Summary of the Q&A Session at the Financial Results Conference Callfor the Third Quarter of the Fiscal Year Ending March 31, 2018
Date and Time: February 1, 2018 (Thu.) 11:00-11:40
Notice: This summary is a reference designed for the convenience of those who
could not attend the financial results conference call stated above. Please note that
this is not a word-for-word transcript of all remarks made at that session, but is asummary prepared by Kurita Water Industries Ltd.
Q. Please comment on what led to the overshoot in orders and operating profits for
hardware sales for the electronics industry in Asia.
A. In Asia, we continued to see higher-than-expected levels of large-scale
semiconductor and FPD orders. In addition to the increase in the absolute number ofprojects, our customers' assessment of our capabilities has improved on the back ofour growing track record. We believe that this has led to a higher level of conversionof inquiries into firm orders. The improvement in profits is a function of higher
revenues.
Q. Did higher crude oil prices push up your costs?
A. The impact on costs came through primarily in our Water Treatment Chemicals
business but, so far, it has not been significant. There is a time lag between changes
in crude oil prices and the impact on our costs.
Q. You mentioned increases in labor costs and IT expenses in the Water Treatment
Chemicals business. Could you talk about how much you had initially expected suchcosts to increase and the progress you have made to date?
A. Expenses are not running ahead of our initial expectations. We have beenproactively hiring to expand our overseas business. On the domestic side, we arefocused on developing a solutions-based approach for the newly integrated Water
Treatment Chemicals and Maintenance businesses. There will be a time lag before
we see higher revenues and improved profitability as a result of the increase ininvestments. Therefore, we believe that Q3 profitability was slightly weaker. We
expect to capture the benefits of the increased expenses in the form of higher
profitability in Q4 and beyond.

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Q. Please talk about your Asia and European businesses in the Overseas Water
Treatment Chemicals business.
A. Asia was up 3.5% in yen terms in Q3 YTD, while EMEA was up 5%. North America
increased 9-fold on the back of new consolidations.
Q. Can you disclose the sales and operating profit attributable to Fremont for theDecember quarter within the Water Treatment Chemicals business?
A. Sales were approximately \0.9 billion in yen terms. We broke even at theoperating income level, before goodwill amortization.
* Our overseas businesses operate on a calendar year basis.

Q. Did domestic Water Treatment Chemicals sales increase YoY in the Decemberquarter?
A. Revenues were up 2.3%.
Q. You are guiding for \248 billion in orders for FY ending March 2018. If you take
into account production capacity and lead time, can you talk about how much of thisyear's orders will be recognized as revenue in FY ending March 2018? If it is difficult
to talk about specific figures, a qualitative comment would be helpful.
A. We are currently formulating our forecasts for the next fiscal year. However, weare seeing improved production efficiency at both domestic and overseas plants sowe would expect to generate revenues of a similar level to the level of orders for FY
ending March 2018.
Q. You have revised up your order guidance for China and Korea but what are yourexpectations for profitability? Also, are you assuming that this business will consistof outright sales of hardware or is there a possibility that orders could include
revenues from other business models?
A. Profitability on individual orders at the time of order intake is unchanged, but wewould expect overall profitability to improve on the back of higher revenues. With
regard to the type of sales we are expecting, in China, given subsidy programs forinvestments, it is unlikely that these orders would take the form of Ultra pure Water
Supply (UPWS) contracts. Most likely, we will be proposing a combination of EPC
plus maintenance and operation contracts.

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Q. Are margins for combined EPC plus operations and maintenance contracts similar
to UPWS margins? Or, are they closer to the margins you generate on outright salesof hardware?
A. By combining services with outright sales of hardware, we aim to get close to themargins we generate on UPWS.
Q. Please discuss the capacity utilization of your customers in the Water Treatment
Chemicals business during the December quarter. For example, did capacity
utilization in China decline on the back of tightening environmental requirements?
Was there an impact from the decline in smart phone production?
A. I believe that the operating environment has not significantly changed from thesituation we described as of the end of H1. We have not seen declines in capacity
utilization at either our domestic or overseas customers.
Q. Are Water Treatment Chemicals sales in China recovering?
A. The December quarter was solid; on a local currency basis, revenues were up 9%
YoY.

Results 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 and other forward-looking statements to differ materially from the forecasts.

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