FOR IMMEDIATE RELEASE

Kurita Water Industries Reports First Quarter Earnings
Tokyo, Japan July 28, 2005—Kurita Water Industries Ltd. (TSE Security Code 6370) announced revenuefor the first quarter (April 1 – June 30, 2005) of the fiscal year ending March 31, 2006 of 27,922 million
yen and net income of 624 million yen, or 4.86 yen per share.

Results of Operations
Total consolidated orders for the Kurita Group increased 11.0% for the quarter over the previous year to42,668 million yen, while net sales for the same period increased 6.3% year-on-year to 27,922 millionyen. Operating income increased 29.7% to 852 million yen and ordinary income grew 42.2% to 1,152
million yen, resulting in a net income increase of 32.5% to 624 million yen. By segment, watertreatment chemicals sales increased 5.7% year-on-year to 11,963 million yen, while water treatment
facilities sales grew 6.7% to 15,959 million yen.
In the electronics industry, while large-scale capital expenditures in Taiwan and Korea had run theircourse during the quarter, capital expenditures remained strong in Japan. Other industries showed signsof improvement, reflecting the factory operating ratio and capital expenditures that remained largely on
the recovery path. On the other hand, the business climate for public expenditures related businesses
remained unfavorable due to shrinking budgets for public works projects and intensified competition.
Reflecting the seasonal nature of its water treatment facilities business, the Kurita Group’s first quarterand third quarter sales tend to be lower than other quarters with the water treatment facilities sales skewed
toward the end of the first half and the end of the fiscal year.

Segment Information
Water Treatment Chemicals
Total Group orders for the segment increased 3.5% to 13,446 million yen, while sales increased 5.7% to11,963 million yen. The relatively higher weight of the segment to total Group sales during the firstquarter reflects the aforementioned seasonality of the water treatment facilities business.
During the quarter, the Group focused its efforts on securing stable order flow by emphasizing marketingof new products accommodating clients’ needs, promoting packaged water treatment management
contracts, and pursuing closer relationships with its clients.
Orders for the Group’s mainstay boiler water treatment chemicals and cooling water treatment chemicals
were largely flat, compared with the same period of the previous fiscal year, while wastewater treatment
chemicals saw an order increase. In other products, orders for process chemicals used in the paper andpulp industry and orders for agents used to solidify heavy metals contained in waste incineration fly ash
both decreased, while higher orders were seen for process chemicals used in the oil refining andpetrochemical industry.
Water Treatment Facilities
Total Group orders for the segment increased 14.9% to 29,222 million yen, while sales grew 6.7% to15,959 million yen.
During the quarter, in an effort to secure stable order flow, the Group emphasized its “Solutions Business”
in offering clients solutions that address their needs to reduce cost and environmental burden, and the“Outsourcing Business” as represented by the ultra-pure water supply business.
In the private sector, orders for the Group’s mainline ultra-pure water production systems for theelectronics industry dropped in Taiwan and Korea, but surged in Japan, compared with the same period of
the previous year. In addition, orders for the tool cleaning service for semiconductor and FPD

1

production equipment and related maintenance services increased. As a result of these, overall orders
from the electronics industry increased. Besides, the segment saw a dramatic growth in orders for water
treatment facilities as well as orders for related maintenance services from other industries (the food,pharmaceuticals, basic materials and automobile industries). Orders for soil remediation also surged.
In public works projects, orders for sewage treatment facilities and orders for human waste treatment
facilities saw a slight increase compared with a year earlier.

Financial Condition
At the end of the quarter, total assets on a consolidated basis declined 5,625 million yen from the end of
the previous fiscal year to 186,803 million yen, mainly reflecting a decrease of 15,937 million yen inaccounts receivable due to a progress in collection of accounts receivable that had accumulated at the endof the previous fiscal year, which offset an increase in inventories by 6,079 million yen mainly reflecting
the increase in work in progress in the water treatment facilities segment. Total liabilities decreased
5,116 million yen to 49,835 million yen, mainly reflecting the decrease of 4,917 million yen in accounts
payable that had accumulated at the end of the previous fiscal year. Total shareholders’ equity decreased
629 million yen to 135,737 million yen, mainly reflecting the decrease in retained earnings by 690 million
yen following the year-end dividend payment. As a result, the Company’s shareholders’ equity ratio
increased from 70.9% at the end of the previous fiscal year to 72.7%.

Outlook for the Full Year
The Company’s business performance for the first quarter was largely in line with the initial forecast, andthe Company is confident that it is on track to achieve interim and full-year earnings forecast for the fiscal
year ending March 31, 2006 which was included in our earnings announcement dated April 28, 2005.

Business Risks
Major risk factors that could affect the Group’s future performance include, but are not limited to, capital
expenditure trends on water treatment facilities and factory operating ratios at clients, public investment
trends, price movements in oil and other materials, and competition with peers.

About the Kurita GroupThe Kurita Group provides a wide range of products, technologies, and maintenance services related towater treatment. The two core lines of the Group’s business consist of: 1) water treatment chemicals used
for boiler water, cooling water, waste water and in manufacturing processes, and 2) water treatment
facilities such as ultra-pure water production systems, wastewater treatment facilities, and sewage water
treatment facilities. The business scope of both lines includes production, sales, and maintenanceservices. For additional information about the Kurita Group, please visit the Company’s website atwww.kurita.co.jp.

Forward-Looking Statements
This news release contains various forward-looking statements which are based on current expectations
and assumptions of future events. Except for the historical information contained herein, all figures andstatements with respect to future performance, projections and business plans of the Kurita Group
constitute forward-looking statements. Although Kurita believes that its expectations and assumptions arereasonable, actual results and trends of the Group’s performance could differ materially from thoseexpressed or implied by such figures or statements because of risks and uncertainties, including but notlimited to factory operating ratios at major clients in the steel, petroleum and paper/pulp industries;
capital expenditure trends in the electronics, food, pharmaceuticals, basic material and automobileindustries; and the financial condition and budgeting actions of national and local governments in Japan.

2

Condensed Financial Statements - Consolidated
Condensed Balance Sheets - Consolidated(in million yen)

(Reference)
As of
As of
As ofJune 30, 2005 June 30, 2004
March 31, 2005
(A)
(B)
(C)
[Assets]
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - tradeMarketable securities
Inventories
Other
Allowance for doubtful accounts
Fixed assets
Tangible fixed assets
Intangible fixed assets
Investments and other assets
Total assets[Liabilities]
Current liabilities
Notes payable - trade
Accounts payable - trade
Accounts payable - other/Accrued
expenses
Income taxes payable
Accrued employees’ bonuses
Other
Fixed liabilities
Accrued employees’ retirement
benefits
OtherTotal liabilities[Minority interests]
Minority interests[Shareholders’ equity]
Common stock
Additional paid-in capital
Retained earnings
Net unrealized gains onavailable-for-sale securities
Foreign currency translation
adjustments
Treasury stock
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity(A) – (B)(A) – (C)107,332
30,781
11,34445,221
2,277
14,154
3,698-144
79,47144,7593,073
31,638186,803

114,053
41,496
10,54740,457
6,119
12,192
3,373-133
64,34441,7503,409
19,184
178,397

116,400
30,6799,958
61,158
2,794
8,075
3,891
-156
76,02843,8553,180
28,993
192,428-6,721-10,715797
4,764-3,842
1,962
325
-11
15,1273,009-336
12,454
8,406-9,068102
1,386-15,937
-517
6,079
-193
12
3,443
904
-107
2,645
-5,62539,731
1,729
21,72538,273
1,746
21,361

44,465
1,521
26,642

1,458
-17
364

-4,734208-4,917

8,401

6,696

7,413

1,705

988

933
1,351
5,590
10,104

471
1,301
6,696
10,951

3,924
2,060
2,904
10,48546250-1,106-847-2,991
-709
2,686
-381

8,655
1,448
49,8359,093
1,857
49,224

8,689
1,795
54,951

-438
-409
611

-34-347-5,116

1,230

1,000

1,110

230

120

13,45011,409114,628

13,450
11,398
107,481

13,45011,409115,318

11
7,147

-690

1,766

1,482

1,809

284

-43-685

-748

-790

63

105

-4,832
135,737-4,892
128,171-4,830136,366

60
7,566

-2
-629

186,803178,397

192,428

8,406-5,6253

Condensed Statements of Operations - Consolidated(in million yen)Three months ended
June 30, 2005 (A)Three months ended
June 30, 2004 (B)(A) – (B)

AmountAmount%AmountNet sales
Cost of sales
Gross profit
Selling, general andadministrative expenses

27,922
18,579
9,343

100.0
66.5
33.5

26,277
17,420
8,856

100.0
66.3
33.7

1,645
1,159
487

160,896
112,077
48,819

100.0
69.7
30.3

8,490

30.4

8,199

31.2

291

32,867

20.4

Operating income
Non-operating income
Non-operating expense
Ordinary income
Extraordinary gains
Extraordinary losses
Net income before incometaxes
Income taxes
Minority interests inearnings of consolidated
subsidiaries

852
369
70
1,152-

3.1
1.3
0.3
4.1-

657
240
87810-

2.5
0.9
0.3
3.1-

195
129-17342-

15,951
1,068
295
16,725
128
477

9.9
0.7
0.2
10.4
0.1
0.3

1,152

4.1

810

3.1

342

16,376

10.2

457

1.6

326

1.3

131

6,838

4.3

70

0.3

12

0.0

58

154

0.1

624

2.2

471

1.8

153

9,383

5.8

Net income%(Reference)Year ended
March 31, 2005
Amount%4

Order Intake

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

Three months ended
June 30, 2005 (A)Three months ended
June 30, 2004 (B)(A) – (B)

Amount13,44629,222
42,668Amount12,98825,44238,430

Amount458
3,780
4,238%
31.5
68.5
100.0%
33.8
66.2
100.0

(in million yen)
(Reference)Year ended
March 31, 2005
Amount%52,12030.4
119,213
69.6
171,334
100.0

Net Sales

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

Three months ended
June 30, 2005 (A)Three months ended
June 30, 2004 (B)(A) – (B)

Amount11,963
15,95927,922

Amount11,31914,95826,277

Amount
644
1,001
1,645

%
42.8
57.2
100.0%
43.1
56.9
100.0

(in million yen)
(Reference)Year ended
March 31, 2005
Amount%50,63731.5
110,25968.5
160,896
100.05