Results Presentation for the Year Ended March 31, 2007

Kurita Water Industries Ltd.
（ Stock code ： 6370 ）May 9, 2007

Table of Contents
Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007

1. Financial Highlights
2. Business Development
3. Orders
4. Sales
5. Operating Income
6. Analysis of Changes in Operating Income
7. Operating Income Margin
8. Revenues from Service Businesses
9. Overseas Businesses
10. Capital Expenditures, Depreciation and R&D Expenses

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
1. Financial Highlights

Billions of Yen

2006/3

2007/3Year-on-yearchangeOrders

183.9

192.5

＋4.7％

Net sales

173.7

197.1

＋13.5％

Operating income

17.3

24.3

＋40.2％

Ordinary income

18.4

25.2

＋36.9％Net income

10.5

14.2

＋35.1％

1

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
2. Business Development

Water treatment
chemicals
Improved domestic product mix
Overseas growth contributing to higher sales and profit
Surging raw material prices absorbed by cost reduction

Water treatment facilities
Increased sales for electronic industries on the back offavorable market environment
Steady expansion in service businesses
Withdrawal from public construction projects and reductionof losses
2

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
3. Orders
Water treatment
chemicals

Water treatment facilities
for the electronics industry
for general industries（Billions of Yen）

200

183.9

187.0

192.5

160

53.9

56.1

56.6

【Growth areas】
 Process treatment chemicals
 Customized services Overseas subsidiaries【Growth areas】
 Ultra-pure Water System
 Ultra-pure Water SupplyBusiness Tool cleaning

12080
40

67.8

77.9

74.3

130.0

136.0

130.9

62.2

56.6

58.1

2006/3（Actual）

2007/3（Projected as ofend/1H）

2007/3（Actual）

0【Growth areas】
 Soil remediation【Areas of decline】
 Water treatment facilities Public sector

3

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
4. SalesWater treatment
chemicals（Billions of Yen）

200

173.7160

Water treatment facilities
for the electronics industry
for general industries

190.0197.1

56.056.7【Sales growth】
 Customized services
 Process treatment chemicals
 Overseas subsidiaries

54.5

12080

62.1

140.5

134.0

119.1
40

77.0

73.2

57.0

60.8

63.5

2006/3（Actual）

2007/3（Projected as ofend/1H）

2007/3（Actual）【Sales growth】
 Ultra-pure Water System
 Ultra-pure Water SupplyBusiness Tool cleaning
 Maintenance【Sales growth】
 Soil remediation

04

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
5. Operating Income
Water treatment
chemicals（Billions of Yen）

Water treatment facilities
for the electronics industry
for general industries

24.3

24

【Growth factors】
 Improved product mix
 Higher overseas revenue

20.5
208.8

17.3
8.7

16128.0
13.1

840【Growth factors】
 Growth in hardware andimproved profitability
 Growth in service businesses

8.3

9.4

10.7

11.8

1.0

1.1

2.3

2006/3（Actual）

2007/3（Projected as ofend/1H）

2007/3（Actual）

15.5【Growth factors】
 Growth in service businesses Income from public works
returned to profit

5

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
6. Analysis of Changes in Operating Income

Higher netsales

Higher raw
materials prices（Billions of Yen）

+5.7
- 0.4
- 1.3

24.3

+2.9

17.3
Higher SG&A
expenses

2006/3

Improved
cost tosales ratio

2007/3

6

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
7. Operating Income Margin
Operating Income Margin
by Segment

Operating Income Marginof Water Treatment Facilities

Operating income margin (Water treatment chemicals)

Water treatment facilities (Electronics industry)

Operating income margin (Total)

Water treatment facilities

Operating income margin (Water treatment facilities)Water treatment facilities (General industries)

（％）

（％）

20

20

17.1
15

14.6

15.5

15

13.4

12.3
10

10.0

11.0

11.0

10

7.8

7.8
5500

3.7
1.8

2006/3

2007/3

2006/3

2007/3

7

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
8. Revenues from Service Business
Breakdown of Service Businesses
In the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)（Billions of Yen）
（Billions of Yen）
200

197.1

173.7
56.7

150

54.5

85.2 （+13.0）

90

60

72.2

9.85.7
10.4

13.1

9.6
100

Tool cleaning

12.4

85.2
72.2

47

55.3

2006/3

2007/3

Soil
remediation
Maintenance, etc.

30

50

Ultra-pure
Water Supply
Business

46.5

49.9

2006/3

2007/3008

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
9. Overseas Businesses（Billions of Yen）
30

20

100

Overseas Orders

25.9

27.0

6.9

8.5

18.5

19.4

2006/3（Actual）

2007/3（Projected as ofend/1H）

2007/3（Actual）

Overseas Sales

30

21.8
100

27.0
8.3

Water treatment chemicals
Water treatment facilities

9.2

19.0

（Billions of Yen）

2028.629.5
8.9【Growth region】
 U.S
【Decline region】
 Taiwan【 Growth region】
 China S.E. Asia
 Brazil

6.8
15.0
2006/3（Actual）

18.7

20.6

2007/3（Projected as ofend/1H）

2007/3（Actual）【Growth region】
 Taiwan S. Korea
 U.S.

9

Ⅰ．Consolidated Financial Results for the Fiscal Year Ended March 31, 2007
10. Capital Expenditures, Depreciation and R&D Expenses
Capital Expenditures and Depreciation

R&D Expenses（Billions of Yen）

R&D expenses

19.0

20

Percentage of net sales
Capital expenditures（Ultra-pure WaterSupply Business）

16.1
15（Billions of Yen）

515.7

4.2

4.4

2.4％

2.2％

2006/3

2007/3410

11.9

Capital expenditures（Excl. Ultra-pureWater Supply Business）

3

5.6
4.1

50

Depreciation

4.2

3.2

2006/3

2007/3

Note: Capital expenditures and depreciation relate
to tangible fixed assets.

21010

Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008

1-1． Accelerate Expansion of Service Businesses
1-2． Expand Ultra-pure Water Supply Business1-3． Ultra-pure Water Supply Business (Trends)
2． Expand Overseas Businesses
3． Strengthen Kurita’s Technology Fundamentals

Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
1-1. Accelerate Expansion of Service Businesses
FY ending March 2008 （Projection）
Water treatment chemicals

Water treatment facilities（hardware）
Linked withcapitalexpenditures\49.1bn\59.2bn
Ratio of service business：76％\207.0bn
Water treatment
facilities（Service）

Generating stablerevenue unaffectedby capital
expenditure trends\98.7bn

Ultra-pure watersupply business

Tool cleaning business

Soil remediation

Operation & maintenance,etc.

11Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
1-2. Expand the Ultra-pure Water Supply Business
CAPEX and Cumulative Investment
CAPEX (left axis)

Concept

Cumulative investment (right axis)（Billions of Yen）

（Billions of Yen）

56.6

20

Customer
Plant

40

23.8

10

Supplyultra-pure water

Semiconductor/
FPD production
lines
Payment of fees

Kurita・ Construction（CAPEX）
・ Ownership（Capitalize）
・ Maintenance・ Operation/
Management

50

50

39.6

1560

15.7

11.9
3.0
2005/3（Billions of Yen）

20

17.0

20
1011.92006/330

2007/3

2008/3（Projected）

0Net Sales
16.0

159.8

1050

3.9
2005/3

5.7

2006/3

2007/3

2008/3（Projected）

12

Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
1-3. Ultra-pure Water Supply Business (Trends)
To domestic large-scale plasma
display panel (PDP) plants
To domestic large-scale LCD plants
To domestic semiconductor plants
To domestic wafer plants

To domestic semiconductor plants

To domestic large-scale
LCD plants
To LCD plants inSingapore

2002/3

2003/3

2004/3

2005/3

2006/3

2007/3

2008/313

Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
2. Expand Overseas Businesses
Sales by Overseas Business Segment

Sales by Region（Billions of Yen）

（Billions of Yen）

35

29.5

30
2520

21.8

2.2
1.3
3.4

Other

1.7
1.1
2.3

30

29.5

25

8.9

EuropeN. America

20Asia

31.5
10.2

21.8
6.8

15

15
10

35

31.5
2.3
1.7
3.0

Water treatment chemicals
Water treatment facilities

22.6

24.5

10

16.6

21.3

2007/3

2008/3（Projected）

15.0

5

500

2006/3

20.6

2007/3

2008/3（Projected）

2006/314

Ⅱ．Strategic Focuses for the Fiscal Year Ending March 31, 2008
3. Strengthen Kurita’s Technology Fundamentals
Solution to customers’ issues〔 Higher profitability, lower cost, lower environmental burdens 〕

Development

Creativity

Sales

Product development
reflecting users’ voices-Service proposal-Speedy response

Cultivate coretechnologies- Improve quality-Develop human resources

Technology-Theoreticalconcepts-Data

Production
15

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008

1. Key Assumptions
2. Overview
3. Orders
4. Sales
5. Operating income
6. Analysis of Changes in Operating Income
7. Operating Income Margin
8. Revenues from Service Businesses
9. Capital Expenditures, Depreciation and R&D Expenses
10. Profit Distribution Policy

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
1. Key Assumptions

Water Treatment Chemicals BusinessContinuing high operating rates at domestic steel, oil refining, petrochemicaland pulp and paper plants
Continuing strong needs among customers for higher productivity, lower costand lower environmental burdens
Expansion of Chinese and Southeast Asian economies
Continuing increase in raw materials cost

Water Treatment Facilities Business
Expanded needs of existing customers in Ultra-pure Water Supply business
Capital expenditures in domestic electronics industry to slow down temporarily in 1H
then recover in 2H
Continuing capital expenditures in domestic materials and food industries
Increased demand for soil remediation in relation to land transactions
16

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
2. Overview

Billions of Yen

2007/3

2008/3（Projected）

Year-on yearchangeOrders

192.5

211.0

＋9.6％

Net sales

197.1

207.0

＋5.0％

Operating income

24.3

27.5

＋13.3％

Ordinary income

25.2

28.0

＋11.0％Net income

14.2

15.7

＋10.5％

17

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
3. Orders
Water treatment
chemicals（Billions of Yen）

200

150

100

Water treatment facilities
for the electronics industry
for general industries【Growth areas】
Domestic high value- addedproducts Overseas businesses

211.0

192.5

59.1

56.6

【Growth areas】
 Ultra-pure Water SupplyBusiness Tool cleaning Overseas large-size facilities

86.5

77.9

151.9

136.0
50

58.1

65.4

2007/3

2008/3（Projected）

0【Growth areas】
Steel Food Soil remediation

18

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
4. SalesWater treatment
chemicals（Billions of Yen）

200Water treatment facilities
for the electronics industry
for general industries【Sales growth】
 Domestic high valueadded products Overseas business

207.0

197.1

59.2

56.7
150

100

87.4

77.0

147.8

140.5
50

63.5

60.4

2007/3

2008/3（Projected）【Sales growth】
 Ultra-pure Water Supply
Business
 Tool cleaning【Sales growth】
 Maintenance Soil remediation

019

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
5. Operating Income
Water treatment facilities

Water treatment
chemicals

for the electronics industry
for general industries（Billions of Yen）

302520【Growth factors】
 Higher sales
 Improvement in product mix

27.5
24.3

9.7

8.8

【Growth factors】
 Growth in service businesses

151013.1

15.5

14.5

50

2.3

3.3

2007/3

2008/3（Projected）

17.8【Growth factors】
 Improvement in sales-to-cost
ratio in water treatment facilities
segment
 Higher sales from soil
remediation business Higher sales from maintenancebusiness

20

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
6. Analysis of Changes in Operating Income

Higher raw
materials prices（Billions of Yen）

- 0.3

- 1.5

Higher netsales

+2.1

+2.9

27.5

24.3
HigherSG&A
expenses

2007/3

Improvement
in cost-tosales ratio

2008/3（Projected）

21

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
7. Operating Income Margin
Operating Income Marginof Water Treatment Facilities

Operating Income Margin
by Segment
Operating income margin (Water treatment chemicals)

Water treatment facilities (Electronics industry)

Operating income margin (Total)

Water treatment facilities

Operating income margin (Water treatment facilities)

Water treatment facilities (General industries)

（％）
20（％）

1815.51416.417.11513.3
12.3

16.6

12.0

10

11.0

12.0

11.0
10

5.5

5

3.7
60

2007/3

2008/3（Projected）

2007/3

2008/3（Projected）

22

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
8. Revenues from Service Businesses
Breakdown of Service Businesses in the
Water Treatment Facilities Segment

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

98.7 （+13.5）

100（Billions of Yen）

$!!

197.1
56.7

85.2

207.0
59.2

75

50
#!!

85.2

Ultra-pure Water
Supply Business

14.4

Toolcleaning

9.8
13.1#"!

16.0

12.4

14.5

98.7

Soilremediation

Maintenance, etc.

25

49.9

53.8

2007/3

2008/3（Projected）

"!

55.3

49.1
0!

2007/3

2008/3（Projected）

23

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
9. Capital Expenditures, Depreciation and R&D Expenses
Capital Expenditure and Depreciation

R&D Expenses（Billions of Yen）

25
20

23.0
19.0

Capitalexpenditures（Ultra-pure Water
Supply Business）

17.0

15
15.7

10

Capital expenditures（Excl. Ultra-pure
Water SupplyBusiness）（Billions of Yen）

5

4.4

4.7

3

8.0
Depreciation

2.2％2.3％

2007/3

2008/3（Projected）

26.0
3.20

Percentage of net sales

45.6

5

R&D expenses

2007/31

2008/3（Projected）

Note : Capital expenditures and depreciation related
to tangible fixed assets.

024

Ⅲ．Consolidated business plan for the Fiscal Year Ending March 31, 2008
10. Profit Distribution Policy
（Yen）
35

32
28

30
25
20

22
16

18＋615＋210＋4＋450

2004/3

2005/3

2006/3

2007/3

2008/3（Projected）

Basic Dividend Policy:
In line with our basic policy of the continued stable payment ofdividends, we aim to increase dividends in consideration oftrends in business results and effective use of internal reserves.
25

Kurita Water Industries Ltd.
Website:E-mail:http://www.kurita. jp/
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 anduncertainties, these statements and projections may differ from actual results.