FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Fiscal Year to March 31, 2005
Tokyo, Japan April 28, 2005–Kurita Water Industries Ltd. (TSE Security Code 6370) announced
consolidated revenue for the fiscal year ended March 31, 2005 of 160,896 million yen, and net earningsof 9,383 million yen, or 71.76 yen per share.

Summary of Operating Results
Total consolidated orders for the fiscal year ended March 31, 2005 increased by 14.4% over the previous
year to 171,334 million yen, while net sales for the same period grew 9.6% to 160,896 million yen. As aresult, operating income for the fiscal year increased by 18.2% to 15,951 million yen and ordinary income
grew by 20.0% to 16,725 million yen, producing net income of 9,383 million yen, up 11.1% from theprevious year. While the cost of sales margin increased slightly from 69.1% the previous year to 69.7%,
the S.G.& A. margin improved noticeably from 21.7% the previous year to 20.4%. By segment, water
treatment chemicals sales increased 6.7% from the previous year to 50,637 million yen, while water
treatment facilities sales grew by 11.0% to 110,259 million yen.
During the year, the Group’s operations were supported by continued strong capital expenditure-related
demand for water treatment from the electronics industry in Japan, Taiwan, South Korea and China. In
addition, demand began to recover in the basic materials and automobile industries, supported by higher
factory operating ratios and capital expenditures. On the other hand, the business climate for public
expenditure related demand remained extremely severe, on shrinking budgets for public works projects,
intensified competition, and mergers between local municipalities.

Segment Information
Water Treatment Chemicals
Total Group orders for the segment increased 9.7% to 52,120 million yen, while sales grew 6.7% to50,637 million yen, and produced operating income growth of 11.9% to 7,433 million yen.
During the year, business conditions improved owing to higher factory operating ratios in the steel, oil,pulp/paper and other basic materials industries. However, continued cost reduction efforts by clients aswell as competition with other firms in the industry require continued vigilance. Under thesecircumstances, the Group actively pursued closer relationships with its clients, worked to improve
productivity and to leverage Kurita’s strengths in offering proposals that provide solutions to client
problems and promoted packaged water treatment management contracts to ensure order flow.
Moreover, the Group continued to pursue greater cost savings in production and distribution to ensure
enhanced profitability.
Orders for the Group’s mainstay boiler water treatment chemicals were largely flat, while cooling water
treatment chemicals and wastewater treatment chemicals saw a slight increase. In other products, orders
for agents used to solidify heavy metal contained in the fly ash given off during waste disposal, as wellas process chemicals used in the oil refining and petrochemical industry declined, while higher orders
were seen for process chemicals used in the paper and pulp industry. In addition, management services
related to water treatment also increased.

Water Treatment Facilities
Total Group orders for the segment increased 16.6% to 119,213 million yen, while sales grew 11.0% to110,259 million yen, and produced operating profit growth of 24.4% to 8,515 million yen.
The Group saw continued strong demand from the private sector that is being driven by growth incapital expenditures in the electronic industries in Japan, Taiwan, South Korea and China for expanded
production of semiconductors, LCDs and related components. Signs of recovery were also seen in basic
materials industries as well as food, pharmaceuticals, automobiles and other general industries,
supported by recovering corporate earnings and capital expenditures. During the year, the Groupemphasized its “Solutions Business” in offering clients solutions to their production problems, and the“Outsourcing Business” as represented by the ultra-pure water supply business. In addition, the Groupfocused its marketing activities on a select group of clients to ensure order flow. Moreover, continued
effort was made to improve profitability with more ready-made equipment to improve quality and raise
productivity, and thereby enhance profitability.
Higher orders were seen for the Group’s mainline ultra-pure water production systems for theelectronics industry, maintenance services, and in the tool cleaning business for semiconductor and
LCD production equipment. In addition, there was growth in orders for water treatment facilities fromthe food, pharmaceuticals, basic materials and automobile industries, as well as related maintenanceservices. Moreover, orders for water treatment facilities for the electric power industry and soil
remediation facilities also increased.
On the other hand, public works investment-related demand remained depressed. In response, theGroup exerted every effort to deepen its regional ties and enhance collaboration between Group
companies to capture orders. As a result, while orders for sewage treatment facilities declined, orders
for sludge recycling centers saw a slight increase owing to focused efforts to capture orders for large
projects.
Net Sales(in million yen)
Year ended March 2005

Year ended March 2004

(April 1, 2004 to March 31, 2005)(April 1, 2003 to March 31, 2004)

Segment

Amount%Amount%Water Treatment Chemicals
Water Treatment Facilities
Total

50,637110,259
160,896

31.5%
68.5%
100.0%

47,442
99,377
146,819

32.3%
67.7%
100.0%

Order Intake(in million yen)
Year ended March 2005

Year ended March 2004

(April 1, 2004 to March 31, 2005)(April 1, 2003 to March 31, 2004)

Segment

Amount%Amount%Water Treatment Chemicals
Water Treatment Facilities
Total

52,120119,213
171,334

30.4%
69.6%
100.0%

47,516102,218
149,735

31.7%
68.3%
100.0%Cash Flow Trends
Consolidated net cash and cash equivalents at the end of March 31, 2005 were 30,365 million yen,representing a decrease of 4,772 million yen (13.6%) from the end of the previous fiscal year.
Net cash inflow from operating activities was 8,297 million yen, compared to an inflow of 5,574 million
yen the year previous, reflecting cash inflows of 16,376 million yen and 4,361 million yen respectively
from pretax profit for the period and depreciation expenses. Conversely, major cash outflows included anincrease of 4,063 million yen in accounts receivable and tax payments of 6,479 million yen.
Net cash outflow from investing activities was 10,669 million yen, versus a net outflow of 146 million
yen the year previous. While there was a net cash inflow of 4,970 million yen from sale/purchase of
marketable securities, this was more than offset by a net cash outflow from purchase of investment
securities of 8,096 million yen, and a cash outflow of 5,905 million yen from the purchase of fixed
operating assets.
Net cash outflow from financing activities was 2,422 million yen, versus a net outflow of 1,720 million
yen the previous year, mainly reflecting a 2,227 million yen cash outflow from the payment of cash
dividends.

Scope of Consolidation for the Year Ended March 31, 2005
The Group’s consolidated accounts for the year reflected 31 consolidated subsidiaries and six companies
accounted for under the equity method, with another four companies not reflected under the equity
method. Compared to the previous fiscal year, two new companies were consolidated and one wasremoved, for a net increase of one company. Five new companies were reflected under the equity method,while none were removed.

Outlook for the Coming Year
Overview
For the coming fiscal year, the Group foresees Japan’s economy continuing in a mild recovery, supported
by improved corporate profits and a pickup in personal consumption. However, there is concern that the
movement in crude oil and basic materials could have a negative impact on the recovery.
As the coming year represents the last year of the Group’s “PA-5” management plan, Kurita will be
exerting every effort to achieve the goals outlined in the plan and to expand its business as well as its
earnings through further growth in the Group’s unique businesses and through deeper relationships with
its clients. For the fiscal year to March 31, 2006, the Group is forecasting consolidated net sales of
175,000 million yen, ordinary profit of 20,500 million yen and net income of 11,500 million yen,representing year-on-year increases of 8.8%, 22.6% and 22.6%, respectively.
Outlook by Segment
Water Treatment Chemicals

While the Group anticipates that the factory operating ratios of its clients, which have a large impact onorder trends, will continue at FY2005 (to March 31, 2005) levels, there is a concern that the sharp risein basic material prices, client cost cutting efforts and competition with other firms will have an impact
on profitability. The Group intends to ensure order flow by expanding market share, through thepromotion of the Group’s unique businesses such as management services related to water treatment,
and by deepening client relationships. In addition, continued effort will be made to lower basic material,
distribution and manufacturing costs to maintain profitability.
Water Treatment Facilities
The Group foresees continued strong capital expenditures and demand for the Group’s water treatment
facilities and services from the private sector. However, as the segment with the largest impact on thedivision, i.e., the electronics industry, is expected to see a lull in large-scale capital expenditures, theenvironment for profitability could noticeably deteriorate. In response, the Group will endeavor tofurther expand its unique “Solutions” and “Outsourcing” businesses in order to ensure order flow, whileat the same time expanding the ratio of ready-made products, and increasing both the quality andefficiency of production to maintain profitability.
The prognosis for public sector demand remains bleak, given continued shrinkage in local government
public works budgets. Consequently, the Group will be working to further enhance collaboration within
the Group and utilize regionally-based sales organizations to leverage the Group’s strengths indeveloping proposal-based sales in order to ensure order flow. At the same time, the Group willcontinue to emphasize cost reductions and quality improvements in production in an effort to ensureprofitability.

Medium-Term Strategies
The Kurita Group is currently mid-way through its “PA-5” medium-term management plan. Eachcompany in the Group is well aware of its respective role in the plan, and in addition the Group as awhole is committed to working as one in “achieving the PA-5 Plan through the expansion of Kurita’s
proprietary businesses and strengthened client relationships”. To do this, the Group will be particularly
focusing on the following strategies during the fiscal year to March 2006:a)Accelerated market share expansion in Japan through closer relationships with clients and an“offensive” business structure.

b) Developing clear business strategies that are appropriate for the characteristics of each overseas
region, and to selectively concentrate management resources accordingly.
c)

In addition to pursuing continued overall cost reductions, to strengthen the development andmarketing of key new products that can contribute to substantial market share expansion and asignificant improvement in overall profitability.

Business Risks
Major risk factors that could affect the Group’s future performance are as follows:a)Business performance and demand in the water treatment chemicals segment is affected by factory
operating ratios at major clients in the steel, petroleum, and paper/pulp industries.

b) Demand for water treatment facilities is dependent on capital expenditure trends in the electronics,
food processing, pharmaceutical, basic materials and automobiles industries. In addition,
performance of the Company’s environmental facilities business is influenced by the financial
condition and budgeting actions of local governments, which affects demand for these products.
c)

Demand for water treatment facilities is seasonally concentrated in the second half of the fiscal year,
owing to public sector-related construction, which is reflected both on an as-completed and apercentage completion basis. These sales are concentrated at the end of the fiscal year, meaning that
operating profits are also concentrated in the second half of the fiscal year.

d) While international political uncertainties do give cause for concern regarding exposure to exchange
rate fluctuations, because overseas sales and earnings are a relatively small part of the Group’s sales
and earnings (at less than 14% total sales), the impact of exchange rate fluctuations is limited.

Profit Distribution
Kurita’s basic philosophy regarding profit distribution is to aim to consistently provide a stable dividend
stream and distribute dividends to shareholders, giving due consideration for earnings performance andfuture business expansion. In addition, the Group is also endeavoring to provide sufficient retained
earnings for various investments and the development of new businesses that will further enhance theGroup’s corporate value.

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 maintenance services.
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 Kurita 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 automobile
industries; and the financial condition and budgeting actions of national and local governments in Japan.

KURITA WATER INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(in million yen)

Net sales
Cost of sales
Gross Profit
Selling, general and administrative
expenses
Operating income
Non-operating income
Non-operating expense
Ordinary income
Extraordinary gains
Extraordinary losses
Income before income taxes
Income taxes
Minority interests in earnings ofconsolidated subsidiaries
Net income

Year ended March 2004

Year ended March 2003

(April 1,2004 to
March 31, 2005)(April 1,2003 to
March 31, 2004

Increase/
DecreaseAmount160,896
112,077
48,819

%
100.0
69.7
30.3

Amount146,819
101,433
45,386

%
100.0
69.1
30.9

Amount14,077
10,644
3,433

32,86720.4

31,895

21.7

972

15,951
1,068
295
16,725128477
16,376
6,837

9.9
0.7
0.2
10.4
0.1
0.3
10.2
4.2

13,4901,034
586
13,938
1,479
499
14,918
6,346

9.2
0.7
0.4
9.5
1.0
0.3
10.2
4.3

2,461
34
-291
2,787
-1,351
-22
1,458
491

154

0.1

126

0.1

28

9,383

5.8

8,444

5.8

939

CONDENSED CONSOLIDATED BALANCE SHEET(in million yen)
Increase/
Decrease

As of March 31, 2005

As of March 31, 2004

[Assets]
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - tradeMarketable securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets

30,6799,958
61,158
2,794
8,075
2,038
1,852
-156
116,400

35,512
10,60756,074
6,720
6,713
2,070
1,365
-140
118,923-4,833-649
5,084-3,926
1,362
-32
487
-16
-2,523Fixed assets
Tangible fixed assets
Intangible fixed assets
Investment and other assets
Total fixed assets
Total assets

43,8553,180
28,99376,028
192,428

41,671
3,347
19,67864,697
183,620

2,184
-167
9,315
11,331
8,808[Liabilities]
Current liabilities
Notes payable - trade
Accounts payable - trade
Short-term borrowings
Accounts payable, other/Accrued expenses
Income taxes payable
Advances received
Accrued employees’ bonuses
Allowance for product warranty
Other
Total current liabilities

1,521
26,624
85
7,413
3,924
942
2,060
992
884
44,465

1,371
25,517
48
7,128
3,593
1,373
2,173
1,028
718
42,954

150
1,125
37
285
331
-431
-113
-36
166
1,511

270
8,689

349
9,149

-79
-460

Fixed liabilities
Long-term borrowings
Accrued employees’ retirement benefits
Accrued retirement benefits for directors andcorporate auditors
Other
Total fixed liabilities
Total liabilities

704

658

46

821
10,48554,951800
10,95853,912

21
-473
1,039

[Minority interests]
Minority interests

1,110

1,031

79

13,45011,409115,318

13,450
11,398108,180

11
7,138

-257

-257

-

2,067
-790
-4,830136,366

1,625-829-4,890128,676

442
39
60
7,690

192,428

183,620

8,808[Shareholders’ equity]
Common stock
Additional paid-in capital
Retained earnings
Unrealized gains (losses) on revaluation of
land
Revaluation surplus of other securities
Foreign currency translation adjustments
Treasury stock
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
March 31, 2005
(April 1,2004 –March 31, 2005)
Amount(in million yen)
Year ended
March 31, 2004
(April 1,2003 –March 31, 2004)
AmountCash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of consolidation goodwill
Equity in earnings of unconsolidated subsidiaries and affiliates
Decrease in allowance for employees’ retirement benefits
Increase in allowance for doubtful accounts
Increase (decrease) in other allowancesInterest and dividend income
Other non-operating income
Interest expense
Other non-operating expenses and extraordinary losses(Gains) losses on sale/revaluation of investment securities
Loss on revaluation of tangible fixed assets(Gains) losses on sale/disposal of tangible fixed assets
Increase in notes and accounts receivables, trade
Increase in inventories
Increase in other current assets
Increase in notes and accounts payable, trade
Increase (decrease) in advances received
Increase in other current liabilities
Bonus paid to directors
Other
Sub totalInterest and dividend received
Other non-operating income received
Interest paid
Other non-operating expenses paid
Income taxes paid
Net cash provided by operating activities

16,376
4,361
-17
-244
-463
5
-104
-356
-345
38
224
-128
472
-4,063-1,375
-440
848
-431
37
-138
69
14,323
424
322
-36
-257
-6,4798,297

14,918
3,872
-2
-208
-2,317
73
45
-409
-402
27
354
-1,414499-57-7,202
-442
-327
2,995
409
636
-118
-1
10,927
482
408
-27
-388
-5,8295,574

Cash flows from investing activities
Deposits into time deposit accounts
Withdrawals from time deposits
Payments for purchases of marketable securities
Proceeds from sale of marketable securities
Payments for purchases of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for purchases of investment securities
Proceeds from sale of investment securities
Other expenses
Other income
Net cash used in investing activities-3,5181,594-5,03810,008-5,905100-8,096546-829
468-10,669

-507
431
-200
6,695
-8,364
1,183-2,212
3,992-1,642
476-146

Cash flows from financing activities
Proceeds from short-term borrowings
Repayment of short-term borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Acquisition/sale of treasury stock
Dividends paid (including dividends paid to minority stockholders)
Other income
Net cash used in financing activities

-60
-125
-10
-2,227-2,422358-12-4-2,08928-1,72022-4,72235,137-127
3,580
31,507-50

30,36535,137

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents of newly consolidated subsidiaries atthe beginning of the period
Cash and cash equivalents at the end of the period