Kurita Water Industries Ltd.
Results Presentation for the First Halfof the Year Ending March 31, 2018
(Securities code: 6370)

November 1, 2017

Table of Contents

I

Consolidated Financial Results for the First Half of the YearEnding March 31, 2018

IIConsolidated Business Plan for the Fiscal YearEnding March 31, 2018

III Priority Measures
Reference Material

I. Consolidated Financial Results for the First Halfof the Year Ending March 31, 2018
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 Sales
7. Overseas Sales
8. Capital Expenditures, Depreciation, and R&D Expenses
9. Financial Condition

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

(Billions of Yen)
1H of the FY
ended March
2017(Actual)

1H of the FY
ending March
2018(Initial
Projection)

1H of the FY
ending March
2018(Actual)

Year-on-Year
ChangeOrders

112.5

112.0

125.3

+11.4%Net Sales

103.8

104.0

108.1

+4.1%

Operating Income

9.6

7.7

10.2

+5.3%

Ordinary Income

9.6

7.9

10.3

+6.6%

Profit attributable toowners of parent

6.5

5.3

7.4

+13.3%

 Orders increased significantly due to new consolidation in the Water
Treatment Chemicals business and large orders in the Water Treatment
Facilities business.

Exchange
rate (Yen)

09/2016

09/2017USD

111.81112.37EUR

124.62121.64

RMB

17.07

16.39

 Operating income rose, reflecting an improvement in the cost of sales ratio in
the Water Treatment Facilities business.
 A gain on sales of shares of other listed companies was posted to
extraordinary income.

1

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

Water treatment chemicals

Water treatment facilities

Total

*

Orders(Billions of Yen)
140

112.5
42.0

Sales
125.3
44.6

112.0

(Billions of Yen)
140

70.5

80.7

09/2016

09/2017

9.6
4.1

104.0

41.5

44.1

44.3

62.4

64.0

59.7

09/2016

09/2017

67.6
0Operating Income Margin
10.2

7.7

3.9

4.1

6

0

108.1

70

Operating Income(Billions of Yen)
12

103.8
44.4

70

0

denotes initial projections

(%)
10

9

5.6

6.3

09/2016

09/2017

9.9

9.8

6.0

9.3

9.4

7.4

8.7

9.2

8.9

3.6
8

09/2016

09/20172

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018
(Billions of Yen)

Orders50

 Domestic orders rose 2.7% year on year.
25

42.0

44.6

09/2016(Billions of Yen)

09/20170 Overseas orders increased 10.1% year on year due to newconsolidation.

44.4

Sales
 Domestic sales rose 3.2% year on year.

50

 Overseas sales climbed 9.8% year on year due to newconsolidation.
25

41.5

44.1

09/2016(Billions of Yen)

09/2017044.3

 In Japan, sales of boiler water, cooling water, and process
treatment chemicals rose.
(%)

6

10

9.9

8.7

9.2

3

0

 Except for the effect of new consolidation, overseas sales rosearound 1% year on year.

5

4.1

3.9

09/2016

09/2017

Operating income margin*

Operating Income
 Despite the rise in sales, operating income decreased due to arise in selling, general and administrative expenses.

 The cost of sales ratio remained roughly flat.

4.1
0

denotes initial projections

3

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018
(Billions of Yen)

Orders

50

25

45.0

34.6
0

09/2016(Billions of Yen)

 Orders for hardware in Japan included large order for
semiconductors.
 Orders for hardware overseas included large orders in China
and South Korea.
 Orders in the ultrapure water supply business declined due tothe revision of contracts.
 Orders for maintenance services in Japan increased due toexpansion and repairs at facilities of customers.

34.3

09/2017

40

Sales
20

36.0

37.1

09/2016(Billions of Yen)

09/2017

0

8

33.7

(%)

15.4

14.5

20

9.8

4

0

Operating Income
10

5.5

5.4

09/2016

09/2017

Operating income margin*

 Sales of hardware increased in Japan due to the progress ofconstruction work.
 Sales of maintenance services in Japan rose with the expansionof customer facilities.
 Sales of the ultrapure water supply business declined due to therevision of contracts.

3.3

 Operating income was adversely affected by the decline in sales
in the ultrapure water supply business.
 Operating income was positively affected by an increase in sales
overseas and an improvement in the cost of sales ratio.

0

denotes initial projections

4

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018
(Billions of Yen)

Orders40

 Orders for large scale soil remediation projects were received.
20

35.8

35.7

 Orders for maintenance services for general industries
increased due to demand associated with renovating old
facilities and demand for new facilities and expansion.

33.3

 Maintenance services for public offices declined.

0

09/2016(Billions of Yen)

09/2017

Sales

30

 Sales of hardware from electric power industry rose slightly.
15

 Sales from chemical cleaning increased.

26.4

26.9

09/2016(Billions of Yen)

09/20170

26.0

 Soil remediation sales declined.

(%)

3.5

1.2

1.2

5.0

 The cost of sales ratio improved for both hardware and services.

0.1
0.6

0.0

0.9
0

Operating Income

0.0
09/2016
Operating income margin

09/2017
*

0.3
-5.0

denotes initial projections

5

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

Service Business Revenue
in the Water Treatment Facilities Segment

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

50
(Billions of Yen)

108.1

103.8

100

46.2

46.2

15.2

13.5

Ultrapure watersupply business

3.1

3.4

Tool cleaning

27.9

29.3

Maintenance, etc.

09/2016

09/2017

44.1

41.5

90.3

87.6

25

50

0

46.2

46.2

16.2

17.8

09/2016

09/2017

Servicebusinesssales

0 Revenue in the ultrapure water supply business declined in Japan but increased overseas. Overall, revenue
in the business exceeded the initial forecast.
 Revenue from tool cleaning and maintenance rose on the back of firm capacity utilization at customers.
6

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

Overseas Sales by Region
Asia

North America

EMEA

Overseas Sales by Business Segment
Other

Water treatment chemicals(Unit: billions of yen)

10.2

10.3

1.0

09/2016(Unit: billions of yen)

1.4

1.2

30.9

Water treatment facilities

12.6

11.4
34.0

18.4

20.0

34.0

30.9

21.4

19.5

2.4

09/2017

09/2016

09/2017

 Sales increased in both the Water Treatment Chemicals and the Water Treatment Facilities businesses.
 The impact of foreign exchange rates was minor.

7

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

Capital Expenditures and Depreciation
Capital expenditures(ultrapure watersupply business)

Capital expenditures(excl. ultrapure watersupply business)(Billions of Yen)
10

R&D Expenses

Depreciation

R&D expenses(Billions of Yen)
3.4

8.8

(%)
3

2.3

5

2.4
0

7.2

3.8
6.7

Percentage of net sales

2.4

1.7

6.6

1.4

1.6

09/2016

09/2017

1.5

2.4

2.6

09/2016

09/20170 Capital expenditures of the ultrapure water supply
business made good progress.

0 R&D expenses were in line with the initial plan.

 Depreciation was in line with the initial plan.
8

I. Consolidated Financial Results for theFirst Half of the Year Ending March 31, 2018

Assets299.2
73.4

Liabilities and Net Assets

300.1
67.5
(-5.8)

82.6

86.0(Billions of Yen)
Cash, deposits
andmarketablesecurities

299.2

300.1

70.5

70.7

(Billions of Yen)

Liabilities(+0.2)

Other current
assets(+3.4)

74.0

76.3

Property, plantand equipment

228.8

229.4

Net assets(+2.3)

69.3

70.2(+0.9)

Mar. 31, 2017

Sep. 30, 2017

Othernoncurrent
assets(+0.6)

Mar. 31, 2017

Sep. 30, 2017

 Cash on hand declined Reasons:- Capital expenditure on facilities in the ultrapure water supply business exceeded depreciation, and property, plantand equipment increased.
- Purchase of own shares in addition to an increase in trade notes and accounts receivable and inventories

9II. Consolidated Business Plan for the Fiscal YearEnding March 31, 2018
1. Business Environment
2. Overview
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 Sales
8. Sales Plan for the Ultrapure Water Supply Business
9. Major Contracts in the Ultrapure Water Supply Business10. Overseas Sales
11. Capital Expenditures, Depreciation, and R&D Expenses

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

1. Business Environment
Water Treatment Chemicals
 Production activities in the domestic manufacturing industry are expected to be firm.
 Economies in Europe, the United States, and Asia are expected to be firm.

Water Treatment Facilities
 Production activities and capital expenditures in the domestic electronics industry are expected
to be firm.

 Capital expenditures in the electric power industry and general industries will remain roughlyflat.
 The replacement and enhancement of old facilities and the improvement of efficiency will
advance in industries other than the domestic electronics industry.

 Active semiconductor- and FPD-related investment will continue in China and South Korea.

10II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen)FY ended
March 2017
(Actual)FY endingMarch 2018
(Initial
Projection)

FY endingMarch 2018
(Revised
Projection)

Year-on-Year
ChangeOrders

218.7

221.0

238.0

+8.8%

Net Sales

214.2

223.0

230.0

+7.4%

Operating Income

19.5

18.5

21.0

+8.0%

Ordinary Income

20.1

19.0

21.5

+7.1%

Profit attributable toowners of parent

14.5

13.0

15.0

+3.4%

 The projection for orders has been revised upward on the assumption of active
capital expenditures in the electronics industry in Japan and overseas.
 The projection for net sales has been revised upward, reflecting the rise inorders.
 The projection for income has been revised upward on the assumption of an
improvement in the cost of sales ratio in the Water Treatment Facilities business.

Exchange
rate (Yen)

03/2017

Assumptions
for 03/2018

USD

108.84112.00EUR

120.33124.00

RMB

16.37

16.40

11

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

Water treatment chemicals

Water treatment facilities

Total

*

Orders(Billions of Yen)
250

Sales

218.7
82.1

238.0

221.0

89.5

89.5

(Billions of Yen)
250

136.6

148.5

03/2017

03/2018
Projection

19.5
7.2

0

223.0

81.9

89.4

89.4

132.3

140.6

133.6

03/2017

03/2018
Projection

Operating Income Margin
21.0

18.5

7.4

7.7

(%)
10

9

11

12.2
0

230.0

131.5

Operating Income(Billions of Yen)
22

214.2

125

125

0

denotes initial projections

03/2017

13.6
03/2018
Projection

10.8
8

9.2
9.1
8.8

03/2017

9.7

8.1

9.1

8.3

8.3

8.6

03/2018
Projection
12II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

(Billions of Yen)

Orders90

 Orders are expected to rise 2% in Japan.
45

0

82.1

89.5

03/2017

03/2018
Projection

 Orders are expected to increase 16% overseas, reflecting new
consolidation.

89.5(Billions of Yen)

Sales

90

45

0

81.9

89.4

03/2017

03/2018
Projection

 Sales are projected to rise 3% in Japan, and the initial projection
has been revised upward.

89.4

 Sales are expected to increase 16% overseas, reflecting new
consolidation, but the initial projection has been revised
downward.

(Billions of Yen)

(%)

12

12

8.8

8.3

8.6

6

0

6

7.2

7.4

03/2017

03/2018
Projection

Operating income margin*

Operating Income Operating income fell short of the plan in the first half, which isreflected in the full-year projection.
 The cost of sales ratio is assumed not to change significantly.

7.7
0

denotes initial projections

13

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

(Billions of Yen)

Orders

90

45

0

86.8

72.5
03/2017

 The full-year projection for orders for hardware in Japan has
been revised upward given orders in the first half.

69.0

 The full-year projection for orders for hardware overseas has
been revised upward, reflecting strong demand in China andSouth Korea.

03/2018
Projection

Sales(Billions of Yen)
90

45

0

 The projection for sales of hardware in Japan has been revised
upward, reflecting orders in the first half.

79.4

74.4
03/2017

 The initial projections for sales in the ultrapure water supply
business in Japan and overseas have been revised upwardslightly.

03/2018
Projection(Billions of Yen)
16

(%)

14.5

13.6

11.8

8

0

 The projection for sales of hardware overseas has also beenrevised upward, reflecting orders in the first half.

72.7

18

9

10.8

10.8

03/2017

03/2018
Projection

Operating income margin

*

8.6
0

Operating Income
 Sales of hardware will rise, and the cost of sales ratio will
improve.
 Income from domestic maintenance and tool cleaning will
expand.

denotes initial projections

14

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

(Billions of Yen)

Orders70

35

0 The full-year projection for orders for soil remediation has beenrevised upward based on results in the first half.

64.2

61.7

03/2017

03/2018
Projection

 The full-year projections for orders for hardware for the electric
power industry and general industries have been revised
downward, reflecting results in the first half.

62.5

Sales

(Billions of Yen)
70

35

0

 The full-year projections for sales of hardware for the electric
power and other industries have been revised downward, but
sales will rise from the previous fiscal year.

57.9

61.2

03/2017

03/2018
Projection(Billions of Yen)

(%)

4

2

4.6

3.7

2.5
2.8
03/2017
Operating income margin

6

Operating Income
3

1.5
0

 The full-year projection for sales of maintenance services forgeneral industries has been revised upward. Sales ofmaintenance for general industries will rise from the previous
fiscal year.

60.9

03/2018
Projection
*

2.2
0

 Profitability in the hardware business for the electric powerindustry and general industries will improve.
 The income plans for maintenance services for generalindustries and for chemical cleaning have been revised upward.

denotes initial projections

15

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

Service Business Revenue
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)*denotes initial projections(Billions of Yen)
100

(Billions of Yen)
240

214.4
178.1

214.2

31.6

89.4

81.9

60.0

186.3

182.6

150.4

91.5

0

32.2

98.9

179.7

8.1

97.8

98.6
96.9

25.9

Ultrapurewater supply
business

6.6

Tool
cleaning

26.8

32.0

28.8

6.3

6.4

6.5

60.6

62.6

65.2

03/2016

03/2017

89.4

188.0
120

91.5

223.0

189.4
83.7

58.8

230.0

94.9

8.3

50

154.9

94.9

98.9

97.8

27.7

34.5

31.8

34.5

03/201403/2015

03/2016

03/201798.6
96.9

Servicebusiness
sales

51.8

54.4

03/201403/2015

64.5

Maintenance,
etc.

42.0
36.7

03/2018
Projection

0

03/2018
Projection

 The projection for the ultrapure water supply business has been revised upward.
 The projection for maintenance services for general industries has been revised upward.
16

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
8. Sales Plan for the Ultrapure Water Supply Business(Billions of Yen)
34

28.8

+1.1

-0.8

New
construction or
addition offacilities

Expiration ofcontracts,
etc.

-2.0
Revision tocontracts

-1.4

+1.1

Expiration
25.7 ofcontracts,
etc.

New
25.7
construction or

26.8

addition offacilities

17

0

03/2017First half

Second half

03/2018
Projection17II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
9. Major Contracts in the Ultrapure Water Supply Business
Original contract

Renewal or extension(Domestic)(Domestic)(Domestic)(Overseas)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Overseas)

03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3 22/3 23/3
* Key contracts are shown above. This does not cover all contracts.

18II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

Overseas Sales by Region
Asia

North America

EMEA (formerly Europe)
*

33.6
3.3
1.3
1.8
27.2

39.1
3.5
1.6
2.0
32.1

Other

Water treatment chemicals

63.9
3.0

64.2
2.6

20.7

19.8

2.4

1.9

73.9 71.4
3.2 2.8

denotes initial projections(Billions of Yen)80

73.9 71.4
63.9

64.2

21.1 21.3
44.7 45.0

5.3 6.0
40

39.1

41.2

38.5

22.7

25.7

33.6
17.3

37.8

39.9

15.9

44.3 41.3

17.7
0Water treatment facilities*

denotes initial projections(Billions of Yen)
80

40

Overseas Sales by Business Segment

21.8

29.2 26.4

003/2014 03/2015 03/2016 03/2017 03/2018
03/2014 03/2015 03/2016 03/2017 03/2018
Projection
Projection
 Sales in the Water Treatment Chemicals business rose, but the initial projection has been revised downward slightly.
 The projection of sales of hardware in the Water Treatment Facilities business has been changed from the declined plan
to the raised plan.
* New geographical segments have been applied from the fiscal year ended March 31, 2016,
and they are applied to the fiscal year ended March 31, 2015 retroactively.

19II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
Capital Expenditures and Depreciation
Capital expenditures Capital expenditures(ultrapure water(excl. ultrapure watersupply business)
supply business)*

R&D Expenses

Depreciation

R&D expenses*

denotes initial projections(Billions of Yen)
24

Percentage of net sales

denotes initial projections(Billions of Yen)
7

24.0
20.0

2.5

18.8

(%)
3

2.4

2.3

2.5

17.3
12

14.0

3.5

9.3

15.8
13.4

6.3 13.2

1.5

5.3

5.0

5.3

03/2016

03/2017

03/2018
Projection

5.5

13.0 13.0
6.7

0

3.0

3.0

03/2016

03/2017

6.0
03/2018
Projection

 The initial projection has been revised upward, reflecting
the decision to make an additional investment in theultrapure water supply business.

00 The focus will be on the global strengthening ofdevelopment functions.

20III. Priority Measures

1. Expansion of the overseas business foundations

2. Development of a new service business
3. Business organization reformIII. Priority Measures
1. Expansion of the overseas business foundations
Seeking expansion in North America
Expanding the water treatment business using
M&A

Expanding the production system in Europe

Developing the business base

Decided to acquire the paper and pulp process
treatment chemicals production base of Akzo Nobel
in France.

 Close cooperation within the Group Use of alliances and M&A

Aims to expand KEG’s paper and pulp process
treatment chemicals business and improve
profitability.
21III. Priority Measures
2. Development of a new service businessStandardized wastewater reclamation system

Developing standardized wastewater
reclamation service
 Building a track record for delivery in Japan Developing service agreements and reaching for target
markets in Japan and overseas

Water saving at commercial facilities

Water saving service using the IoTAPANA Inc.
Sensor Gaining new customers and increasing the number ofagreements in the United States to 700
Sewagewater

 Starting business in Japan

Kurita Group Determining needs for water saving at commercial facilities
and proposing implementation on a trial basis
 Aiming to create a solution business for plants
22III. Priority Measures
3. Business organization reform
Until March 2017

From April 2017

Water Treatment Chemicals

Domestic

Overseas
Water
Treatment
Chemicals

Overseas

Water Treatment Facilities
Ultrapure Water
SupplyMaintenanceservices

EPC

Overseas

Water
Treatment
Facilities

Domestic

Water Treatment
ChemicalsUltrapure Water
Supply

MaintenanceservicesEPC* A revised evaluation system from October 201723

Reference Material(Billions of yen)

+0.6

12

+1.6

9.6

Impact of increase
in revenue

Effect of change
in cost of sales ratio-1.7
Increase in
SG&A expenses

10.2

6

0

09/2016

09/2017

Note: The effect of change in the cost of sales ratio is calculated using the gross profit margin.
24

■URL■

http://ir.kurita.co.jp/en/■ M AI L ■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.