Summary of the Q&A Session
Financial Results Briefing for 2Q of the Fiscal Year Ending March 31, 2023

Date and Time: November 1 (Tue) 10:00 - 11:10
Notice: This summary is a reference designed for the convenience of those who could notattend the financial results briefing stated above. Please note that this is not a word-forword transcript of all remarks made at that session, but is a summary prepared by Kurita
Water Industries Ltd.

Q. With regard to orders from China, while the increase in the number of projects is positive,
recently there has been talk that the outlook is increasingly uncertain. Given this backdrop,
can you comment on customer type for the orders you have received? Are there concernsthat are visible to you at this stage, such as impending export restrictions?
A. Our 1H China orders are mainly from local Chinese semiconductor manufacturers butcover a diverse array of customers, including small-scale chip makers. With ongoing local
lockdowns as a result of the government's zero COVID strategy, we hadn’t initially
expected to make much progress on negotiations. However, the Chinese government'sinitiatives to strengthen the semiconductor industry kept investment appetite stronger than
we had anticipated. This is our understanding of the backdrop to 1H orders.
On export restrictions, we believe a sudden deterioration in US-China relations could
trigger the imposition of tighter restrictions. Based on this assumption, we are reviewing
order content thoroughly before accepting orders. We already have track records for
supplying facilities to many Chinese semiconductor and FPD makers. Our plan is to focus
on the onsite service business as showcased today, more sophisticated management andmaintenance services, and the supply of reclaimed water; our stance is to fully take into
account the external environment, including US-China relations, in accepting orders.
Q. Recent news flow has included reports of production cuts and lower capacity utilization incertain subsectors of the electronics industry. It appears that this had an impact on theprecision tool cleaning business in 1H. Please explain the current impact of customer
production adjustments on businesses such as Ultrapure Water Supply, maintenance andprecision tool cleaning, as well as the outlook going forward.
A. The business that is the most resilient in the face of lower capacity utilization at ourcustomers' plants is the Ultrapure Water Supply business. The model is structured togenerate profit even with just the basic fee. For maintenance services, there arecustomers that will undertake maintenance when plant operations are paused, so lower
capacity utilization can actually lead to opportunities for business. The precision toolcleaning business is the most impacted by lower capacity utilization. Structurally, thedomestic precision tool cleaning business tends to see more of an impact than theoverseas business.
However, for the electronics industry business as a whole, our order backlog is currently
at high levels and we have made progress in converting customers to service businesses.
As such, we don't expect to see an immediate deterioration in profitability. For the1 / 5

precision tool cleaning business, we have a sense of urgency related to rising costs, given
surging labor costs in the US. We are currently considering many initiatives to absorb therising costs, such as automation.
Q. With regard to the expansion of service contract-type business for the electronics industry
as highlighted on slide 23, please share your expectations for the magnitude of businessgrowth and your targets.
A. We are currently formulating the next medium-term management plan. The electronics
industry is positioned as a growth market and we are considering targets.
Q. The 2H guidance for overseas water treatment facilities’ orders is 12.9 billion yen,significantly lower than the 1H results. Are you merely being conservative or do you expect
the number of projects to decline in 2H? With regard to the orders expected from China
and South Korea, please discuss the breakdown by customer type. Please provide color
on changes you are seeing in terms of the firmness or stability of orders or changes incustomer base.
A. The backdrop to our expectation for a decline in orders in 2H compared to 1H is that wesaw some frontloading of orders originally expected in 2H into 1H, a reflection ofcustomers placing orders earlier in response to longer lead times for the delivery offacilities as a result of component and materials shortages. Our impression is that up tothe end of 1H, capex did not decline much compared to the fall in capacity utilization. Itmay well be that there will be some changes in timing but we have not heard that projects
are going away. With regard to orders from China and South Korea, we expect orders in
China to come from a wide array of customers, mainly in semiconductors. For Korea, weexpect orders from existing semiconductor customers.
Q. Please talk about the progress you are making in raising prices by region as well as yourplans for 2H.
A. We are currently executing on the second and third round of price hikes across all regions.
We have had the most success in Europe where the 1H improvement in the CoGS ratio
exceeded our expectations. The progress in ASEAN has been middling. Progress in China,
South Korea and Japan has been challenging but we expect to see the impact from higher
selling prices in 3Q and beyond. In the US, we have been proactively raising prices but it
is not enough to fully cover increasing costs, such as logistics expenses. However, wecontinue to implement price hikes.
Also, ongoing initiatives to improve global procurement efficiency by leveraging
procurement capabilities in each region have started to bear fruit. If the pricing situation
for raw materials stabilizes in 2H, we would expect to see a positive impact come through.
However, if prices continue to rise, it may be tough.
Q. In the analysis of the factors that impact profit, does the negative impact on the CoGS
ratio include the net impact of higher selling prices?
A. We have factored in the net impact of selling price hikes, assuming that raw materials
prices remain at current levels. However, we have not factored in 100% of our targeted
selling price hikes; the expected contribution is based on our track record to date.
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Q. Please provide the segment breakdown for the impact of the deterioration of the CoGS
ratio for 1H and guidance for 2H.
A. The breakdown of the 1H business profit impact from the deterioration of the CoGS ratio
is roughly evenly split between Water Treatment Chemicals and Water Treatment
Facilities. In 2H, we expect the impact of the deterioration to be larger for the Water
Treatment Facilities business, with only a modest impact on the Water Treatment
Chemicals business.
Q. My impression is that it is relatively easy to pass along higher costs in the Water Treatment
Facilities business at the time of receiving orders but the precision tool cleaning businessis depressing segment margins. Do you anticipate implementing measures such as pricehikes going forward?
A. For the precision tool cleaning business, we have already initiated price hikes in the US
reflecting rising labor costs. We will be implementing measures for the domestic businessgoing forward. In particular, we have seen electric power costs rise. However, the generaltrend suggests that it will be difficult to pass on higher costs immediately. We will need tobe smart about how we address this.
Q. Please provide an update on the growth of the overseas CSV business and the revenue
scale of the service contract-type business in 1H.
A. My impression is that the CSV business has finally started to grow. Over the last 2 years,
progress was sluggish because of the pandemic, which prevented visits to conduct sales
training and to customer sites. With restrictions lifted, we have started to see improved
take-up of selling methods outside of ASEAN, such as in Europe, South Korea and China.
Also, rising energy costs are a tailwind for the CSV business, as it makes the value
proposition for the CSV business more attractive. We expect to see further growth in 2H
and FY ending March 2024.
Non-consolidated service contract-type business sales in 1H were approximately 2.3
billion yen, up 0.6 billion yen YoY. The CSV business orders related to Water Treatment
Chemicals as of 1H were 10.6 billion yen, up 2.5 billion yen YoY.
Q. You indicated that the increase in orders for the electronics industry was the result offrontloading orders owing to component shortages. Are you concerned about a potential
decline in FY ending March 2024 orders because of the demand pull-forward? Or, do you
expect demand to remain strong given the trend toward building out the electronics
industry as social infrastructure?
A. We do not expect that the 1H level of orders can be maintained going forward but we do
expect capex to continue around the world in the medium- to long-term given that theelectronics industry is increasingly positioned as a key element of social infrastructure.
Customers that operate globally tend not to miss the timing for investments; as such weexpect our customers to continue to invest.
Q. With regard to services for general industry, progress in deploying the solution model had
been slow as a result of the pandemic limiting sales activity and longer time frames forfield trials. Do you feel you are now gaining traction?
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A. We now have the ability to visit our customers' sites frequently and it is now possible toconduct field trials. The solution model is increasingly being embraced. We have seen theemergence of solutions, such as material yard management for the steel industry, whichhave applications not only for the domestic market but for other regions around the world.
I believe it is important to deploy with speed, including training in sales methodology. I
believe we can look forward to further growth, including the successful solutions includedin 1H CSV business.
Q. This fiscal year, you expect to exceed full-year sales of 300 billion yen for the first time.
Do you see the Kurita Group aiming to achieve sales of 400 or 500 billion yen in the next
medium-term management plan which starts in the next fiscal year? Or, directionally, will
you be more focused on improving profitability even if sales do not grow? What sort ofinitiatives are you considering for the next medium-term management plan that will lay thefoundations for the 5-year period beyond the medium-term plan period?
A. We are still in the process of considering targets for the next medium-term management
plan, but I think there are 2 vectors we could pursue.
The first would be to focus on how much we can grow the electronics industry business.
As we focus on going deeper with current initiatives, I think the key point for the next 5year plan will be to look at the business model of the Ultrapure Water Supply business,
which most epitomizes our know-how and technological superiority, and to think about
what we should target and how this service should evolve. During the last 2 years, theelectronics industry has been extremely active. It may appear as if the business structure
has reverted back to a focus on EPC but our aim is to shift to service businesses thatallow us to maintain contact points with a diverse array of customers over the long-termby providing solutions to the challenges facing the electronics industry. The key for sales
growth will be whether we will be able to directionally demonstrate a significant step up
based on this.
The other is the general industry area. Compared to the electronics industry, thefrequency and scale of capex is not that large. As such, we must identify issues specificto wider geographical areas or industries rather than focusing on individual companies.
The key to growth will be creating new solutions in collaboration with local governments
or corporates, by bringing to bear our base of global expertise and, in particular, thediverse service business base of the domestic business. Our aim is to deploy solutions
unique to the Kurita Group where there are markets, without limiting ourselves to theelectronics industry.
Through this, I believe it is possible to envision a scenario for topline growth.
Q. In precision tool cleaning, please describe the difference between the domestic Kuritec
Service and the US Pentagon businesses. Is the strong performance of Pentagon theresult of an increase in volume or progress in cultivating new customers?
A. Kuritec Service concentrates on the cleaning of production equipment tools at existing,operating semiconductor and FPD plants. By nature, the business tends to be impacted
by customer capacity utilization. Pentagon concentrates on cleaning of SPE tools to beinstalled in new plants, so is strong in the cleaning of new equipment. The growth of thelast 2-3 years reflects the success in winning business from new plants. I believe thecombination of the strengths of both creates a strong business model, capturing capex
4 / 5growth and customer utilization. We are also focused on initiatives such as automationand technological differentiation.
Q. Is the business of precision tool cleaning for new equipment installation a new businessfor the Kurita Group?
A. Precision tool cleaning for new equipment requires certification by the SPE makers, but
we did already have this service. However, Pentagon was further ahead than our domestic
business.
Q. Is the growth in Pentagon's 1H sales the reflection of market share gains in new precision
tool cleaning?
A. In addition to the continued increase in new tool cleaning projects, Pentagon is also
leveraging the new precision tool cleaning business to subsequently capture utilizationlinked business with customers. Pentagon is solidly increasing its cleaning business atcustomer plants.

Business forecasts presented and other statements relating to the future made in thisdocument are based on information currently available and certain assumptions theCompany considers reasonable. A variety of factors may cause actual financial results andother forward-looking statements to differ materially from the forecasts.

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