Kurita Water Industries Ltd.
Results Presentation for
the First Half of the YearEnding March 31, 2015
(Stock code: 6370)

October 31, 2014

I

Consolidated Financial Results for the First Half of the YearEnding March 31, 2015

II

Consolidated Business Plan for the Fiscal YearEnding March 31, 2015

III

Business Environment and Outlook

IV Acquisition of the Businesses of BK Giulini
Reference Material

Consolidated Financial Results for the First Half of the YearEnding March 31, 2015

1. Financial Highlights
2. Orders, Sales, Operating Income, and Operating Income Margin
3. Water Treatment Chemicals
4. Water Treatment Facilities (for the electronics industry)
5. Water Treatment Facilities (for general industries)
6. Service Business Revenue
7. Overseas Businesses (sales by region and business)
8. Capital Expenditures, Depreciation, and R&D Expenses
9. Financial Condition

(Billions of Yen)

Fiscal Year to
March 2014
First Half Actual

Fiscal Year to
March 2015
First Half Initial
Projections

Fiscal Year to
March 2015
First Half ActualYear-on-Year
ChangeOrders

89.7

92.0

97.0

+ 8.1%Net Sales

82.8

87.0

89.0+ 7.5%

Operating
Income6.7

7.9

8.6+ 28.9%

Ordinary
Income7.2

8.3

9.2+ 28.4%

Net Income4.15.3

5.9+ 43.4%1

Water treatment chemicals

Water treatment facilities

Total*Orders(Billions of Yen)

100

89.7
29.3

Sales

97.0
29.7

92.0

(Billions of Yen)

100

87.0

28.8

29.3

29.8

54.0

59.6

57.2

9/20139/2014

50

60.4

67.2

9/20139/201462.0
0Operating Income

Operating Income Margin(Billions of Yen)

(%)

1217

6.7
6

8.6

7.9

4.1

4.7

15.4
10

4.4

0

89.0

82.8

30.0

50

0

denotes initial projections

2.3
9/20138.1
4.5
9/201414.0 15.8
9.7
7.6

9.1
5.6

3.2
3

4.2
9/20139/20142Orders*

Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections

Operating income
Operating income margin*(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

30

30

5.0

denotes initial projections
(%)

18

15.4

14.0 15.8

150

29.7 30.0

29.3

9/20139/2014150

28.8

29.3 29.8

9/20139/2014[Major areas of change in Orders / Sales] Japan: Decline in core products (-)

 Overseas: Growth in China and Southeast Asia (+)

2.50.0

9

4.4

4.1

9/20139/20144.70[Major determinants of change] Deterioration of cost of sales ratio (-)
 Increase in SG&A expenses (-)

3Orders*

Operating Income andOperating Income MarginSales

denotes initial projections*denotes initial projections

Operating income
Operating income margin*(Billions of Yen)40

denotes initial projections(Billions of Yen)

(Billions of Yen)

(%)

40

616

12.0 9.8
10.1
20

32.7

36.3 32.8

20

31.9

35.6 34.0

38

4.3

3.3

3.2
09/20139/201409/2013[Major areas of change in Orders / Sales] Increase in hardware (+)
 Increase in maintenance services (+)

9/201409/20139/20140[Major determinants of change] Impact of increase in revenue (+)
 Decrease in SG&A expenses (+)

4Orders*

Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections

Operating income
Operating income margin*

denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

30

30

1515

27.7

30.9 29.2

150

22.1

1.1

-0.5

0.3

0-0.1

-1.0

24.1 23.2-4.3
09/20139/2014[Major areas of change] Increase in electric power industries
hardware (+)
 Increase in maintenance services (+)

0

9/20139/2014[Major areas of change] Increase in electric power industries
hardware (+)
 Increase in general industries hardware (+)
 Increase in maintenance services (+)-1

9/20139/2014-5[Major determinants of change] Improvement in cost of sales
ratio (+)
 Impact of increase in revenue (+)

5Service Business Revenue
装置事業中のサービス事業内訳
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)(Billions of Yen)

50
(Billions of Yen)

100

43.1

44.0

15.815.9

4.1

4.3

Tool cleaning

23.2

23.8

Maintenance, etc.

9/20139/2014

89.0

82.8
29.3

Ultrapure watersupply business

28.8
25

73.3

50

71.9

43.1044.0
Servicebusiness
revenue

10.9

15.6

9/20139/201406

(Unit: billions of yen)North
America

Asia

Europe0.6

0.7

9/20139/2014

1.1

10.8

13.9

Dalian9/2013

TianjinEurope9/20139/2014

SuzhouGuangzhou

Sales by Business Segment

0.8

South
Korea

Shanghai

9/2014

North
America

TaiwanOther

VietnamThailand

7.0 14.2 7.2Brazil9.1 17.1 8.0
Malaysia

1.6

1.69/20139/2014Singapore9/20139/2014

Water treatment chemicals
Water treatment facilities

Water treatment
chemicals locations
Water treatment
facilities locations

Indonesia

7Capital Expenditures and Depreciation

Capital expenditures(ultrapure watersupply business)

Capital expenditures(excl. ultrapure watersupply business)

R&D Expenses

Depreciation(Billions of Yen)

R&D expenses

Percentage of net sales(Billions of Yen)

8

2.4

(%)

3

2.7
2.4

4

1.2

7.1
2.0

3.1

7.1

1.5

2.2

2.1

9/20139/2014

1.8

0.8
1.10

9/20131.3
9/2014008Assets

Liabilities and Net Assets(Billions of Yen)

274.9

95.3

279.0

100.9
(+ 5.6)

67.2(Billions of Yen)

67.5

Cash, deposits
andmarketablesecurities

274.9

279.0

55.8

56.3
(+ 0.5)

Other current
assets(+ 0.4)

219.2
77.9

73.8

Liabilities

222.7

Net assets

Property, plantand equipment(- 4.1)

34.6

36.7

Mar. 31, 2014

Sep. 30, 2014(+ 2.1)Othernoncurrent
assets(+ 3.5)Mar. 31, 2014

Sep. 30, 20149

Consolidated Business Plan for the Fiscal Year Ending March 31, 2015

1. Overview
2. Key Assumptions
3. Orders, Sales, Operating Income, and Operating Income Margin
4. Water Treatment Chemicals

5. Water Treatment Facilities (for the electronics industry)
6. Water Treatment Facilities (for general industries)
7. Service Business Revenue
8. Overseas Businesses (sales by region and business)

9. Ultrapure Water Supply Business
10. Capital Expenditures, Depreciation, and R&D Expenses
11. Shareholder Return

(Billions of Yen)

Fiscal Year toMarch 2014
ActualFiscal Year toMarch 2015
Projection

Orders

173.5

189.0+ 9.0%

Net Sales

178.1

185.0+ 3.9%

OperatingIncome

14.9

17.0+ 14.2%

Ordinary Income

16.1

17.8+ 10.8%

Net Income

9.4

11.0+ 17.6%

Year-on-Year
Change10Water treatment chemicals
 Domestic customers’ capacity utilization will not likely
recover sharply.
 In emerging countries, given economic growth andrising populations, plant construction and Japanesecompanies’ expansion of overseas production willcontinue to increase.

Water treatment facilities
 In Japan, although demand for capital investment inplant construction and expansion will likely be weak,
demand for the replacement of old equipment isexpected.

 In East Asia, capital investment in thesemiconductor/LCD industries vary from product toproduct and from customer to customer.

11

Water treatment chemicals

Water treatment facilities

Total*Orders(Billions of Yen)

200

173.5
59.4

Sales

189.0 189.0
59.8(Billions of Yen)

200

61.0

100

0

178.1

185.0 185.0

58.8

59.7

119.3

125.3 124.1

3/20143/2015114.0

129.2 128.0

3/20143/20150Operating Income

Operating Income Margin
(%)

2216

14.9

17.0

17.0

7.5

8.8

8.0

13.5
10

8.4
6.9
0

60.9

100

(Billions of Yen)

11

denotes initial projections

3/20149.5
3/2015

8.2

12.6 14.4
9.2
7.69.26.6

5.84

3/20143/2015
12Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections

Operating income
Operating income margin*

denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

60

60

1018

13.5

30059.4

3/201459.8 61.0

3/201530059.7 60.9

58.8

3/20143/2015[Major areas of change in Orders / Sales] Japan: Delay in recovery in customers’ capacity utilization (-)
 Overseas: Continued growth particularly in Asia (+)

12.6 14.4

5098.07.5

3/20143/2015

8.80[Major determinants of change] Deterioration of cost of sales ratio (-)
 Increase in SG&A expenses (-)
 Impact of increase in revenue (+)

13Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections

Operating income
Operating income margin*(Billions of Yen)80

denotes initial projections(Billions of Yen)

(Billions of Yen)

(%)

80

1218

10.9
40

65.2

74.4 72.9

40

71.0

73.1 73.1

697.8

0

3/20143/201503/2014[Major areas of change in Orders / Sales] Increase in hardware overseas (+)
 Increase in maintenance services (+)

3/201512.0 11.2

03/20148.8

3/20158.2

0[Major determinants of change] Impact of increase in revenue (+)
 Improvement in cost of sales ratio (+)
 Decrease in SG&A expenses (+)

14Orders*Operating Income andOperating Income MarginSales

denotes initial projections*

denotes initial projections

Operating income
Operating income margin*

denotes initial projections(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

(%)

60

60

1.2

330

54.8 55.1

48.9

30

48.3

52.2 51.0

0

1.4

0.10.70.00-0.8-1.7

03/20143/201503/2014[Major areas of change] Increase in electric power industries hardware (+)
 Increase in general industries hardware (+)

3/2015-1.2

3/20143/2015-3[Major determinants of change] Impact of increase in revenue (+)
 Improvement in cost of sales ratio (+)

15Service Business Revenue
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)*

Water treatment facilities (hardware)*(Billions of Yen)

denotes initial projections

100

100.5
96.1

(Billions of Yen)193.8

200

181.2

180.1

178.1

185.0

56.1

58.8

100

32.4

31.6

94.0
93.4

31.8
31.5

59.7
60.9

9.3

157.0
146.4

91.5

35.1

9.7
152.8

90.3
34.8

185.0

56.4
56.7

denotes initial projections

153.7

150.4

8.5

50

8.1

8.2
8.2

Ultrapurewater supply
businessToolcleaning

100.5
90.3

96.1

0

91.5

28.4

36.7

33.6

27.7

3/20113/20123/20133/201494.0
93.4

Servicebusiness
revenue

51.3

56.4

49.4

51.8

3/20133/201454.0
53.7

Maintenance,
etc.

31.3
30.7

3/2015
Projection

0

3/20113/20123/2015
Projection16

Sales by Region

Sales by Overseas Business Segment
Water treatment chemicals

Asia

N. America Europe

*

Other

Water treatment facilities

denotes initial projections*(Billions of Yen)

(Billions of Yen)

40

38.0 38.2
33.6
29.3
26.4

20

3.1
1.3
2.8

19.2

3.0
1.4
2.3

30.5
3.0
1.2
2.3

3.3
1.3
1.8

3.7
1.5
2.6

40

3.6
1.2
1.4

33.6
29.3

22.5

23.9

3/20113/20123/20133/201430.5
17.2 17.2

26.4

20
27.2

38.0 38.2

15.9

11.5

12.0

17.8

18.5

17.7

3/20123/20133/201410.9

30.2 32.015.50

denotes initial projections

3/2015
Projection

03/201120.8 21.0

3/2015
Projection

17

Sales*Capital Expenditures

denotes initial projections*(Billions of Yen)

(Billions of Yen)

40

620

3

35.1

34.8

32.4

31.6

denotes initial projections

5.3

31.8 31.5

4.6 4.8
3.9
3.2

03/20113/20123/20133/20143/2015
Projection

03/20113/20123/20132.8

3/20143/2015
Projection

18Capital Expenditures and Depreciation

Capital expenditures(ultrapure watersupply business)

Depreciation

Capital expenditures(excl. ultrapure watersupply business)*

R&D Expenses

R&D expenses

Percentage of net sales*denotes initial projections

denotes initial projections(Billions of Yen)

(Billions of Yen)

(%)

16

5.03

2.4

2.5

2.6 2.6

7.3

8

7.3
6.1 14.5
3.20

14.3

5.3

2.5

14.4 14.5

4.4

4.5

3/20133/2014

4.8 4.8 1.5

4.8

4.6
2.8
2.5

2.9

2.5

2.6

3/20133/20143/2015
Projection

0.0

3/2015
Projection

019

Dividend per share

Stock repurchases per share

142

(Yen)

140

127

134

134

Net income per share

131
96

110
92

82
72
70

79

37

18092

3/2005223/2006

283/2007

3234

36

38

3/20083/20093/20103/2011

40

4244

46

3/20123/20133/20143/2015
Projection

Kurita’s basic policy is to maintain stable dividends, and the company will work to increase dividends while
giving due consideration to trends in results and investments in its businesses.
Meanwhile, Kurita will make decisions about stock repurchases flexibly and with agility.
20

Business Environment and Outlook

1. Water Treatment Chemicals (Japan)
2. Water Treatment Chemicals (Overseas)
3. Water Treatment Facilities (Profitability)
4. Water Treatment Facilities (Ultrapure Water Supply Business)

5. New Products and Services (1)6. New Products and Services (2)Domestic Sales of Water Treatment Chemicals and Index of Industrial
Production (Year-on-year Change)
Domestic sales of water treatment chemicals

Index of industrial production

(%)

20

Customers’ capacity utilization
declined.
100-106/20106/20116/20126/20136/2014

 Domestic demand for water treatment chemicals
is linked to customers’ capacity utilization.

21

Overseas Sales of Water Treatment Chemicals(Millions of Yen)

10,0005,000

003/2011
First half
Secondhalf

3/2012First half
Secondhalf

3/2013First half
Secondhalf

3/2014First half
Secondhalf

3/2015First half
Secondhalf
projection

 The overseas Water Treatment Chemicals business
continues to grow.

22

Operating Income in Water Treatment Facilities

Operating Income

Operating Income Margin(Millions of Yen)(%)

12,000

Profitability in Water Treatment
Facilities business bottomed out.

6,000016803/2011
First half

Secondhalf

3/2012First half

Secondhalf

3/2013First half

Secondhalf

3/2014First half

Secondhalf

3/2015First half0Secondhalf
projection

 Earnings power in the Water Treatment Facilities
business is recovering.

23

Ultrapure Water Supply Business (Sales / Capital Expenditures)

Sales

Capital Expenditures(Millions of Yen)

(Millions of Yen)

18,000

5,000

9,000

2,500

003/2011
First half

Secondhalf

3/2012First half

Secondhalf

3/2013First half

Secondhalf

3/2014First half

Secondhalf

3/2015First half

3/20160Second First half
half
outlookprojection

 The Ultrapure Water Supply business remains
a stable revenue source.

24

K-eco Maintenance Service
 Installing water quality sensors in water treatment facilities delivered to customers
 Analyzing real-time online data and the results of regular water quality analyses
 Visualizing the operation condition, sharing information with customers, and proposing proper
maintenance

Main agreement
Annual maintenance agreement

Special agreement on the visualization ofoperation condition
Special agreement on assistanceto cost reduction

 Contributing to the optimization of operations in the entire plant, including utility facilities

25Entering the Lithium-ion Battery Field: ABSORBENT KC-504P
 Kurita has developed new materials to improve the safety oflithium ion batteries by applying clathrate compound technology*
that it has cultivated in water treatment.
 Clathrate compound technology inhibits increases in internalpressure and temperature in batteries.
 ABSORBENT KC-504P removes the need for a process of eliminating carbon dioxide
generated in the production of batteries, thereby shortening manufacturing time and reducing
cost.
 ABSORBENT KC-504P can be used in a wide range of batteries, from small batteries formobile equipment to large batteries for electric vehicles.
 Kurita plans to supply ABSORBENT KC-504P to lithium ion battery manufacturers in Japanand overseas. (Kurita has received orders from a major battery manufacturer in Asia.)* Clathrate compound technology
Clathrate compound technology is a technique used to integrate certain “guest” molecules into a group of regular or porous“host” molecules at a certain composition ratio, thus creating a cathrate compound with a specific crystalline structure.
Certain combinations of host molecules enable the stabilization of dangerous materials and help sustain the effects ofsubstances for a long time.

26

Acquisition of the Businesses of BK Giulini

1.
2. Overview of BKG and the Business3. Strategic Rationale

AcquiredBusinessAcquisition
SchemeAcquisition
AmountClosing Date

 Acquisition of Water Solutions, Paper Solutions and Alumina
Compounds (the "Business") of BK Giulini GmbH ("BKG") (the"Transaction") Acquisition of assets/liabilities of the Business and shares of relatedcompanies through a wholly-owned subsidiary in Germany

 250 million Euro (approximately 34.2 billion Yen*1) subject to working
capital and net debt adjustments

 By the end of 2014, subject to applicable anti-trust clearance andcustomary closing conditions

 Cash on hand

PaymentNote:*1 FX rate: 1Euro = 136.65 Yen27

Overview of BKG

Investment Highlight Headquarter: Ludwigshafen, Germany
 Foundation: 1823

 Excellent sales force with more than 10 years of experience onaverage

 Shareholders: Israel Chemicals Limited (owns 100% indirectly)

 Long-term relationships with blue chip customers in Europe

 Business: Manufacturing, developing and marketing water
treatment chemicals, paper chemicals, alumina compounds,intermediates for pharma and cosmetics and gypsum

 Strong track-record in developing solutions which meet customerneeds
 Highly experienced and strong management team

Overview of the Business
Water Solutions:
A leading provider of chemical treatment, technical services and tailormade equipment for key water applications. The innovative productoffering includes scale & corrosion inhibitors, dispersants, biocides,removal of scale products, defoamers, coagulants and flocculants

Business

Paper Solutions:
One of the leading producers of high quality functional chemicals (sizingand wet strength additives) as well as solutions and services used in
paper production
Alumina Compounds:
Alumina Compounds is a leading producer of a wide range of alumina
salts and specialties (neutral, alkaline, acidic). The key products arewater treatment, civil additives, additives for paper process chemicals

Revenue Breakdown byBusiness (FY2013)
14%
50%

36%

Water Solutions
Paper Solutions

Sales
Employees

177 million Euro (Approximately 24.2 billion Yen*1) (FY2013)
Approximately 464

Alumina Compounds
Note:*1 FX rate: 1Euro = 136.65 Yen28

Significant complementarity between Kurita andthe Business both geographically and technically By adding customer base and production sites in Europe
and other regions of the Business to our strong operation inAsia especially Japan, Kurita will accelerate its overseas
expansion
Revenue break-down in 2013
Geographic
Complementarity

NAEUPro-forma

RoWRoWNAEU

To grow asglobal player

AsiaAsiaJapanJapan

Total: 178.1 billion Yen

Total: Approx. 201.8 billion Yen*1,2

 Top line growth by cross-selling• Kurita: Reverse osmosis membrane treatment chemicals
Technical andProducts
Complementarity• the Business: Paper process chemicals, Alumina Compounds

 Product development by technology sharing• Kurita: Sensing technology

To deepen totalsolution
capability• the Business: Polymer production technology
Note:*1 FX rate: 1Euro = 136.65 Yen*2 Revenue from part of China business and internal elimination (c. 3 million EUR) are not included as there is no geographical breakdown

29

(Billions of yen)

11.0

+0.2
+1.6
6.7
5.5

0.0

9/2013

Impact ofincrease inrevenue*Decreasein SG&A
expenses

+0.1

-0.0

Effect of Effect of raw
change inmaterials
cost ofprices
sales ratio*

+0.0
Other

8.6

9/2014* The impact of increase in revenue and the effect of change in the cost of sales ratio are calculated using the gross profit margin.

30

Kurita Water Industries Ltd.
■URL■

http://ir.kurita.co.jp/■MAIL■

ir@kurita.co.jp

Forward-looking Statements
This presentation contains forward-looking statements, business plan projections, and judgments based on
information available to management at the time of writing. Due to the existence of a variety of risk factors
and uncertainties, actual results may differ from those specified or implied by these forward-looking
statements and projections.