Summary of Q&A on Financial Results Presentation Meetingfor the Fiscal Year Ended March 31, 2023
(Held on May 17, 2023)
ORGANO CORPORATION
Please note that this Q&A summary was summarized for simplicity based on the Company’s
judgment.
Q.

What is the outlook for business performance in the next fiscal year?

A.

In the electronics industry field, although multiple large-scale investments are being planned
mainly in relation to semiconductors in Japan, Taiwan, China, Malaysia, and the U.S., uncertainty
prevails in our future outlook because of memory market conditions and the effect of U.S.
semiconductor regulations imposed on China. In terms of orders received, we expect to passthrough a short lull after many consecutive years of growth. Considering the many factors
contributing to fluctuation, we will continue to closely watch the trends of our markets andcustomers. In terms of sales and profits, our carry-over balance for order backlog, particularly inthe electronics industry, is at a high level. Although we do believe it is possible that processing
delays could occur in some projects due to longer delivery times for materials, we are expectingthat construction work overall will continue to proceed according to plan, and in our plans, weare forecasting increased revenue and increased profits. Concerning our profit outlook for Plant
projects, we have taken into account rising materials prices and construction work related risks
in our plan, so we believe that it is possible that profitability will gradually improve as progress
is made regarding cost reductions and revenue improvements.

Q.

You mention entry into the South Korean market in your Medium- to Long-term ManagementPlan, but it is understood that in the South Korean semiconductor market, other Japanesecompetitors have already developed businesses, and are building close relationships withcustomers. Please provide more details, such as the domain you are targeting, whether this will
exacerbate the competitive environment, and the anticipated impact on profitability.

A.

Concerning our entry into South Korea, we will target the high-end electronics industry market
while ensuring profitability. Whereas our operations in Taiwan, China, etc. are concentrated on
ultra-pure water production equipment, for South Korea, we plan to develop our operations infunctional materials for advanced purification of electronic materials such as various chemicalsolutions and solvents used in semiconductor manufacturing, as well as water treatment
chemicals, standard equipment and other performance products.

Q.

In China, our order backlog has significantly grown, and sales for that country in the fiscal year
ending March 31, 2024 are forecasted at ¥20.0 billion. Please tell us about your current actual
progress on projects, and the risks, such as the risk of future cancellations.

A.

Although there are risks concerning schedule delays for some projects due to longer delivery
times for materials and the impact of the U.S. tightening semiconductor regulations against China,
we are not expecting any cancellations of projects currently underway. On the other hand, webelieve it is important to closely watch the U.S.’ regulations against China, and we will carry out
our operations while continually conducting customer surveys and maintaining careful scrutiny
regarding materials.

Q.

In the fiscal year ended March 31, 2023, the “change in profit margin” was a factor for resultingbetter-than-planned performance. However, in the fiscal year ending March 31, 2024, “change inprofit margin” is assumed to provide a decreasing effect. Concerning the environment
surrounding your delivery such as procurement and construction, what factors do you envisage
to be different in the next fiscal year from the fiscal year just ended?

A.

When it comes to the delivery of our products and services, the environment is not expected tochange much. However, material prices are continuing to rise. For this fiscal year, we have taken
into account risks, including the risks of rising material and construction work prices andconstruction-work risk related to accidents and troubles arising from the execution of work. As
construction work approaches completion, any difference between estimates and the actual cost
will become clear. In addition, improvements in profit can be realized as a result of factors suchas additional negotiations with customers in association with cost reduction measures andspecification alterations, etc. Due to this, we may attract the view that our initial plan appears to
be conservative. However, we believe it is important to take into consideration the collateral
security necessary for qualitative risks in the engineering business.

Q.

Amid the changing macro environment, the appetite for capital investment in the semiconductor
market is currently in a lull. Considering this, how confident are you regarding your orders planfor this fiscal year? What downside risks are there? In addition, to the extent that you are able to,please tell us about the projects included in your plan.

A.

Our orders plan is drawn up according to the information we obtain from detailed surveys
conducted as part of our operating activities. Therefore, we have a high level of confidence
regarding the plan’s accuracy. Concerning the factors that pose downside risks to our plan, aside
from market trends, we are concerned about the risk that investment plans will not proceed as we
expect due to supply-side constraints, such as those associated with procurement of materials andconstruction work. We are unable to provide any details on the projects included in the plan, but
we can say that in addition to projects in Japan, the U.S., China, Taiwan, etc. we expect projectsrelated to investments in areas such as semiconductors and silicon wafers in Malaysia, among
other countries.
Q.

The procurement prices of materials, energy prices and personnel costs are all rising. Are you
passing all these costs through to the prices of your products and services?

A.

The largest impact regarding costs is the rising prices of raw and other materials. In theCompany’s business, we determine the contractual price by factoring in the most recent prices
for materials at the time we receive the order for a project. This structure makes it easy to conduct
cost pass-through. For some projects, there may be cases where the profit margin declines below
what was expected due to the material costs and business costs soaring at a higher-than-expected
rate, but in general, we believe we can ensure cost pass-through for the amounts by which pricesincrease.

Q.

Please provide some details as background to why the profit margin in the Plant business has
been improving in the fields of the electronics industry and the general industry.

A.

Concerning our profit margin in the Plant business, the largest factor for the improved profit
margin in actual results compared with the plan was the conservative cost estimation that wasused for the initial plan. In our year-on-year comparisons, we believe that one other factor for theimprovement in profit was that while a busy market with active investment continues, it isnecessary to be selective with projects ordered.

Forward-looking statements such as the forecasts in this document regarding business are based on
information available at the time of preparation and are therefore subject to risk and uncertainty. Actual
performance may differ from these projections.