Organo Corporation
Report on the Second Quarter Financial
Results for the Term Ending March 31, 2015

November 10, 2014

1

Report on the Second Quarter
Financial Results and Forecasts for FY2014

Hiroyuki Uchida,President

2

The Consolidated Organo Group
Organo (Suzhou) Water
Treatment Co., Ltd.
< China >Organo Corporation
Organo Plant Service Corporation
Organo Food Tech Corporation
Organo Acty Corporation
Organo Eco Tech Corporation< Japan >Organo (Thailand) Co., Ltd.
< Thailand >Organo (Asia) Sdn. Bhd.
< Malaysia >Ref ; Non-consolidated Companies
Organo (Singapore) Pte Ltd <Singapore>
Organo (Vietnam) Co., Ltd. <Vietnam>
PT Lautan Organo Water <Indonesia>

Organo Technology Co., Ltd.
< Taiwan >3

Financial Results of the Second Quarter, FY2014(millions of yen)

09/2013
Result09/2014
Plan09/2014
ResultY ear on Y ear
ChangeChange f rom
Initial Plan

Orders Receiv ed

32,35435,00035,704+ 3,350+ 704

Net Sales

26,791

30,00028,6331,842

ᇞ 1,367

Gross Prof it

6,447

6,300

6,115

ᇞ 332

ᇞ 185(%)

24.1

21.0

21.4

ᇞ 2.7 pt

+ 0.4 pt

SG&A

6,877

6,800

6,547

ᇞ 330

ᇞ 253

Operating Incomeᇞ 429ᇞ 500

ᇞ 432

ᇞ3+ 68

Ordinary Income

ᇞ 229

ᇞ 550

ᇞ 444

ᇞ 215+ 106

Net Income

ᇞ 134

ᇞ 300

ᇞ 583

ᇞ 449

ᇞ 283
4

Financial Results of the Second Quarter FY2014(by Business Segment)
Orders Received

Net Sales

Operating Income(millions of yen)(millions of yen)(millions of yen)

40,00040,0001,500

35,70432,3549,881

30,0009,521Year onYear
Change+ 360

30,00026,791
9,326

20,00010,000

9,385

20,00022,83325,8230Year onYear
Change+ 2,990

10,00017,464

19,24809/2014

Year onYear
Change+ 59

500

Year onYear
Change+ 1,784-500∆ 429∆ 432570597-1,000-1,02909/2013

09/20140-1,000Year on
Year
Change+ 27
Year on
YearChange∆ 29-1,500009/2013

1,00028,63309/2013■ Water Treatment Engineering

09/2014■ Functional Product[Water Treatment Engineering] Orders increased, primarily for plants in the domestic electronics industries and municipal
water and sewage treatment. Sales climbed in the domestic electronics industries and general industries, despite a decline in
the overseas electronics industries. Operating income decreased, mainly due to a decline in profitability, despite decreased
SG&A expenses.
[Functional Products] Both orders and sales remained unchanged from the same period of the previous year. Operating
income increased due to decrease in SG&A expenses.

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

19,24820,000

Sales by Customer(millions of yen)
20,00017,464

10,747
10,085

Year onYear
Change+ 662

10,00019,24817,464

9,642
8,787

Year onYear
Change+ 855

10,000

7,379

8,502

Year onYear
Change+ 1,123

08,6779,606

09/2013

09/2014

Year on
YearChange+ 929

009/2013

09/2014

Plant Business

Solution Business[Plant Business] Sales increased, primarily for plants in thedomestic electronics industries.
[Solution Business] Sales grew in overall industries inJapan and overseas.

Electronics Industry

General Industry[Electronics Industry] Sales increased in both plants andmaintenance business in Japan, despite declined in theoverseas.
[General Industry] Sales increased, chiefly in plants fordomestic pharmaceuticals industry and wastewater
treatment plants in Japan.

6

Sales by Region
Sales by Overseas Region

Domestic and Overseas Sales（millions of yen）

（millions of yen）

35,00030,22330,0004,059

29,566
3,732

25,000

40.0%

7,000

Year onYear
Change∆ 1,693

6,000

6,009

28,633
26,791
4,316
6,009

5,000

4,059

20,00026,1644,000

25,83424,317

20.0%

15.1%

Year onYear
Change+ 3,53522.4%

15,00020,782
10,000

700

13.4%

5,000

574

09/2011

Domestic

09/201209/2013

Overseas

09/20140.0%

Overseas Ratio

539

2,659

Year onYear
Change∆ 1,073

1,119

Year onYear
Change
∆ 457

3,732

3,000

1,905

1,000

03,732

Year onYear
Change
∆ 161

636

2,203

2,000

12.6%

4,316

1,518

1,576
954

009/2011

09/201209/2013

09/2014Southeast Asia

TaiwanChina

7Analysis of Operating Incomeof the Second Quarter, FY 2014 (by Factor)(millions of yen)

09/2013

Increase inSales+ 443

09/2014
SG&A
Decrease+ 330
∆ 432

∆ 429
Profit Ratio
Decrease∆ 776*The sales increase and profit ratio decrease are calculated using the gross profit margin.
8

Balance Sheet
AssetsLiabilities and Net Assets(millions of yen)

Cash on Hand
and Deposits

76,852
10,268(millions of yen)

74,80876,852

5,591

Current
Liabilities(∆ 4.677)
Current Assets andOthers

41,415Long-term
Liabilities
44,23774,80824,742

24,297(∆ 445)

7,857

7,170
(∆ 687)(+ 2,822)
Net Assets
44,252

43,340(∆ 912)

03/201409/2014

Fixed Assets
25,16924,980(∆ 189)03/201409/20149Major Efforts in the First Half of FY2014◆Launched new slime control chemical containing non-chlorinatedoxidant (sales commenced in July 2014)
Contains oxidant uniquely developed by the Company
High safety
Superb disinfect and algicidal effectLow-level metal corrosiveness and degradation effectto RO membranes
 High stability Low environmental impact For Cooling water;
ORBLADE J Series
 For RO membrane;
ORPERSION E Series
10Major Efforts in the First Half of FY2014◆ Succeeded in developing technology that
continuously purifies ceramide from rice bran
“New Simulated Moving-Bed System”
 Organo’s unique chromatographic separation technologythat can separate more than three ingredients
 Used in numerous production facilities for processing sugar

Applications

Development of technology that continuously purifies ceramide(Joint development with the National Agriculture and Food Research Organization (NARO) and Nippon Flour Mills Co., Ltd.）

Conventional natural ceramide Material with low purity of approx. 10%
 Uses are limited due to its color and smell
inherent in impurities Continuous production of highly refinedmaterials with purity of 95% or higher is possible
 New applications are expected for cosmetics,
pharmaceuticals, and R&D

11

Major Efforts in the First Half of FY2014◆ Reinforcement of business of soil and groundwater
investigation and remediation
 Businesses were consolidated into Organo (from October 2014)
Soil and Groundwater Group was set up in the Plant Division, and dedicated staffs weredeployed in all domestic branches.
⇒ Strengthen sales capabilities leveraging the network of the Organo GroupObjectives
Outlook for market expansion
 Work for the improvement of circularroutes in Tokyo
 Tokyo Olympics in 2020
 Maglev train project

Strengthen sales and technical organizations
to deal appropriately with projects that areexpected to increase

Strengthen and promote“One Stop Solutions” to respond tocustomers’ diverse needs in relation
to water treatment

12

Forecasts for the Term Ending March 2015
(millions of yen)

03/2014 03/2015
03/2015
Year on Year Change from
Result Initial Plan Revised PlanChangeInitial Plan
Orders Received

65,50175,00075,000+ 9,499-

Net Sales

62,09670,00070,000+ 7,904-

Gross Profit(%)

14,553(23.4)

15,400(22.0)

14,700(21.0)＋ 147
ᇞ 2.4pt

ᇞ 700
ᇞ 1.0pt

SG&A

13,72013,90013,200

ᇞ 520

ᇞ 700

Operating Income

833

1,500

1,500＋ 667-

Ordinary Income(%)

1,170(1.9)

1,400(2.0)

1,400(2.0)＋ 230+ 0.1pt-

Net Income

664

900

900＋ 236

13

Forecasts for the Term Ending March 2015
( by Business Segment )Orders Received(millions of yen)

75,00080,00070,00065,501
20,90060,00019,686Net Sales(millions of yen)

Year onYear
Change+ 1,214

70,00040,00040,00020,00045,81410,0002,000

Year onYear
Change+ 8,286

70,00062,09660,00050,00054,100(millions of yen)

80,00050,00030,000Operating Income

20,90019,983

Year onYear
Change+ 917

42,112

49,100Year onYear
Change+ 6,988

1,500

1,600

Year onYear
Change+ 76-100

Year onYear
Change+ 591

1,000

1,524

30,00020,000833

0-691

10,000003/2014

03/2015 (Plan)

003/2014■ Water Treatment Engineering

03/2015 (Plan)-1,00003/2014

03/2015 (Plan)■ Functional Product[Water Treatment Engineering] Orders are expected to increase in plants in the general industries, both in Japan andoverseas, and the domestic electronics industries. Sales are expected to increase, mainly due to the growth of plants in thedomestic electronics industries, the pharmaceuticals industries, and the wastewater treatment business. Operating income
is expected to improve due to sales expansion.
[Functional Products] Sales are expected to grow based on development and renewal of products.

14

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

Sales by Customer(millions of yen)

49,10050,00049,10050,00042,112

42,112
25,91025,030Year onYear
Change+ 880

27,300Year onYear
Change+ 4,463

21,800Year onYear
Change+ 2,525

22,83725,00025,00023,19017,083

Year onYear
Change+ 6,107

19,2750003/2014

Solution Business

03/2015（Plan）

Plant Business[Plant Business] Sales are expected to increase, mainly as a resultof the growth of plants in the domestic electronics industries,
pharmaceuticals and food industries, and the wastewater treatment
business.
[Solution Business] Sales are predicted to increase, largely due tothe growth of maintenance in overall industries in Japan.

03/2014

General Industry

03/2015（Plan）

Electronics Industry[Electronics Industry] Sales are expected to increase
due to the growth of plant business in Japan.
[General Industry] Sales are expected to increase,primarily due to the growth of plants in the domestic
pharmaceuticals industry and wastewater treatment
business, and the growth of plants for overseas thermal
power stations.

15

Sales by Region
Domestic and Overseas Sales

Sales by Overseas Region(millions of yen)(millions of yen)

15,00080,00068,502
8,67170,000
66,71862,096
10,792

12,00014,09014,090Year onYear
Change∆ 2,090

1,993

10,79258,0008,671

55,926

8,352

1,738

40,00048,006

59,831

17.1%

16.2%

2,000

1,519

10,00022.7%

12,000Year onYear
Change+ 9,994

5,700

5,000

4,718

3,745

03/2012

Domestic

03/2013

Overseas

03/201403/2015(plan)

Overseas Ratio

Year onYear
Change∆ 2,652

7,039

12.7%

0

Year onYear
Change+7

2,216

2,234

03/201203/2013

4,300

Year onYear
Change+ 555

0Southeast Asia

03/2014

Taiwan03/2015(plan)

China

16

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

Net Sales(millions of yen)(millions of yen)
30,00030,00022,70019,08820,00019,74520,0008,900

17,354
4,871

21,1499,009

21,80019,723

19,275
7,200

6,804

9,240

8,817

119

10,033
10,00010,00012,483

14,34513,80010,07910,505

14,60010,9069,242

0

0
03/201203/2013

Domestic

03/201403/2015 (Plan)

Overseas

03/201203/2013

Domestic

03/201403/2015 (Plan)

Overseas17

Progress of Orders Received,
Net Sales and Orders on Hand
Orders on Hand
(millions of yen)Orders received / Net sales(millions of yen)
100,000

70,000Orders Received

Net Sales

Orders on Hand
60,00080,00075,00068,041 68,502

66,07461,09766,71860,23865,50170,000 50,000
62,09660,00040,964

44,21240,14540,00039,212
34,64530,00040,00020,00020,00010,00000
03/201103/201203/201303/201403/2015 (plan)18

Major Indicators(millions of yen)
FY2013 Full Year

FY2014 Full Year
(Initial Plan)

FY2014 Full Year
(Revised Plan)

Capital Investment358

800700TechnologicalDevelopment Costs

1,490

1,600

1,550

Depreciation

1,065

1,000

1,000

Interest-bearing
Borrowings

10,230

11,20012,000

Number of Employees

1,896

1,910

1,920

888

Dividend per Share(yen/year)

19Major Efforts for Expansion of Domestic Business
Water Treatment Engineering

Functional ProductsElectronics Industry
 Secure orders in the electronics industry segment

Continuation of new products
development and product renewal

General Industries

Standard Water Treatment Equipments Pharmaceuticals, food, chemicals: Strengthen thepure water/wastewater business Water supply business: Increase orders throughcooperation with Meidensha Corporation Power plant: Strengthen the responsiveness tocoal and LNG thermal plant projects
 Expand the soil and groundwater investigation
and remediation business

Solution Business

Water Treatment Chemicals
 Promote sales of new products
 Collaboration with Katayama Nalco Inc.

Food Processing Materials

 Further expand sales for reconstruction andmaintenance

Strengthen cost reduction and construction capabilities

20

Major Efforts for Expansion of Overseas BusinessAcceleration of Globalization
 Strengthen business promotion targeting non-Japanese customers
 Leverage the ASEAN Engineering Center (Thailand) to promote technology
and product development according to the market characteristics of theregion
 Leverage the ASIA Procurement Center (Thailand) to strengthen purchasing
capability and promote cost reduction
Strengthen sales capabilities toaddress projects for power plants

Enhance responsiveness to theprojects for the electronics industries

Strengthen the structure of overseas business bases
21Organo Corporation
Corporate Planning Department
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 based on
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.

22