Organo Corporation
Report on the Second Quarter Financial
Results for the Term Ending March 31, 2014

November 7, 20131

Report on the Second Quarter
Financial Results and Forecasts for FY2013

Hiroyuki Uchida,President

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The Consolidated Organo Group (Japan)
Organo Hokkaido
Corporation

Organo Chubu
Corporation
Organo Kansai
Corporation
Organo Kyushu
Corporation

Organo Tohoku
Corporation

Organo Food Tech
Corporation
Organo Corporation
Organo Tokyo Corporation
Organo Plant Service Corporation
Organo Acty Corporation
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The Consolidated Organo Group (Overseas)

Organo (Suzhou) Water
Treatment Co., Ltd.
< China >Organo TechnologyCo., Ltd.
< Taiwan >Organo (Thailand)Co., Ltd.
< Thailand >Organo (Asia)
Sdn. Bhd.
< Malaysia >PT Lautan Organo Water

Ref ; Non-consolidated Group
Organo (Singapore) Pte Ltd.
<Singapore>
Organo (Vietnam) Co., Ltd. <Vietnam>
PT Lautan Organo Water <Indonesia>

4Financial Results of the Second Quarter,
FY2013 (Consolidated)(millions of yen)

'12.9
Result'13.9
Plan'13.9
ResultOrders Received

31,83434,00032,354+ 520

Net Sales

29,56630,00026,791Gross Profit(%)

7,587(25.7)

6,800(22.7)

6,447(24.1)△ 2,775

SG&A

6,5766,6006,877△ 1,140△ 1.6pt
+ 301

△ 353
△ 1.4pt

Operating Income

1,010

200

Ordinary Income

1,045100△ 429△ 1,439△ 629

Net Income

63440△ 229△ 134

Year on Year Change fromChange
Initial Plan

△ 1,274△ 768△ 1,646△ 3,209+ 277△ 329△ 1745Financial Results of the Second Quarter FY2013(by Business Segment)
Orders Received(millions of yen)

31,834

Net Sales(millions of yen)

Operating Income(millions of yen)

32,354
Year onYearChangeΔ 291

29,566

Year onYearChangeΔ 811■ Water Treatment Engineering

1,010

26,791
Year onYear
Change+ 14

Δ 429

Year onYear
ChangeΔ 2,789

Year onYear
Change+ 116
Year onYear
ChangeΔ 1,556■ Functional Product[Water Treatment Engineering] Orders increased, primarily for overseas electronics industries. Sales also increased inoverseas, but decreased in overall domestic industries, particularly in the power plant segment. Operating income decreased
due to reduced net sales, changes in the sales mix, and lower profitability.
[Functional Products] Both orders and sales remained mostly unchanged year on year. Operating income increased,primarily due to improved profitability.

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Sales by Business Segment and Customer（ Water Treatment Engineering ）Sales by Business Segment(millions of yen)

Sales by Customer(millions of yen)

20,253

20,253
17,464

17,464
Year onYear
ChangeΔ 2,434

Year onYear
ChangeΔ 3,111

Year onYear
ChangeΔ 355

Year onYear
Change+ 323[Plant Business] Sales declined, primarily due to a dropin the sale of plants for the domestic electronics industry
and the postponement of projects of general industries tothe second half of the fiscal year.

[Electronics Industry] While domestic sales declined,
both the plant and maintenance businesses grew inoverseas.

[Solution Business] Sales decreased mainly because ofdecline in the power plant segment.

[General Industry] Sales decreased as a result of adecline in the power plant segment, despite growth in theplant for food industry in both domestic and overseas,
and in the waterworks segment.

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Sales by Region
Sales by Overseas Region

Domestic and Overseas Sales（millions of yen）

（millions of yen）

30,22325,71929,566
26,791

6,009

Year onYear
Change+ 2,277

4,052

Year onYear
ChangeΔ 5,052

4,059

Year on
YearChange+ 126

3,732
Year onYear
Change+ 1,529

Year onYear
Change+ 622

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Analysis of Operating Income, FY 2013 (by Factor)(millions of yen)

1,010

Decrease inSales
Δ 712

Profit Ratio
Decrease
Δ 427

SG & AIncrease
Δ 301

Δ 429

*The decrease in sales and profit ratio decrease are calculated using the gross profit margin.
9Balance Sheet
AssetsCash on Hand
and Deposits

85,3098,809

Liabilities and Net Assets(millions of yen)(millions of yen)
85,30976,772Current
Liabilities

76,772(+ 1,726)
Current Assets
and Others

Long-termLiabilities(Δ 7,173)(Δ 670)(Δ 10,154)
Net Assets(Δ 694)

Fixed Assets(Δ 110)10Major Efforts in the First Half of FY2013◆Alliance with Katayama Nalco Inc. in the water treatment chemicals
business (Agreement signed on July 9, 2013)
Key Products
OrganoCombined water treatment chemicals
Wastewater treatment chemicals

Katayama
Nalco

Process-related chemicals forsteel, petrochemical products,
pulp and paper ,etc

49% capital
contribution

51% capital
contribution

Katayama Chemical, Inc.
[processing agents forwater treatment & paper pulp, etc]

Nalco Group

Ecolab GroupNalco Japan G.K.
[water treatment chemicals,and processing chemicals for
petrochemical production][cleaning chemicals
for the restaurant
industry & foodplants]
Acquisition(2011)[Aim]
Business development based on
mutual complements such asincreased product lines[Target]Growth of the water treatment chemicals
business to add 2 billion yen to FY2015 netsales
11Major Efforts in the First Half of FY2013◆Launched rental service of RO water purification system "Osmopure"for general consumers

 Water purification system directly
connected to water faucet using activatedcarbon + RO membrane Main unit is rented free of charge(cartridges are purchased periodically)
 Less costly and more eco-friendly
than water serving service
 Includes antibacterial function

Osmopure rental service website

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Major Efforts in the First Half of FY2013◆Strengthen wastewater treatment business Established Wastewater Management Dept. (April 2013 -) Increased product lines and technical capacity to expand sales Fluidized bed anaerobic wastewater treatment system
 Membrane bioreactor (MBR) method system “OFAS Series”
 High-speed dissolved air flotation system, etc.

Aims

Electronics industry/domestic/pure water

Shift of business portfolio

Overall industries/overseas/
both pure water + wastewater Manage and develop wastewater
treatment technologies, establish
sales expansion and new technology
development strategy
 Strengthen wastewater treatment
business for various industries suchas the chemical, food and beverageindustries
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Major Efforts in the First Half of FY2013◆Established ASEAN Engineering Center/Asia Procurement Center(May 2013 -)Aims

Electronics industry/domestic/pure water

Shift of business portfolio

Overall industries/overseas/
both pure water and wastewater Accelerate responses to Asian customers
 Strengthen technical capabilities
 Provide technologies and products tomeet local needs
 Reduce costs, increase pricecompetitiveness Diversify risks in local procurement

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Major Efforts in the First Half of FY2013◆Increased capital of PT Lautan Organo Water
Completed capital infusion into PT Lautan Organo Water(Republic of Indonesia) in May 2013. Business expansion is underwaywith the other local subsidiaries in Vietnam (capital added in Oct. 2012)
and Thailand (capital added in March 2013), etc.

Location

Timing ofcapitalinfusion

Capital before
infusion

Amount of capital
added

Capital afterinfusion

Jakarta, Indonesia

May 2013

IDR 6 billion

IDR 12 billion

IDR 18 billion(approx. ¥62 million)(approx. ¥125 million)(approx. ¥187 million)* IDR = Indonesian Rupiah* The amounts in Japanese yen are calculated based on the exchange rate at the time of the capital infusion.

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Forecasts for the Term Ending March 2014
(millions of yen)

'13.3
Result'14.3'14.3
Year on Year Change fromChange
Initial Plan
Initial Plan Revised Plan

Orders Received

60,23875,00075,000+ 14,762+0Net Sales

66,71873,00067,000+ 282

Gross Profit(%)

16,846(25.3)

16,900(23.2)

14,200(21.2)

SG&A

13,34813,90013,700△ 2,646△ 4.1pt△ 6,000

Operating Income

3,498

3,000500

Ordinary Income(%)

3,909(5.9)

2,800(3.8)

550(0.8)

Net Income

2,564

1,500350+ 352△ 2,700△ 2.0pt△ 2,998△ 2,500△ 2,214△ 1,150△ 3,359△ 5.1pt△ 200△ 2,250△ 3.0pt

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Forecasts for the Term Ending March 2014
( by Business Segment )Orders Received(millions of yen)

Net Sales(millions of yen)

Operating Income(millions of yen)

75,00060,238Year onYear
Change+ 1,748

66,718Year onYear
Change+ 13,014

67,000Year onYear
Change+ 1,951

3,498

Year onYear
ChangeΔ 1,668

500

Year onYear
Change+ 123
Year onYear
ChangeΔ 3,121■ Water Treatment Engineering■ Functional Product[Water Treatment Engineering] Orders are expected to increase based on growth in the plant and wastewater businesses
for overall overseas industries and the domestic food industry. Sales are expected to decline due to a large number ofprojects in which sales will be realized from next year onward. Operating income is expected to decrease due to changes inthe sales mix and lower profitability.
[Functional products] Sales are expected to grow based on new product development and product renewals.

17Sales by Business Area and Customer( Water Treatment Engineering )Sales by Business Area
(millions of yen)

Sales by Customer(millions of yen)

47,46847,46845,80045,800Year on
YearChange
Δ 3,756

Year onYear
Change+ 2,087[Plant Business] Sales are expected to grow based on an increase inplants for food and electronics industries in overseas markets, and inmunicipal water, sewage water and industrial wastewater treatment
business segments in Japan.
[Solution Business] Sales are expected to fall in response to a decline in
the domestic power plant segment.

Year onYear
ChangeΔ 1,045

Year onYear
ChangeΔ 623[Electronics Industry] Sales are expected to drop due todecrease in overall domestic, despite growth in both plant andmaintenance business in overseas.
[General Industry] Sales are expected to fall mainly due todecrease in the power plant segment, despite growth in plants
for food and electronics industries in both domestic andoverseas, and in municipal water, sewage water and industrial
wastewater treatment business segments in Japan.

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Sales by Region
Domestic and Overseas Sales(millions of yen)(millions of yen)
68,502
61,097

Sales by Overseas Region

66,71814,50067,000Year onYear
Change+481

Year onYear
Change+3,708

10,792
9,567
8,671

Year onYear
Change△3,426

Year onYear
Change+961

Year onYear
Change+2,266

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Progress of Orders Received and Net Sales
from the Electronics Industry
Orders Received

Net Sales(millions of yen)(millions of yen)

19,088
17,68521,149

20,50019,723

18,136

19,10017,35411920

Progress of Orders Received,
Net Sales and Orders on Hand (Consolidated)
Orders received/Net sales(millions of yen)Orders on Hand
(millions of yen)21

Major Indicators (Consolidated)(millions of yen)
FY2012 Full Year

FY2013 Full Year
(Initial Plan)

FY2013 Full Year
(Revised Plan)

Capital Investment

720

900

600

TechnologicalDevelopment Costs

1,655

1,750

1,500

Depreciation

1,159

1,100

1,000

Interest-bearing
Borrowings

14,901

12,20012,200

Number of Employees

1,835

1,860

1,880

Dividend per Share(yen/year)

1212822

Upcoming Efforts
In Japan
Water Treatment Engineering• Strengthen the pure water/wastewater business for the general industries,including pharmaceuticals, food, and chemicals.
• Respond actively to coal and LNG fired power plant projects in the power plantsegment.
• Increase orders received through cooperation with Meidensha Corporation inthe business for domestic municipal water.

Functional Product• Promote cost reduction by improving the purchase and production systems.
• Increase the water treatment chemicals business through cooperation withKatayama Nalco Inc.
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Upcoming EffortsOverseas•

Strengthen business promotion targeting non-Japanese customers.

•Increase technical capabilities and promote cost reduction through the ASEAN
Engineering Center and Asian Procurement Center.

•

Increase response capacity to power plant projects in Southeast Asia.

•Increase the capital of Organo (Asia) Sdn. Bhd. (Malaysia) to strengthen ourbusiness foundation in Southeast Asia.

•Consider alliances and M&A for expanding and strengthening of ourbusinesses.

24Organo Corporation
Corporate Planning Department, Planning Group
1-2-8, Shinsuna, Koto-ku, Tokyo 136-8631, Japan
TEL +81-3-5635-5111
FAX +81-3-3699-7240
URL http://www.organo.co.jp

This document includes forecasts of future developments made by management basedon their assumptions, forecasts and plans at the time of writing. Actual performance may
differ materially from the above projections due to a variety of factors.

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