Kurita Water Industries Ltd.

May 14, 2003

1

Contents

Fiscal Performance‥‥‥‥‥‥‥‥ 3
Medium-Term Management Plan‥‥14
Current Business Plan ‥‥‥‥‥‥27

2

Performance for
FY ended March 31, 2003

3

Business Climate for FY ended March 2003
Water Treatment Chemicals
Demand for discounting products continued regardless oftype of industry, and the overall market contracted.

Water Treatment Facilities
Corporate mergers and capital investment by the electronics
industry declined
Investment by general industry also down.
Competition was intensified in the soil remediation market
because of entrances by small and large general contactors.
Public investment shifted emphasis to incinerators and public
service demand decreased.

4

Business Measures and Results (1)Water Treatment Chemicals
Sales expanded supported by the introduction of newboiler and cooling water treatment chemicals targeting
factories required to manage heat generation and bymarketing based on cost reduction proposals, such asenergy conservation and reduction in standard physicalunit, to customers.
Earnings expanded thanks to focus on contract-typeservices.
Sales of incinerator-related treatment chemicals rose.
Sales of paper pulp treatment chemicals up.
Cost reductions were achieved by merging manufacturingsubsidiaries and improving procurement methods.

5Business Measures and Results (2)Water Treatment Facilities
Orders expanded thanks to strengthened
merchandising resulting from ready-made equipment
and hydrogen and ozone water production equipment
systems.
Outside Japan, orders were received from the liquid
crystal display market in Asia.
Greater efficiency pursued and the business scope ofLand Solution Inc. was broadened in the soil
remediation business.
Outside Japan, ultrapure water supply business has
started and maintenance business was expanded.
Ready-made product lineup was extended while also
reducing procurement costs was progressed.

Business Restructuring

6Financial Summary for FY ended March 2003（¥Billion）

OrdersNet Sales
Operating Income
Ordinary Income
Net Income
Net Income per ShareMar.’02
140.5
142.7
10.8
11.6
5.7
¥42.85Mar.’03
128.4
141.6
12.3
12.4
5.5
¥40.67

Change(%)
-8.6
-0.7
+14.1
+6.8
-3.4

7

Financial Performance for FY ended March 2003
Statements of Income（¥Billion）
Composition ofNet Sales(%)

Mar.’02

Composition ofNet Sales(%)

Mar.’03

Net Sales

142.7100.0

141.6

100.0

Cost of Sales

99.0

69.4

97.8

69.1

Gross Profit

43.6

30.6

43.8

30.9

SG&A Expenses

32.8

23.0

31.5

22.2

Operating Income

10.8

7.6

12.3

8.7

Non-Operating Income

0.8

0.6

0.1

0.1

Ordinary Income

11.6

8.1

12.4

8.8

Special Gain/Loss-2.5-1.7-2.1-1.5

Income Taxes

4.6

3.3

5.0

3.5

Income Tax Adjustment

-1.2

-0.9

-0.3

-0.2

Net Income

5.7

4.0

5.5

3.9

8

Financial Performance for FY ended March 2003
Segment Information (1)◆Net Sales by Segments（ \ Billion））160

Water Treatment
Chemicals

142.7

141.6

120

46.3

47.1

Water Treatment
Facilities for theElectronics Industry

80

38.0

36.7

Water Treatment
Facilities for GeneralIndustry

40

30.4

33.1

28.0

24.7

Mar.'02

Mar.'03

Water Treatment
Facilities for Public
Sector09

Financial Performance for FY ended March 2003
Segment Information (2)◆Operating Income & Ratio of Operating Income to Net Sales（ \ Billion ）1512.3

Water Treatment
Chemicals

10.8

10

6.5
6.2

50

1.3
1.2
2.1

2.8

Mar.'02

Mar.'03

Water Treatment Chemicals
Water Treatment Facilities
for Electronic Industry
for General Industryfor Public Sector
Total

1.4
1.6

Mar.’02 Operating Income /Net Sales Ratio(%)
13.5
4.7
3.5
3.8
7.5
7.6

Water Treatment
Facilities for theElectronics Industry
Water Treatment
Facilities for GeneralIndustry
Water Treatment
Facilities for PublicSector

Mar.’03 Operating Income /Net Sales Ratio(%)
13.8
6.1
7.6
4.2
6.5
8.7
10

Financial Performance for FY ended March 2003
Balance Sheets（¥Billion）

At March 312002

2003

ChangeTotal Assets

172.1

173.7

+1.5

Current Assets

103.5

107.2

+3.7

Tangible Fixed Assets

36.4

38.3

+1.9

Intangible Assets

2.4

2.7+0.3Investment and Others

29.9

25.5

-4.4

Liabilities

49.0

51.8

+2.8

Shareholders’ Equity

122.6

121.0

-1.6

11

Financial Performance for FY ended March 2003
Cash Flows（¥Million）

Mar.’02

Mar.’03

ChangeNet Cash Provided by Operating Activities

8,713

10,402+1,689Net Cash Used in Investing Activities-5,334-6,999-1,665

Net Cash Used in Financing Activities-2,169-6,270-4,101

Net Increase (Decrease)in Cash and Cash Equivalents

1,354-2,927-4,281

Cash and Cash Equivalents at End of Year32,98031,507-1,473

Capital Expenditures3,268

5,593+2,325

Depreciation

3,132

3,030-379

Research and Development Expenses

5,071

4,484-587

Ratio of Research and Development
Expenses to Net Sales

3.6%

3.2%

-0.4pt12

13

Basic Management Slogan

Win Trust andMake a Strong Impression
Develop extremely aggressive and excellent
businesses that win the unshakable trust ofcustomers and deeply impress them.

14

Vision of Kurita in Three Years

We will have fully established our advanced water andenvironmental management businessWe will have an overwhelming dominance of the water
treatment industry in Japan, and an expanded market position
overseas.
Establishing new environmental businesses, we will beinvolved in energy-related businesses.
We will have developed technologies and products that
contribute to solving the business problems of our customers
and that impress them.
Thanks to the activities of the Company and its employees,
Kurita will have the reputation of a highly trustworthy company.
15Performance Goals of Three-Year Plan

Kurita Group Consolidated Performance
Net Sales

175 Billion

Operating Income

20 Billion

Net Income

11.5 Billion

16

Major Strategies

Expand our business scope and market share bystrengthening our offensive and defensive businesses indomestic and international markets.
Expand our business scope by developing our solutions
and outsourcing businesses.
Build and strengthen a Group service network centeredon our customer base.
Develop appealing products, technologies, and services
that will sell globally.
Develop new environmental and energy-relatedbusinesses.

17New Organization

Auditing Department
Corporate Planning Division
Research & Development Division
Administration Division
Operations Control & Procurement Division
New Business Division
Eco-Solution Group
Plant Group
Facility Management Services Division

Geo-Environment Group
Global Business Group
No.1 Chemicals Group

Chemicals and Maintenance
Service Division

No.2 Chemicals Group
Maintenance Group
Environmental Water
Treatment Division18

Segment Sales Growth\ Billion)(\403020+10.0

BusinessOutside Japan+5.0

Soil Remediation+8.7

Water Treatment
Facilities
Water Treatment
Chemicals
Eco-Solution

10+4.7+5.0
0Mar.'03

Mar.'04

Mar.'05

Mar.'06

Note: Sales figures represent comparisons with sales
for FY ended March 2003.
19

Strategies by Business to Achieve Three-Year Targets (1)Aggressive Business Development
Eco-Solution
Group
Water Treatment
Chemicals

New Business Model
WaterTreatment
Facilities

Customer BusinessSolutions
CostReductionsMaintenance

Reducing
Environmental
ImpactExpanding Business Scope andAcquiring New Customers
20Strategies by Business to Achieve Three-Year Targets (2)Sales Growth Outside Japan(\\ Billion））
12+2.58

Chemicals
4+7.5

Facilities
0Mar.'03

Mar.'04

Mar.'05

Localizing management
Inject new personnel into sales force
Increasing business alliancesEntering process treatment chemicals
business
Develop business on proposal marketing
basis
Develop outsourcing and solutions
businesses
Localizing management
Construct assembly plant outside Japan
Establish procurement network

Mar.'06

Note: Sales figures represent comparisons with sales for FY ended March 2003.
21

Strategies by Business to Achieve Three-Year Targets (3)Strengthening Group Network in Japan
No. 1 Chemicals Group
No. 2 Chemicals Group
Approx. 450 staff
Chemical Sales
Subsidiaries
8 companies,
approx. 200 staff

Chemical Sales
AgentsClose relationship withregion and customers

63 companies,
approx. 330 staff

Achieve
Earnings
Maintenance Group36 offices,approx. 200 staff

Kuritaz (Operationsand Maintenance)
100 offices,
approx. 900 staff
22

Operating Income by Segments（ \B i l l i on ）
25

20.0

20

10.5
15

Facilities

109.55Chemicals
0Mar.'03

Mar.'04

Mar.'05

Mar.'06（Actual））

23

Ratio of Operating Income to Net Sales by Segments（％）
20
Chemicals

Chemicals
Facilities
TotalTotal

10

Facilities

0Mar.'03

Mar.'04

Mar.'05

Mar.'0624

Current Business Plan

25

Business Plan（¥Billion）

Mar.’03

Mar.’04

Change(Projected)

OrdersNet Sales
Operating Income
Ordinary Income
Net Income
Net Income per Share

128.4
141.6
12.3
12.4
5.5
¥40.67

149.8
147.5
13.0
13.3
7.7
¥58.90

+21.4
+5.9
+0.7
+0.9+2.2+¥18.23

26

Business Plan
Major Strategies (1)Water Treatment Chemicals
Improve value-added business and upgrade cost competitiveness byintroducing new products and technologies for the non-coastal
Japanese market.
Expand business through contract-type services, such ascomprehensive agreements for cooling water and wastewater treatment,
BOO (Build, Own, Operate) agreements for small once-through boilers,and non-chemical processing of cooling water agreements. (Target of¥3.4 billion on non-consolidated basis)
Expand sales of treatment chemicals for incinerators for public demand.
Achieve synergies through cooperation with maintenance.

27

Business PlanMajor Strategies (2)Water Treatment Facilities
Expand sales of hydrogen and ozone water production equipment systems andultrapure water supply business to the electronics industry in Japan.
Increase acquisition of major orders from global electronics industry (Taiwan,Korea, China)
Commit to environmental risk business with the manufacturing industry in the soil
remediation business and expand Land Solution Inc.
Maintain earnings in the maintenance group by pursuing operating andmaintenance and multiple-year contracts.
Expand the scope of applications for ready-made products, including modules, forall equipment to boost product power and reduce costs.

Eco-Solution Group
Starting with such concepts as reducing environmental impact and wastewater
treatment in industries, such as paper pulp, food products, and IT industries,
propose new business models to customers to win orders.
28Business Plan
Examples of Ultrapure Water Supply Business

Ultrapure Water Production System ofKuritec Singapore Pte. Ltd.

Hydrogen and ozone waterproduction equipment systems
KHOW
29

Business Plan
Orders by Segments（ \ Billion））
160

149.8
Water Treatment
Chemicals

128.4

48.3

120

Water Treatment
Facilities for theElectronics Industry46.4
42.5

80
31.4
40

28.9

34.6

21.7

24.4

Mar.'03

Mar.'04 (Projected)

Water Treatment
Facilities for GeneralIndustry
Water Treatment
Facilities for Public
Sector030

Business Plan
Net Sales by Segments（ \ Billion））
160
141.6

120

47.1

147.5
Water Treatment
Chemicals

48.3
Water Treatment
Facilities for theElectronics Industry

80

36.7

42.8

40

33.1

31.6

24.7

24.8

Mar.'03

Mar.'04 (Projected)

Water Treatment
Facilities for GeneralIndustry
Water Treatment
Facilities for Public
Sector031

Business Plan
Operating Income & Ratio of Operating Income to Net Sales（ \B i l l i on ）1612840

12.3

6 .5

W at e r T r e at m e n t
C h e m i c als

13.0

W at e r T r e at m e n t
Fac i li t i e s fo r t h e
El e c t r o n ic s In du st r y
W at e r T r e at m e n t
Fac i li t i e s fo r Ge n e r al
In du st r y
W at e r T r e at m e n t
Fac i li t i e s fo r Pu bli cSector

6 .52 .83 .6

1 .4
1 .6

1 .2
1 .7

Mar.'0 2

Mar.'0 3 ( Proje c te d)Water Treatment Chemicals
Water Treatment Facilities
for Electronic Industry
for General Industry
for Public Sector
TotalMar.’03 Operating Income/ Net Sales Ratio(%)

Mar.’04 Operating Income/ Net Sales Ratio(%)

13.8
6.1
7.6
4.2
6.5
8.7

13.5
6.6
8.4
3.8
6.9
8.832