FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Six Months Ended September
30, 2016
Tokyo, Japan, October 31, 2016—Kurita Water Industries Ltd. (TSE Securities Code6370) announced net sales of 103,811 million yen and profit attributable to owners ofparent of 6,542 million yen, or 56.36 yen per share, for the six months ended September
30, 2016 (April 1, 2016 – September 30, 2016).
Results of Operations
Total consolidated orders for the Kurita Group (Kurita Water Industries Ltd. and its
consolidated subsidiaries and equity method affiliates) in the six months ended
September 30, 2016 rose 2.3% from the level of the same period of the previous fiscal
year, to 112,481 million yen, and net sales increased 6.0%, to 103,811 million yen.
Operating income was 9,643 million yen, up 5.6% versus the same period of theprevious fiscal year, and ordinary income was 9,639 million yen, up 1.6%. Profit
attributable to owners of parent amounted to 6,542 million yen, up 13.5%.
Looking at the market environment surrounding the Kurita Group, in Japan,
production in the manufacturing industry recovered moderately mainly due to inventory
adjustments, while the recovery of capital expenditure slowed due to the effect of adecline in corporate earnings associated with the stronger yen. Overseas, growth inChina and other emerging economies continued to slow, while the U.S. and European
economies continued to recover. Overall, overseas economies recovered moderately.
In this environment, the Kurita Group sought to develop and market competitive
products, technologies, and services. The Group also focused on proposing solutions tocustomers’ challenges, including the reduction of the environmental burden, energy
saving, and the improvement of productivity, using IT and sensing technologies.
Segment Information
The Group consists of two reportable segments in its segment information: Water
Treatment Chemicals and Water Treatment Facilities
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 42,005 million
yen, up 1.6% versus the same period of the fiscal year ended March 31, 2016, whilesales rose 2.1%, to 41,451 million yen. Operating income was up 13.5% to 4,083
million yen, reflecting the increase in sales and the elimination of temporary expenses inassociation with a revision of the initial allocation of the cost of the acquisition ofbusinesses in Europe in the previous fiscal year.
In Japan, capacity utilization recovered at certain customers’ plants, and the Group
worked to gain new customers by proposing solutions using new products and services.
As a result, both orders and sales rose. Despite the adverse effect of the stronger yen onorders and sales in yen at overseas subsidiaries, both orders and sales overseas increased,reflecting the consolidation of the operating results of the business in Europe, whichhave been consolidated from the previous consolidated fiscal year, for a month longer
than in the previous fiscal year.

1Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 70,476 million yen,up 2.6% versus the same period of the previous fiscal year. Sales rose 8.8%, to 62,360
million yen. Operating income climbed 0.5%, to 5,569 million yen due to increases insales in the water treatment facilities business and in maintenance services.
In Japan, in the electronics industry, orders in maintenance services declined partly inreaction to the strong performance in the same period of the previous fiscal year, butorders in the water treatment facilities remained flat. Sales in the water treatment
facilities remained flat, while sales in maintenance services increased on progress withconstruction in projects for which orders were received in the previous fiscal year. In
general industries, orders in the water treatment facilities remained flat, but orders,primarily from public offices, in maintenance services rose. Orders for large-scale
projects were received in water treatment facilities for thermal power plants and soil
remediation services. Sales of water treatment facilities for electric power declined, but
overall sales in general industries rose due to steady progress in construction associatedwith water treatment facilities for other uses and maintenance.
Overseas, orders fell, reflecting orders for large-scale projects in China and Taiwan in
the same period of the previous fiscal year, but sales climbed due to progress inconstruction in large-scale projects in China and South Korea.
Sales in the ultrapure water supply business declined, reflecting the effects of the
expiration of contracts and reviews of contracts with a certain customer, despite theposting of sales from new contracts.
Financial Condition
Assets, liabilities and net assets
Current assets totaled 149,086 million yen at the end of the second quarter (September
30, 2016), a decrease of 1,460 million yen versus the end of the previous fiscal year
(March 31, 2016). This was mainly a result of a decrease of 7,465 million yen in tradeaccounts receivable, which outweighed increases of 5,481 million yen in funds in hand,consisting of cash and deposits and marketable securities, and 1,252 million yen in workin process. The increase in funds in hand principally reflected progress in collecting
trade accounts receivable. The rise in work in process was chiefly the result of progressin construction in the water treatment facilities business.
Non-current assets totaled 136,506 million yen at the end of the first half (September
30, 2016), a decline of 11,055 million yen versus the end of the previous fiscal year.
The decline was principally attributable to decreases of 4,197 million yen in property,
plant and equipment, 3,564 million yen in intangible fixed assets, and 3,294 million yen
in investments and other assets. The decrease in property, plant and equipment waschiefly due to depreciation mainly on facilities for the ultrapure water supply businessin excess of capital expenditure. The decline in intangible fixed assets was mainly
attributable to the amortization of goodwill and technology-related assets and a decreasein the value of assets after it was converted into yen because of the stronger yen against
the euro. The decrease in investments and other assets was primarily due to a decreasein unrealized gains on investment securities due to falls in the market prices of theshares held by Kurita.
Current liabilities totaled 38,783 million yen at the end of the period, a decline of
5,624 million yen versus the end of the previous fiscal year. This was mainly a result of
declines of 4,190 million yen in trade accounts payable and 1,069 million yen in “other”
2current liabilities. The decrease in “other” current liabilities was attributable mainly to a
decline of 1,101 million yen in accounts payable-other and accrued expenses.
Non-current liabilities totaled 23,632 million yen at the end of the period, a decreaseof 1,103 million yen versus the end of the previous fiscal year, chiefly reflecting adecrease in “other” non-current liabilities.
Net assets totaled 223,176 million yen at the end of the period, a decrease of 5,788
million yen versus the end of the previous fiscal year primarily due to a fall of 8,741
million yen in accumulated other comprehensive income, which was partly offset by anincrease of 2,971 million yen in shareholders’ equity. The increase in shareholders’equity reflected an increase of 3,754 million yen in retained earnings as a result of a
profit attributable to owners of parent of 6,542 million yen in excess of year-end
dividends of 2,788 million yen for the previous fiscal year, and a rise of 782 million yen
in treasury stock (a decrease in net assets) due to the acquisition of treasury stock
associated with the introduction of a performance-based stock compensation system fordirectors and the purchase of shares less than one unit.
The decrease in accumulated other comprehensive income resulted mainly from adecrease of 3,554 million yen in unrealized gains on available-for-sale securities inassociation with a decline in unrealized gains on investment securities and a fall of
6,121 million yen in foreign currency translation adjustments due to the strengtheningof the yen against foreign currencies.
Cash flows
Consolidated net cash and cash equivalents at the end of the first half of the fiscal year
(September 30, 2016) stood at 58,016 million yen, an increase of 24,239 million yen
from the end of the previous fiscal year (March 31, 2016). Cash flows in each category
and their main factors are outlined below.
Cash flows from operating activities
Net cash provided by operating activities during the first half of the fiscal year ending
March 31, 2017, totaled 16,268 million yen, an increase of 4,041 million yen from ayear ago. Inflows from income before income taxes (9,639 million yen), depreciation
and amortization (8,052 million yen; including the amortization of goodwill of 507
million yen), and a decrease in trade notes and accounts receivable (5,460 million yen)were partially offset by an increase in inventories (1,290 million yen), a decrease innotes and accounts payable-trade (2,584 million yen), income taxes paid (4,038 millionyen), and other outflows.
Cash flows from investing activities
Net cash provided by investing activities stood at 3,472 million yen, an increase of34,175 million yen from a year earlier, reflecting net withdrawals from time deposits of
8,864 million yen and other inflows, which were partially offset by payments for thepurchase of property, plant and equipment, including capital expenditures for theultrapure water supply business, of 4,818 million yen, and other outflows.

3Cash flows from financing activities
Net cash used in financing activities came to 4,094 million yen, a decrease of 402
million yen from a year earlier, attributable mainly to the purchase of treasury stock of
782 million yen and cash dividends paid of 2,803 million yen.
Outlook for the Fiscal Year Ending March 31, 2017
The Company has revised its earnings forecast for the fiscal year ending March 31,
2017, in light of its results in the first half under review and uncertainty about thebusiness environment in the second half. The details of the revision are as shown below.
The forecast is produced by the Company based on information available at the timeof publication of this document. Actual results may differ significantly from the forecast
due to a change in a range of factors.
(Consolidated earnings forecast)
Revision of consolidated earnings forecast for the fiscal year ending March 31, 2017
(April 1, 2016 – March 31, 2017)

Previous forecast (A)Revised forecast (B)Change (B – A)
Percent change (%)
For reference: The fiscal
year ended March 31, 2016

Net sales

OperatingincomeOrdinary
incomeProfitattributableto ownersof parent

Net income
per share(Million yen)

(Million yen)

(Million yen)

(Million yen)

(Yen)

222,000
216,000(6,000)(2.7)

21,50018,500(3,000)(14.0)

22,00019,000(3,000)(13.6)

14,00012,000(2,000)(14.3)

120.49103.48(17.01)(14.1)

214,372

19,833

20,43912,577108.24

Other Information(1) Important changes in subsidiaries during the six months under review
There have been no changes in specified subsidiaries resulting in changes in the scopeof consolidation.
From the first half of the fiscal year under review, Kurita Polska SP.z.o.o. and
KURITAZ Hokuriku Co., Ltd., two new companies, are included in the scope of
consolidation. Kurita Europe GmbH, which was a consolidated subsidiary, was mergedwith Kurita Europe APW GmbH, a consolidated subsidiary, and has been excluded fromthe scope of consolidation. Kurita Europe APW GmbH has been renamed Kurita EuropeGmbH.
(2) Accounting treatment specific to the preparation of quarterly consolidated financial
statements
Tax expense
The Company calculates tax expense by producing a reasonable estimate of theeffective tax rate after applying tax-effect accounting to income before income taxes forthe fiscal year and then multiplying quarterly income before income taxes by thisestimated effective tax rate.

4

(3) Changes in accounting principles and changes or restatement of accounting
estimates
Change in accounting principles
With the revision of the Corporation Tax Act, the Company and its domestic
consolidated subsidiaries applied the Practical Solution on a change in depreciation
method due to Tax Reform 2016 (PITF No. 32, June 17, 2016) in the first quarter andchanged the depreciation method for the facilities attached to buildings and structuresacquired from April 1, 2016 from the declining-balance method to the straight-line
method.
The effect of the change on earnings in the first half of the fiscal year under review isminor.
(4) Additional information
Application of the Revised Implementation Guidance on Recoverability of Deferred Tax
AssetsFrom the first quarter of the fiscal year, the Group is applying the Revised
Implementation Guidance on Recoverability of Deferred Tax Assets (Revised Guidance
No. 26, March 28, 2016).
Performance-based stock compensation system for directors
At the shareholders’ meeting held on June 29, 2016, the Company resolved to introduce
a performance-based stock compensation system for directors (excluding external
directors; the same shall apply hereinafter) to boost their motivation to contribute to thesustainable growth of the Group and increases in the Group’s enterprise value in themedium to long terms. The system has been introduced.
1) Outline of the system
This system is a performance-based stock compensation system where points will begiven to the directors in accordance with their positions and performance and shares in
the Company will be transferred to them when they retire. The number of shares to betransferred to each director will be in accordance with their cumulative points.
At the introduction of the system, the Company contributed funds to set up a trust to
deliver shares to officials (“the Trust”).
2) Shares in the Company remaining in the Trust
Shares in the Company remaining in the Trust are included in treasury stock in net
assets of the quarterly consolidated balance sheet. As of September 30, 2016, the bookvalue of shares in the Company held by the Trust was 781 million yen, and the numberof shares in the Company held by the Trust was 339,000.

5Financial Statements — Consolidated
Balance Sheet — Consolidated(Million yen)

AssetsCurrent assets
Cash and deposits
Notes receivable – trade
Accounts receivable – tradeMarketable securities
Finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings (net)
Machinery and equipment (net)Other (net)Total property, plant and equipment
Intangible fixed assets
Goodwill
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

As ofMarch 31, 2016
Amount

As of
September 30, 2016
Amount58,374
7,463
63,552
7,566
3,130
3,690
2,433
4,518
(185)
150,546

70,961
7,355
56,087
460
2,879
4,942
2,142
4,452
(195)
149,086

15,09332,30430,99078,38814,09435,80624,291
74,191

15,114
9,088
24,202

12,462
8,175
20,63837,0638,111(204)
44,970147,561
298,107

31,694
10,166(185)
41,676
136,506
285,592

6

(Million yen)

As ofMarch 31, 2016
Amount

As of
September 30, 2016
AmountLiabilities
Current liabilities
Notes payable – trade
Accounts payable – trade
Income taxes payable
Provision for bonuses
Other provision
Other
Total current liabilities
Non-current liabilities
Net defined benefit liability
Provision
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

1,719
21,060
3,705
2,365
1,052
14,50344,407

1,572
16,870
3,200
2,683
1,022
13,43438,783

15,46757
9,210
24,735
69,142

15,55425
8,052
23,63262,415

13,45010,993
196,788(8,695)
212,536

13,45010,993
200,542(9,478)215,507

16,061

12,507

398
(380)
(618)
(101)
15,3601,067
228,964
298,107

1,281
(380)
(6,739)
(50)
6,619
1,049
223,176
285,592

7

Statements of Income and Comprehensive Income — Consolidated
Statement of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Directors' and corporate auditors' compensations,salaries and allowances
Provision for bonuses
Research and development expenses
Other
Total Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of unconsolidated subsidiaries
and affiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on liquidation of businessTotal extraordinary losses
Income before income taxes
Income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Six months ended
September 30, 2015
Amount97,91864,12933,788Six months ended
September 30, 2016
Amount103,81169,48734,324

8,920

8,925

1,504
2,620
11,60924,654
9,133

1,469
2,433
11,851
24,680
9,643

103
253

99
258

87

89

206
650

226
673

108
72
112
294
9,490

93
375
208
677
9,639

146
146

-

150
150
9,485
3,642
5,843
79
5,764

9,639
3,022
6,616
74
6,542

8

Statement of Comprehensive Income(Million yen)

Net income
Other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Components:
Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests

Six months ended
September 30, 2015
Amount5,843

Six months ended
September 30, 2016
Amount6,616(2,591)(3,555)

(210)
487
(4)

882
(6,049)
50

(6)

(186)

(2,325)
3,518(8,857)(2,240)3,448(2,239)

69

(0)

9

Statement of Cash Flows — Consolidated(Million yen)Six months ended
September 30, 2015
AmountCash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in provision(Increase) decrease in notes and accounts receivable –trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable – trade
Increase (decrease) in net defined benefit liability
Income taxes paid
Other
Net cash provided by (used in) operating activities
Cash flows from investing activities
Deposits into time deposit accounts
Withdrawals from time deposits
Payments for purchases of marketable securities
Payments for purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales and redemption of investment
securities
Payments associated with acquisition of business
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term loans payable
Repayment of finance lease obligations
Purchase of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities
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
Increase in cash and cash equivalents from newly
consolidated subsidiary
Cash and cash equivalents at the end of the period

Six months ended
September 30, 2016
Amount

9,485
7,025
484
139

9,639
7,545
507
301

5,908

5,460

(2,853)(1,970)391(4,762)(1,621)
12,227(1,290)(2,584)354(4,038)372
16,268(23,940)
11,759(9,000)(6,790)161(4)(13,476)
22,340(4,818)
10
(5)

-

9

(2,549)(346)
6(30,703)

(54)
(703)
170
3,472

326
(2)
(320)
(988)
(2,684)(23)(3,692)

(171)
(11)
(323)
(782)
(2,787)(16)(4,094)212(1,222)(21,957)

14,42455,67543,591

59-

33,77758,01610

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Six months ended September 30, 2016 (April 1, 2016 – September 30, 2016)
Not applicable(Notes on Significant Changes in Shareholders’ Equity)
Six months ended September 30, 2016 (April 1, 2016 – September 30, 2016)
Not applicable(Segment Information)
1. Sales and income by reportable segment
Six months ended September 30, 2015 (April 1, 2015 – September 30, 2015)(Million yen)

Reportable Segments

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Sales
Sales to outside customers
Inter-segment sales or transfers

40,595132

57,32270

97,918
202

–
(202)

97,918–

Total

40,72757,393

98,120(202)

97,918Segment income

3,597

5,541

9,139

(5)

9,133

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

Six months ended September 30, 2016 (April 1, 2016 – September 30, 2016)(Million yen)

Reportable Segment

Sales
Sales to outside customers
Inter-segment sales or transfers
Total
Segment income

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

41,451
120
41,572
4,083

62,360106
62,466
5,569

103,811
227
104,039
9,653

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)–

103,811

(227)
(227)
(9)

–

103,811
9,643

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

11Supplementary Information — Consolidated(1) Order Intake(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2015
2016
Amount%Amount41,33537.6
42,005%37.3

Water Treatment Facilities

68,66462.4

70,476

62.7

Total

110,000

100.0

112,481100.0(2) Net Sales(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2015
2016
Amount%Amount40,59541.5
41,451%
39.9

Water Treatment Facilities

57,322

58.5

62,360

60.1

Total

97,918100.0

103,811100.0(3) Capital Expenditures (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2015
2016
Amount%Amount
920
11.1
862

%
22.6

Water Treatment Facilities

7,408

88.9

2,951

77.4

Total

8,329

100.0

3,813

100.0

(4) Depreciation (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Six months ended September 30,
2015
2016
Amount%Amount
667
10.2
784

%
11.6

Water Treatment Facilities

5,865

89.8

5,954

88.4

Total

6,532

100.0

6,738

100.0

12