Summary of Q&A Session at the Financial Results Briefing
for the Fiscal Year Ended March 31, 2016
Date and time: Monday, May 2, 2016, from 3:00 p.m. to 4:00 p.m.
Place: Belle Salle Yaesu
Notice: This summary is a reference designed for the convenience of those who could not attend thefinancial results briefing stated above. Please note that this is not a word-for-word transcript of all
remarks made at that session, but is a summary prepared by Kurita Water Industries Ltd.
Q. What are the ratios of semiconductors, liquid crystal display (LCD) panels, and electronic
components and others in facilities orders and sales for the electronics industry in the fiscal year
ended March 31, 2016 and planned orders and sales in the fiscal year ending March 31, 2017?
A. In the fiscal year ended March 31, 2016, orders for semiconductors, LCD panels, and electronics
components and other were at a ratio of 2:7:1, and sales were at a ratio of 3:6:1. In the fiscal
year ending March 31, 2017, planned orders are expected to be at a ratio of 5:4:1, and plannedsales are expected to be at a ratio of 3:6:1.
Q. Of the plans for facilities for general industries, are the plans for electric power and for industrial
complexes include expectations, or are there any specific projects planned?
A. We see some specific projects for electric power. There are some specific projects for industrial
complexes, but our plan also include expectations. We expect that in the steel andpetrochemical industries, there will be some investment in aging facilities, which companies
have postponed the replacement of.
Q. Are new domestic markets in the ultrapure water supply business an extension of thesemiconductors and LCD panels markets, or are you targeting different markets?
A. The major domestic markets will be the semiconductors and LCD panels markets. However, weare looking at incorporating existing facilities, including those provided by other companies,
and other used facilities into our water supply business model. We do not see any specificdomestic markets other than the semiconductors and LCD panels markets.
Q. What will happen to your transactions with LCD manufacturer, which is your largest customer?
A. Our ultrapure water supply business is protected by contract, and we will continue with thebusiness. Given the possibility of new investment in organic light emitting diode (OLED)
displays, there will be fierce competition. However, we believe there will be business
opportunities.
Q. What was the amount of orders received by KEAG in the fiscal year that has ended? Is KEAG
performing well compared with your expectations when you acquired it?
A. Orders at KEAG were 21.6 billion yen, the same amount as sales. We expect that sales will rise
8% year on year this fiscal year. One of the reasons is the expansion of the period ofconsolidation to 12 months this fiscal year from 11 months in the fiscal year that has ended. We
also expect real growth in local currencies. KEAG is not performing very well in China, where
KEAG is recording sales that account for over 10% of its overall sales. Meanwhile, in Europe,
KEAG recorded almost double-digit year-on-year growth from January to March. We think
1/3

KEAG will stage a strong recovery.
Q. In recent years, ROE has been below the cost of capital, which has been a little less than 6%. Will
you be able to improve ROE by improving the operating income margin? How will you
improve the operating income margin for hardware for general industries?
A. The key initiative for improving the operating income margin will be to improve profitability inthe domestic hardware business for general industries and in the overseas hardware business.
We will improve the hardware business by improving accuracy in the calculation of costs andfacilitating cooperation between the sales and production divisions. The Company is discussing
setting targets for cost structure and revenue structure, including the system for receiving orders,
but we are not ready to announce specific numbers. We would like to explain progress from thefirst quarter.
Q. The negative factor in the sales forecast in the ultrapure water supply business in the fiscal year
ending March 31, 2017 looks too large even if the effect of the expiration of contracts in theprevious fiscal year is taken into consideration. Could you explain the expiration of large
contracts and other factors separately?
A. We cannot describe individual contracts. The same plant has different contracts, which start andexpire at different times. The contract that expired in the previous fiscal year has adverse effects
this fiscal year. There has been no additional expiration of contracts, and there has be no change
in the trend of sales.
Q. In the fiscal year ending March 31, 2017, operating income in the water treatment facilities
segment is expected to increase only 0.1 billion yen year on year, and operating income fromfacilities for the electronics industry is forecast to decline. Could you give us a qualitative
explanation of the reasons of the expected decline in operating income from facilities for theelectronics industry?
A. In the ultrapure water supply business, we expect significant expenses for maintenance that havebeen delayed and maintenance in response to the aging of facilities. The number of high-margin
domestic hardware projects is expected to decline.
Q. Profitability in hardware for the overseas electronics industry seems to be improving. What will
the trend be in the fiscal year ending March 31, 2017?
A. The effect of unprofitable projects declined from 1.7 billion yen in the fiscal year ended March 31,
2015 to 0.4 billion yen in the fiscal year ended March 31, 2016. We can say that the effect ofunprofitable projects has stabilized, especially overseas. We still need to improve profitability
in hardware for the overseas electronics industry and believe that there is room for growth.
Q. You have said that you would like to decide to execute M&A in the United States this fiscal year.
However, considering the difficulty and hardship that you experienced when you started thebusinesses that you acquired in Germany, we expect that you may face a heavy initial burden in
the United States. What is your strategy in the United States?
A. The U.S. market is huge, but we have only a small share. We have a strong desire to lay abusiness foundation in the United States. I have requested business divisions to promptly startlaying a foundation in some form or another. There are some options, including businessalliances, outright acquisitions, and business acquisitions. We are not limited to outright
2/3

acquisitions. At any rate, we would like to lay a business foundation in the United States assoon as possible.
Q. Are there any opportunities to expand your soil remediation business and sewage treatment
business in China, Taiwan, and Vietnam?
A. We will not find any projects soon. However, in China the Water Ten Plan has been issued andthere is a trend towards making laws. Needs for soil remediation and sewage treatment arelikely to emerge. We are undertaking joint studies with universities in China, and considering
markets in those countries.

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

3/3