerging Asia countries: trend of improvement in
the economic environment / concerns over a
slowdown due to the prospect of an interest rate
raise by the US FRB

8

First Half Financial Results
Results(millions of Yen)

09/2015
Results

09/2016Plan

09/2016
ResultY/Y
ChangeChange fromthe Plan

Orders Received

40,82031,50038,332- 2,487+ 6,832

Net Sales

33,47932,00034,364+ 885+ 2,364

Gross Profit
(%)

6,658

6,650

7,744

+ 1,086+ 1,094(19.9%)(20.8%)(22.5%)(+ 2.6pt)(+ 1.8pt)

SG & A

6,846

7,000

7,057

+ 211

+ 57

Operating Income
(%)

- 187

- 350

687

+ 874

+ 1,037(- 0.6%)(- 1.1%)(2.0%)(+ 2.6pt)(+ 3.1pt)

Ordinary Income

- 221

- 400

533

+ 755

+ 933

Net Income
Attributable to
Owners of the
Parent

- 278

- 335

89

+ 368

+ 424
9

First Half Financial Results
Results by Business Segments(millions of Yen)

Orders Received
45,00045,00040,00040,00035,000+ 185

30,00025,00025,00020,00020,000- 2,673

10,000

5,000

5,000

Total
Functional
Product
Water
Treatment
Engineering

09/2015
40,82009/2016
38,332

7,935

8,120

32,88430,211

500

+ 275

0

Total
Functional
Product
Water
Treatment
Engineering

+ 159
0

+ 715

15,00010,0000

1,000

35,00030,00015,000Operating Income

Net Sales+ 611

09/2015
33,47909/2016
34,364

7,801

8,076

25,67726,288-500-1,000Total
Functional
Product
Water
Treatment
Engineering

09/2015-187

09/2016
687

661

820

-848

-133

[Functional Products Segment]
Sales/Operating income: Increased as a result of growth in sales of water treatment chemicals.
[Water Treatment Engineering Segment]
Orders received: Declined in plants for the electronics industry .
Sales: Increased both in plant and solution business for general industries, despite decrease in plants for the electronics industry.
Operating income: Increased due to strong sales of higher-margin solution business for electronics and general industries.

10First Half Financial Results
Sales by Business Areas and Customers[ Water Treatment Engineering Segment ]Sales by Business Areas

Sales by Customers

30,00030,00025,00025,00020,000+ 1,262

15,00015,000- 651

10,000

Total
Solution Business
Plant Business+ 517

10,000- 1,580

5,000

5,000
0

+ 1,674

20,00009/2015
25,677
12,332
13,34509/2016
26,28813,594
12,694[Solution Business]
Increased in maintenance for the general and electronics
industries.
[Plant Business]
Declined due to significant drop in plants for the electronics
industry, despite increase in municipal water and seweragetreatment plants and wastewater plants.

009/2015
25,677
9,826

09/2016
26,288
11,500

Total
GeneralPower Plants +
2,396
2,913
Water & SewerageElectronics
13,455
11,875[General Industries]
Increased in plants for wastewater treatment, and maintenance.
[Power Plants + Municipal Water and Sewerage]
Increased in plants for municipal water and sewerage.
[Electronics Industry]
Declined due to substantial drop in plants, despite increase inmaintenance.

11

First Half Financial Results
Sales by Business Areas[ Functional Product Segment ](millions of Yen)

10,000

8,000
- 245

6,000

4,000

+ 414

2,000
+ 106

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

09/2015
7,801
2,940
2,375

09/2016
8,076
2,695
2,789

2,486

2,592

12

First Half Financial Results
Sales by Regions
Domestic & Overseas Sales
40,000

Sales by Overseas Regions50%

10,000

40%
- 624

8,000

30%
+ 1,510

6,000

20%

4,000

10%

2,000

(millions of Yen)

35,00030,00025,00020,00015,00010,000

- 517

- 742

- 796

5,000
0

09/
09/
09/
09/
2013
2014
2015
2016
Total
26,791 28,633 33,479 34,364
Overseas6,009 4,316 8,903 8,279
Domestic
20,781 24,317 24,575 26,085
Overseas Ratio 22.4% 15.1% 26.6% 24.1%

0%* The depreciation of Asian currencies against the yen caused adecrease of 2,000 million yen in net sales (year-on-yearcomparison).

0
Total
Other Areas
China
TaiwanSoutheast Asia

09/
2013
6,009
92
705
3,830
1,380

09/
2014
4,316
114
544
2,707
949

09/
2015
8,903
364
1,031
5,414
2,093

09/
2016
8,279
203
514
4,672
2,889

13

First Half Financial Results
Analysis of Operating Income by Factors(millions of Yen)

Profit Ratio Increase
+ 909

1,000

687
SG & A
Increase
- 211

500

Increase in
Sales
+ 176

0
- 187

-500
09/2015

09/2016* Increase in sales and profit ratio increase are calculated using the gross profit margin.

14

First Half Financial Results
Balance Sheet
Liabilities and Net Assets

Assets100,000

100,000

90,00090,000- 1,538

80,000- 6,116
Notes andAccounts
Receivable - trade:- 8,954

60,00050,00060,00030,00030,00020,000- 598

50,00040,000- 613

20,000- 227

10,000

Total
Cash and Deposits
Current Assets
and Others*
Fixed Assets

Notes andAccounts
Payable - trade:- 6,02770,00040,0000- 6,669

80,00070,00003/2016
94,795
7,207

09/2016
86,915
5,668

63,202

57,08624,38624,159(millions of Yen)

10,0000
Total
Current
Liabilities
Long-term
Liabilities
Net Assets

03/2016
94,79509/2016
86,91538,002

31,333

10,225

9,627

46,56745,954* Current Assets and Others does not include Cash and Deposits

15

First Half Financial Results
Analysis of Cash Flow(millions of Yen)

10,000

7,500

7,207

CFs from
operatingactivities+ 307

CFs from
investingactivities- 590

CFs from
financing
activities- 957

Effect ofexchange on cash
and cashequivalents
- 299
5,668

5,000

2,500

0
03/2016
Cash and Deposits

09/2016
Cash and Deposits

CFs from operating activities: Increased due to the collection of accounts receivable, despite the payment of accounts
payable and increase of lease investment assets.
CFs from investing activities: Decreased due to the acquisition of fixed assets.
CFs from financing activities: Decreased due to the scheduled payment of long-term borrowings and dividend payments ,despite the additional short-term borrowings.

16

Forecasts for the Fiscal Year

Forecasts for the Fiscal Year Ending March 31, 2017

 Forecasts Summary Forecasts 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
 Progress of Orders Received, Net Sales and Orders on Hand
 Major Indicators17

Forecasts for the Fiscal Year Ending March 31, 2017

Forecasts for the Fiscal Year Ending March 31, 2017
SummarySales from some plant projects scheduled for the second half of the FY moved forward to the first half.
Less large projects, particularly in the electronics industry, are expected in the second half of the FY.
A cautious stance on new investments is expected in overall industries in Japan and abroad.
< The previous forecasts are maintained for the full year >(millions of Yen)

03/2016
Result03/2017Plan

03/2017
Forecast

Y/Y
ChangeChange from
Initial Plan

Orders Received

76,48576,50076,500+ 15-

Net Sales

78,71979,00079,000+ 281-

Gross Profit(%)

17,749(22.5)

17,300(21.9)

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

SG & A

13,802

14,30014,300+ 498-

Operating Income
(%)

3,947
(5.0)

3,000
(3.8)

3,000
(3.8)

- 947
(- 1.2pt)-

Ordinary Income

3,871

2,900

2,900

- 971

-

Net Income
Attributable to
Owners of the
Parent

2,485

1,950

1,950

- 535

18

Forecasts for the Fiscal Year Ending March 31, 2017

Forecasts by Business Segments(millions of Yen)

Orders Received
80,00080,00070,00070,000+ 394

60,000Operating Income

Net Sales
4,000

+ 539

3,500

60,0003,000

50,00050,0002,500

40,00040,0002,000

30,00030,0001,500

20,000- 379

10,0000
Total
Functional
Product
Water
Treatment
Engineering- 257

20,00003/201776,50015,956

16,35060,52960,1500
Total
Functional
Product
Water
Treatment
Engineering

1,000- 1,023500

10,00003/2016
76,485+ 77

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

16,35062,90762,6500
Total
Functional
Product
Water
Treatment
Engineering

03/2016
3,947

03/2017
3,000

1,393

1,470

2,553

1,530

[Functional Products]
Sales / Operating income: Will increase primarily due to growth of water treatment chemicals.
[Water Treatment Engineering]
Sales: Will decrease in plants for electronics industry in Japan and abroad, despite increase in plants for domestic generalindustries.
Operating income: Will decrease in both plant and solution business for electronics industries in Japan and abroad.

19

Forecasts 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
70,00070,00060,00060,000+ 175

50,00040,00030,00030,000

- 433

Total
Solution Business
Plant Business- 979

20,000- 4,799

10,00010,0000+ 5,520

50,00040,00020,000(millions of Yen)

0
03/2016
62,90731,07531,83303/201762,65031,25031,400[Solution Business]
Will increase in maintenance for general industries.
[Plant Business]
Will decrease in plants for electronics industry in Japan andabroad, despite increase in plants for domestic generalindustries.

Total
GeneralPower Plants +Water & SewerageElectronics

03/2016
62,907
20,59003/201762,65026,11011,95910,98030,35925,560[General Industries]
Will increase primarily in plants for water production andwastewater treatment[Electronics Industry]
Will decrease in plants and maintenance in Japan and abroad

20

Forecasts 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

+ 430

8,000
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
16,350
5,660
5,290

5,241

5,400

21

Forecasts for the Fiscal Year Ending March 31, 2017

Sales by Regions(millions of Yen)

Sales by Overseas Regions

Domestic & Overseas Sales
80,00040%

70,000- 2,599

60,00030%

50,00020,00018,00016,000- 647

14,00012,00020%+ 2,881

40,00030,00010%

20,000- 1,228

10,000
8,000
6,000

- 358

4,000
10,0000
Total
Overseas
Domestic
Overseas Ratio

2,000
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
79,00015,80063,200
20.0%

0%

0
Total
Other Areas
China
TaiwanSoutheast Asia

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
10,128
5,528

03/
2017
15,800
130
1,600
8,900
5,170

22

Forecasts 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* Increase in sales and profit ratio decrease are calculated using the gross profit margin.

23

Forecasts 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
76,48578,71946,64003/201776,50079,00044,14024

Forecasts for the Fiscal Year Ending March 31, 2017

Major Indicators
03/2017（plan）

03/2016
Capital Investment

03/2017（forecast）

603

800

800

1,407

1,550

1,550

950

950

950

17,412

17,80017,800

Number of Employees

2,088

2,110

2,110

Dividend per Share

9

10

10

5.4

4.1

4.1

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

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

(yen/year)

ROE
(%)

25

Efforts in Medium-term Management Plan

Efforts in Medium-term Management Plan Outlines of Current Medium-term Management Plan Efforts for Business Field of Electronics Industry
 Efforts for Overseas Business Efforts for Municipal Water and Sewerage Treatment Business Expansion of Business Segments
・Efforts for Aqueous Solution Treatment
・Efforts for Non-aqueous Liquid Treatment

26

Efforts in Medium-term Management Plan
Outlines of Current Medium-term Management Plan

Management
VisionA 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.

Metrics on
Management
Objectives

 Aim to achieve ROE of 5% or more consistently by FY2018 and 8% or more longterm.
 To meet the targets, we consider operating income ratio as the most important metricon management objectives, and establish the revenue structure to achieve 5% ormore stably in and after FY2018.

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
27

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Focus on the Active Semiconductor Investment Plans in China< Targets: Chinese and Foreign Companies >◆ Improve the proposals of systems for ultrapure water, process, and wastewater◆ Strengthen cooperation between our group companies in China (Organo Suzhou), Taiwan(Organo Technology), and Japan (Organo)
Semiconductor manufacturing plant investment plan in China(major plans already announced)

Huaian [Tacoma]

Hefei [Nexchip]

Beijing [SMIC]

Dalian [Intel]

Hefei [Sino King]

Nanjing [TSMC]

Xian [Samsung]Shanghai [SMIC]
Chongqing[Globalfoundries]

Shanghai [HLMC]
Quanzhou [UMC]

Wuhan [Memory Base]Shenzhen [SMIC]

Xiamen [UMC]

Estimate of ultrapure water market in
China’s semiconductor industry throughnew investment
Estimated increase in wafer manufacturing
volume< Total approx. 600,000/month >(for 300 mm wafers)↓
Converted to an increase in ultrapure water
consumption< approx. 3,500m3/hr >↓< approx. 25 billion yen >(as ultrapure water production plants)

28

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Development into semiconductor manufacturing process Strengthen development into the wet process, in addition to the conventional utility business(ultrapure water and wastewater) < proposal for differentiation technologies >Utility

Wet Process

Utility
Wastewater
treatment

Ultrapure water production
Hydrogen peroxide removal

Cleaning
System

Metal removal
Minute particle measurement

Functional Water

Cleaning
EtchingMembrane Formation Resist Removal
Developing
CMP

H2 water,O3 water,NH3 water, etc.

ChemicalSupplyChemical manufacturer

Developer
Etching solution
Stripping solution
Cleaning solution

Chemicalpurification29

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Development into semiconductor manufacturing process
I. Expanding sales of multi-functional waterproduction systems
Key products
Primary Use

Hydrogen
Water
SystemMinute particle
removal○Ozone Water
System○Electrification
prevention
Surfaceoxidation
prevention

Ammonia
Water
System○New Method Ammonia Water
Production System
 Improved minute particle cleaning
capacity Improved performance of static electricity
prevention
 Increased prevention rate of corrosion ofsubstrate surface materials○

Organic matter
removal○Resist residue
removal○Used in semiconductor cleaning process30

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Development into semiconductor manufacturing process
II. Technology to remove and control hydrogen peroxide in ultrapure water[Background]• 5~40μg/L of hydrogen peroxide contained in ultrapure water causes oxidation corrosion of wafer surface• Hydrogen peroxide is likely to be added to the items for ultrapure water management
 Oxidizer removing catalyst “Ordetox”
Catalyst developed originally by Organo decomposes hydrogen
peroxide to less than 1μg/L⇒ Prevents corrosion of semiconductor materials and products
Treatment 10 times faster than conventional systems
1/25th the size of conventional systems ⇒ can be placed near the pointof usePitting

 High-sensitivity hydrogen peroxide
monitor* at the stage of demo product evaluation by customers

New monitor using original technologies
Lower detection limit < 1μg/L
Propose both “treatment” and“management” of hydrogen peroxide in
ultrapure water by using this system with
Ordetox

H2O2 removing
Corrosion
Depth
140 nm
CO2 water (0.1MΩ･cm)
DO 130μg/L
Cleaning Time:16hr

OrdetoxCorrosion
Depth
70 nm

Copper corrosion control effect31

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Development into semiconductor manufacturing process
III. Analysis of minute particles in ultrapure water World’s first 10-nm minute particle measurement technology that uses amembrane originally developed by Organo⇒ Corresponds to semiconductor miniaturization
Contributes to the improvement of quality and yields

Ultrapure
water

Capture minute particles
on the membrane

Observe the captured minute particles on themembrane using an electron microscope
32

Efforts in Medium-term Management Plan
Efforts for Business Field of Electronics Industry
Expanding sales of slime control chemical for RO membrane
Orpersion E266 Series

Expand sales for RO membranes inultrapure water production, wastewater
recovery systems, etc.
at semiconductor plants

 Contains uniquely developed stabilized hypobromite
oxidizing agent
 Strong sterilizing effect and slime cleaning effect Low damage to RO membrane High level of safety

Application case < raw water: well water and recovered water / RO system: 17m3/h, recovery rate 75% >Passing water differential
pressure (MPa)

Increase in differential pressure →alkaline cleaning

0.6

NaClO
treatment<Change to E2661>
stabilize passing water
differential pressure

0.4

Running costs(conventional treatment = 100)
100
80
60
40

0.2

0.0
0
months 414301241520
months 416101841700
months 41790
41160
41250 641340

200Conventional
Treatment

E2661 Treatment

33

Efforts in Medium-term Management Plan
Efforts for Overseas Business< Business Environments >1. Global Market of Water Business

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

Industrial Water & Wastewater

AverageAnnualGrowth Rate(2011-2018)

Sewerage(trillions of Yen)

Municipal Water

80

AverageAnnual Growth Rate(2011-2018)

70

Area

2011

2018

East Asia andOceania

340

649

9.7%

South Asia

63

126

10.3%

40

Western Europe

212

298

4.9%

30

Middle East andNorth Africa

42

66

6.7%

North America

268

360

4.3%

Latin America

131

213

7.2%

7.1%

60
50

3.9%

3.2%

20
10
0
2011

2018

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

34

Efforts in Medium-term Management Plan
Efforts for Overseas Business< Business Environments >Water Business Market Forecasts of Asian Countries
35,0002016 (Estimate)

30,00025,00020,00015,00010,000VietnamBangladesh

Philippines

Singapore

Malaysia

ThailandTaiwanIndonesia

0

Korea

5,000

India

Market (Millions of US$)2021 (Forecast)

Source: Compiled and estimated from Global Water Market 2017 by Global Water Intelligenceand World Economic Outlook Database, Oct. 2016 by International Monetary Fund

35

Efforts in Medium-term Management Plan
Efforts for Overseas BusinessBusiness Development of Organo Group by Region

China< Keywords >Ultrapure water / Process / Wastewater
SemiconductorJapan[trend of reduced capital investment]

India< Keywords >Industrial Water / Wastewater and ZLD
General Industries / Power Plant

Taiwan< Keywords >Semiconductor

Southeast Asia
< Keywords >Wastewater
General Industries / Power Plant

Zero Liquid Discharge (ZLD): system for collecting and reusing wastewater without discharging it outside36

Efforts in Medium-term Management Plan
Efforts for Overseas BusinessResponding to demand for wastewater treatment and Zero Liquid Discharge (ZLD)
Background
Rise in awareness of environmental and water resource
protection associated with industrial development ofemerging countries[Primary target areas]
India and China[Key industries]
Food and pharmaceutical[Efforts]◆ Development and sharing of originaltechnologies◆ Development of businesses, systems
and facilities⇒ Technical and business support bywastewater technology divisions,business divisions, and R&D center
37

Efforts in Medium-term Management Plan
Efforts for Municipal Water and Sewerage Treatment Business[ Aerobic granular technology for sewerage treatment ]Problems with the conventional method (activated sludge method)
Sewerage treatment is slow due to low sludge concentration⇒ requires a large footprint for facilities

Aerobic Granular Method
Biological treatment using granular sludge
containing a high concentration of microorganismsthat are effective in sewerage treatment
Can accelerate sewerage treatment⇒ Reduces the size of facilities
Reduces construction and maintenance expenses
Currently undertaking research jointly with the Bureau of Sewerage of the Tokyo Metropolitan
Government into the development of aerobic granular technology for low-concentration organic
wastewater such as the urban sewerage in Japan.

↓
Targets: Renewal demand of sewerage treatment plant38

Efforts in Medium-term Management Plan
Efforts for Municipal Water and Sewerage Treatment Business[Responses to demand for renewal of water treatment plant facilities]“Wave Settler” ~ New type pulsation-based high-speed coagulation basin
Conventional pulsation-based coagulation basins:in operation at approx. 70 locations in Japan

Responses to demand forrenewal due to decrepitude

Improvement[currently researching jointly with Niigata City Waterworks Bureau]• Upgrading of adaptability to changes in raw water• Reduction of operation management burden• Facilitation of maintenance and management< Wave Settler > Space saving⇒Installation area of approx. 40% of other methods (horizontal flow coagulation basin)
 Energy saving / easy maintenance⇒No low-speed agitator and sludge collector
No moving parts in the water or submerged machines Easy operation management⇒Automation using various sensors
Increased adaptability to changes in raw water39

Efforts in Medium-term Management Plan
Expansion of Business Segments
 From water to aqueous solution and non-aqueous liquid From utilities to processes
Non-aqueous liquid treatment
 NMP recovery and purification (for lithium battery manufacturing process) Chemical purification (for semiconductor manufacturing process)Aqueous solution treatment
 Functional water manufacturing(for semiconductor manufacturing process) Saccharide solution purification(for sugar production process)

Water treatment
 Pure water and ultrapure water production
 Wastewater treatment and recovery
40Efforts in Medium-term Management Plan
Expansion of Business Segments[ Efforts for Aqueous Solution Treatment ]Development of adsorbent for chromatographic separation of monosaccharides
 Business related to sugar purification (desalination and decolorization) commenced in the 1950s
 Many experiences in sucrose (disaccharides), oligosaccharide, etc. production⇔ No experience for separating monosaccharides due to a lack of appropriate adsorbents

New Adsorbent (Amberite™CR3220 Ca launched on Nov. 1, 2016)< Use >
Chromatographic separation of monosaccharides widely usedin food and beverages such as fructose and rare sugars.
< Features > High separation performance and durability appropriate for the separation andpurification of monosaccharides
 Reduces increase in the loss of pressure during operation by increasing the uniformityof particle sizes Can be installed in existing facilities in operation

Enter into the business of separation and purification of monosaccharides↓

Business development in the separation and purification market of all saccharides[Chromatographic separation system + Adsorbent]
41

Efforts in Medium-term Management Plan
Expansion of Business Segments[ Efforts for Non-aqueous Liquid Treatment ]NMP (N-methyl-2-pyrrolidone) on-site purification and recycle system
NMP





Solvent used for manufacturing lithium-ion battery (LiB) electrodes, etc.
The market is expected to grow as the use of electric vehicles increases.
Distillation method has been used in purification of NMP.

[NMP purification and recycle flow]
LiB electrodemanufacturing
facilities

NMP
gas

ScrubberAdsorbent

80%NMP
solution

Purified NMP (water content < 100 ppm)
* conventional method: water content < 500 ppm[New system]
Purification using azeolite membrane

Features Energy : one-tenth of theconventional method
 Cost of filling new solution:
one-fifth of the conventional method(reduces the loss of NMP)
 15% height and 50% footprint of theconventional method⇒Appropriate for on-site treatment< Primary Targets > LiB manufacturing industries in Japan, China, etc.
Further development

Purification of LiB electrolytes business / metal material collection and recycling businessfor electric vehicles for the age of automatic driving

42

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 forecasts due to a variety of factors.

43