FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the First Half Ended September 2005
Tokyo, Japan October 31, 2005—Kurita Water Industries Ltd. (TSE Security Code 6370) announced
revenue for the first half (April 1 - September 30, 2005) of the fiscal year ending March 31, 2006 of
72,499 million yen, and net income of 2,855 million yen, or 22.20 yen per share.

Results of Operations
Total consolidated orders for the Kurita Group increased 6.8% over the same period a year earlier to90,407 million yen, while net sales for the same period increased 1.9% to 72,499 million yen. Operating
income decreased 25.3% to 4,807 million yen and ordinary income shrank 19.1% to 5,466 million yen,resulting in a net income decrease of 25.5% to 2,855 million yen. By segment, water treatment chemicals
sales increased 7.1% year-on-year to 26,521 million yen, while water treatment facilities sales decreased
0.9% to 45,978 million yen.
In the electronics industry, while capital expenditures remained strong in Japan during the period on theback of strong demand for liquid crystal display (LCD) TVs and plasma display panel (PDP) TVs,
large-scale capital expenditures ran their course at some of our clients in Taiwan and Korea. In the generalindustry, factory operating rate improved mainly in the basic materials industry such as steel, petroleum
and chemicals, as well as in the automobile industry, accompanied by solid capital expenditures. On theother hand, the business climate for public spending related businesses remained severe due to shrinking
budgets for public works projects and consolidation of municipal governments.
In view of the business performance for the period, outlook for the full fiscal year, and the Group’s policyof maintaining stable dividend payouts, the Company has decided to reward its shareholders for theirsupport by raising its dividend by 2 yen to 11 yen per share.

Segment Information
Water Treatment Chemicals
Total Group orders for the segment increased 3.7% to 27,213 million yen, while sales increased 7.1% to26,521 million yen, resulting in a 1.4% increase in operating income to 4,008 million yen.
During the period, the Group focused its efforts on securing stable order flows by implementing a wide
ranging measures including pursuing closer relationships with its clients, emphasizing its “Solutions
Business” of offering clients solutions for reduction of costs and environmental burdens, strengthening
marketing of core products, and promoting packaged water treatment management contracts. Also,
responding to cost increases mainly reflecting rising raw materials prices, the Group concentrated its
efforts on securing revenues by shifting its focus to high value-added and high margin products andreducing logistics costs.
Orders for the Group’s mainstay boiler water treatment chemicals and cooling water treatment chemicals
were largely flat compared with a year earlier period, while wastewater treatment chemicals saw an orderincrease. In other products, orders for process chemicals used in the pulp and paper industry and forprocess chemicals used in the oil refining and petrochemical industry both increased, while orders foragents used to solidify heavy metals contained in waste incineration fly ash decreased. Orders for
packaged water treatment management contracts were flat.

Water Treatment Facilities
Total Group orders for the segment increased 8.2% to 63,194 million yen, while sales decreased 0.9% to45,978 million yen, and operating income decreased 67.9% to 800 million yen.

In the private sector, the Group focused its efforts on securing stable order flows by expanding its“Solutions Business” of offering clients solutions that address their needs to reduce cost andenvironmental burdens, by expanding the ultra-pure water supply business, and by strengthening
marketing efforts to strategic clients.
Orders for the Group’s mainline ultra-pure water production systems for the electronics industry were flatin Japan and declined overseas, compared with the same period a year earlier. However, orders formaintenance services for the ultra-pure water production systems in Japan and overseas and orders fortool cleaning service for semiconductor and LCD production equipment both increased. In the generalindustry, orders for water treatment facilities for steel and food industries increased, while orders frompetroleum and chemicals industries were flat, and orders from automobile and pharmaceutical industries
decreased. On the other hand, orders for maintenance services for the general water treatment businessincreased. Orders for soil remediation increased supported by the strong demand .
In the public sector, the Group focused its efforts on securing order intake by implementing local oriented
marketing activity and strengthening cooperation between Group companies. Orders for human waste
treatment facilities and orders for sewage treatment facilities decreased from a year earlier period, under aslow public spending environment.

Outlook for the Full YearFor the full year ending March 31, 2006, the Group forecasts 175,000 million yen in net sales, 19,000
million yen in ordinary income, and 10,800 million yen in net income.
While the Group expects the domestic market to remain solid supported by strong factory operating rates
and capital expenditures, the impact on corporate profits from rising oil prices and the rises passed onto
chemicals affecting other basic material prices remains a concern.
Under such an environment, the Group will strive to expand its business and secure revenues byenhancing its proprietary businesses, further pursuing closer relationships with clients, and cost cutting
efforts.

Outlook by Segment
Water Treatment Chemicals
In water treatment chemicals, although factory operating rates at clients, which has a large impact on theGroup’s order intake and sales, are expected to remain at similar levels seen in the first half of the fiscal
year, there are concerns that further strengthened cost cutting efforts by clients in response to rising basic
materials costs reflecting surging oil prices, and cost increases in this segment, may adversely affect thesegment’s revenues. Under such circumstances, the Group aims to expand sales of core products andstrengthen marketing of “solution” business that offer clients solutions for reduction of energy costs andenvironmental burdens, by further strengthening marketing efforts focused on local oriented and closer
ties with clients, and thereby aims to maintain and increase order flows. The Group will also continue
its efforts of reducing manufacturing and logistics costs of water treatment chemicals.

Water Treatment Facilities
Although large-scale capital expenditures in the private sector have run its course in the electronics
industries, capital expenditures are largely expected to be strong across manufacturing industries. Under
such an environment, the Group aims to secure order flows by expanding its proprietary businesses, suchas the ultra-pure water supply business, by concentrating marketing efforts on strategic clients, and by
further pursuing closer ties with clients.
The severe operating environment in the public sector is expected to continue for the foreseeable future.

However, the Group will strive to ensure order flows by solution-based marketing of new technologies
and strengthened services more attuned to local needs, leveraging its local-oriented marketing structuresby further strengthening cooperation between Group companies.
In the water treatment facilities business, the Group will focus its efforts on securing revenues by driving
forward initiatives to offer modularized and ready-made facilities as well as by improving productivity
through higher quality, lower cost and shorter order-receipt to delivery period.

Financial Condition (Cash Flow Trends)
Consolidated net cash and cash equivalents at the end of the period were 30,046 million yen, representing
a decrease of 319 million yen, or 1.1%, from the end of the previous fiscal year.
Net cash inflow from operating activities amounted to 8,242 million yen, a decrease of 930 million yen
from a year earlier period. This is primarily due to income before income taxes of 5,254 million yen,depreciation and amortization of 2,268 million yen, decrease in notes and accounts receivables-trades by
10,603 million yen, and increase in advances received by 2,227 million yen, which were partly offset
mainly by the increase in inventory by 3,660 million yen, decrease in notes and accounts payable-tradesby 3,972 million yen, and payment of income taxes of 3,723 million yen.
Net cash outflow from investing activities was 7,725 million yen, an increase of 5,905 million yen from ayear earlier period, mainly reflecting the purchase of marketable securities of 5,058 million yen, purchaseof tangible fixed assets of 4,258 million yen and purchase of investment securities of 2,939 million yen,which exceeded the sale of marketable securities etc. of 4,249 million yen.
Net cash outflow from financing activities was 1,221 million yen, an increase of 171 million yen from ayear earlier period, mainly reflecting dividend payment of 1,157 million yen.

Business Risks
Major risk factors that could affect the Group’s future performance include, but are not limited to,
economic trends, capital expenditure trends on water treatment facilities and factory operating rates at its
clients, public investment trends, price movements in oil and other basic materials, and competition withpeers.

Factors that may affect the Group’s business performance
The water treatment chemicals business performance is affected by fluctuations in demand levels
reflecting changes in factory operating rates at the Group’s clients in steel, petroleum and pulp and paperindustries. The Group’s business performance is also affected by movements in basic materials prices
reflecting rising crude oil prices.
The water treatment facilities business performance is affected by demand fluctuations caused by trends
in capital expenditures at companies in the electronics related industries, the Group’s main clients. Also,
the Group’s business performance in public sector projects is affected by financial conditions of andexecution of budgets by municipal governments.

About seasonal concentration of earnings in the water treatment facilities business in thesecond half of a fiscal year
The Kurita Group’s operating income from the water treatment facilities business tends to be concentrated
in the second half of a fiscal year. This is because recognition of sales of water treatment facilities,
particularly sales from completed work and sales recognized according to the percentage of completion
method for long-term projects, are concentrated toward the end of a fiscal year.

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 maintenanceservices. 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 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 rates at major clients in the steel, petroleum and paper/pulp industries; capital
expenditure trends in the electronics, food, pharmaceuticals, basic material and automobile industries; andthe financial condition and budgeting actions of national and local governments in Japan.

KURITA WATER INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In million yen)First half ended
September 30, 2005
(A)
Amount%Net sales
Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income
Non-operating income
Non-operating expense
Ordinary income
Extraordinary gains
Extraordinary losses
Net income before income taxes
Income taxes
Minority interests in earnings ofconsolidated subsidiaries
Net income

First half ended
September 30, 2004
(B)
Amount%Year ended
March 31, 2005

Change(A)-(B)

Amount%Amount72,49950,46422,035

100.0
69.6
30.4

71,17048,04023,130

100.0
67.5
32.5

160,896
112,077
48,819

100.0
69.7
30.3

1,329
2,424
-1,095

17,227

23.8

16,692

23.5

32,867

20.4

535

4,807
746
86
5,466
211
5,254
2,309

6.6
1.0
0.1
7.5
0.3
7.2
3.2

6,438
567
245
6,759
6,759
2,849

9.0
0.8
0.3
9.5
9.5
4.0

15,951
1,068
295
16,725128477
16,376
6,838

9.9
0.7
0.2
10.4
0.1
0.3
10.2
4.3

-1,631179-159-1,293211-1,505
-540

90

0.1

76

0.1

154

0.1

14

2,855

3.9

3,834

5.4

9,383

5.8

-979

CONDENSED CONSOLIDATED BALANCE SHEET(In million yen)

[Assets]
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - tradeMarketable securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Fixed assets
Tangible fixed assets
Intangible fixed assets
Investment and other assets
Total assets[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
Fixed liabilities
Long-term borrowings
Accrued employees’ retirement benefits
Accrued retirement benefits for directors andcorporate auditors
Other
Total liabilities[Minority interests]
Minority interests[Shareholders’ equity]
Common stock
Additional paid-in capital
Retained earnings
Net unrealized gains/losses on revaluation of land
Net unrealized gains on available-for-salesecurities
Foreign currency translation adjustments
Treasury stock
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

As of
September 30,
2005 (A)

As ofSeptember 30,
2004 (B)As ofMarch 31,2005 (C)(A)-(B)(A)-(C)110,790
30,356
9,135
51,795
3,502
11,795
2,107
2,221
-124
81,50646,4593,034
32,011
192,297

115,827
41,914
10,03644,907
5,202
10,571
2,104
1,220
-129
65,826
42,835
3,298
19,691
181,653

116,400
30,6799,958
61,158
2,794
8,075
2,038
1,852
-156
76,02843,8553,180
28,993
192,428-5,037-11,558-901
6,888-1,700
1,224
3
1,001
5
15,6803,624-264
12,32010,644-5,610-323-823-9,363
708
3,720
69
369
32
5,478
2,604
-146
3,018
-131

42,522
2,276
22,701
80
7,242
2,409
3,180
2,676
901
1,053
9,897
214
8,464

38,5262,494
20,522
79
5,290
2,853
2,904
2,613
1,058
710
10,850292
9,107

44,465
1,521
26,642
85
7,413
3,924
942
2,060
992
884
10,485
270
8,689

3,996
-218
2,179
1
1,952
-444
276
63
-157
343
-953
-78
-643

-1,943755-3,941-5-171-1,515
2,238
616
-91
169
-588
-56
-225

389

623

704

-234

-315

829
52,420827
49,376821
54,951

2
3,044

8-2,531

1,197

1,066

1,110

131

87

13,45011,409116,199379

13,45011,409110,933-257

13,45011,409115,318
-257

5,266
636

881
636

2,688

1,366

2,067

1,322

621

-613
-4,835
138,678-868-4,823
131,210-790-4,830136,366

255
-12
7,468

177
-5
2,312

192,297

181,653

192,428

10,644-131

ChangeCONSOLIDATED STATEMENTS OF CASH FLOWS(In million yen)First half ended
September 30,
2005
AmountCash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of consolidation goodwill
Equity in earnings of unconsolidated subsidiaries andaffiliates
Decrease in allowance for employees’ retirement benefits
Increase/decrease 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 of investment securities
Gains/losses on sale/disposal of tangible fixed assets
Increase/decrease in notes and accounts receivables - trade
Increase in inventories
Increase/decrease in other current assets
Increase/decrease in notes and accounts payable - trade
Increase/decrease in advances received
Increase/decrease 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

First half ended
September 30,
2004
AmountYear ended
March 31, 2005
Amount

5,254
2,268
-31

6,759
2,019
0

16,376
4,361
-17

-116

-129

-244

-239
-36
107
-260
-230
18
40
199
10,603-3,660351-3,972
2,227
-923
-95
28
11,535
331
186
-20
-67
-3,723
8,242

-43
-4
434
-202
-182
17
204
0
11,910-3,872
211-4,763
1,531-1,258-80
22
12,573
261
173
-16
-227
-3,591
9,172

-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

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 provided by/used in investing activities

-389
308
-5,058
4,249-4,25857-2,939
471
-527
359
7,725

-1,312
218
-999
3,320
-2,984
162
-136
152
-579
337
-1,820-3,5181,594-5,03810,008-5,905100-8,096546-829
468-10,669

Cash flows from financing activities
Repayment of short-term borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Acquisition/sale of treasury stock
Dividends paid
Dividends paid to minority shareholders
Payment by minority shareholders
Net cash used in financing activities-42-4-1,157-55
38-1,22139-59-2-1,027-1,050

-60
-125
-10
-2,185-42-2,422Effect of exchange rate changes on cash and cash
equivalents
Increase/decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of theperiodCash and cash equivalents of newly consolidated
subsidiaries at the beginning of the period
Cash and cash equivalents at the end of the period

74

-2

22

-629

6,299

-4,77230,36535,13735,137310--

30,04641,43730,365

Segment Information
First Half Ended September 30, 2005

(April 1, 2005 to September 30 2005)(In million yen)

I. Sales and operating income(1) Sales to outside
customers(2) Intersegment sales
Total
Operating costs andexpenses
Operating income
II. Assets, depreciation andcapital expenditures
AssetsDepreciation andamortization
Capital expenditures

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

26,521
170
26,69245,978215
46,194

22,683Eliminationor corporate

Consolidated

72,499386
72,886-386-386

72,49972,49945,39368,077-384

67,692

4,008

800

4,809

-1

4,807

46,684

103,711150,395

41,901

192,297

682

1,585

2,268

-

2,268

1,231

4,362

5,593

-

5,593

First Half Ended September 30, 2004

(April 1, 2004 to September 30 2004)(In million yen)

I. Sales and operating income(1) Sales to outside
customers(2) Intersegment sales
Total
Operating costs andexpenses
Operating income
II. Assets, depreciation andcapital expenditures
AssetsDepreciation andamortization
Capital expenditures
Year Ended March 31, 2005

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

24,76040
24,80046,409351
46,761

20,8493,951

Eliminationor corporate

Consolidated

71,170392
71,562-392-392

71,17071,17044,2682,493

65,117
6,444

-385
-6

64,732
6,438

41,08788,350129,438

52,215

181,653

713

1,306

2,019

-

2,019

550

2,615

3,165

-

3,165

(April 1, 2004 to March 31, 2005)(In million yen)

I. Sales and operating income(1) Sales to outside
customers(2) Intersegment sales
Total
Operating costs andexpenses
Operating income
II. Assets, depreciationand capital expenditures
AssetsDepreciation andamortization
Capital expenditures

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

50,637
199
50,837110,259681
110,941

43,403Eliminationor corporate

Consolidated

160,896881
161,778-881-881

160,896
160,896

102,425

145,829-883

144,945

7,433

8,515

15,9491

15,95143,433108,025

151,459

40,969192,428

1,465

2,895

4,361

-

4,361

1,322

5,383

6,706

-

6,706

Overseas SalesFirst Half Ended September 30, 2005

(April 1, 2005 to September 30 2005)(In million yen)

I. Overseas net sales
II. Consolidated net sales
III. Percentage of overseas net
sales to consolidated net sales

First Half Ended September 30, 2004

Asia

North
America

Europe

Other

Total

5,704

1,004

613

729

8,051
72,499

7.9%

1.4%

0.8%

1.0%

11.1%

(April 1, 2004 to September 30 2004)(In million yen)

I. Overseas net sales
II. Consolidated net sales
III. Percentage of overseas net
sales to consolidated net sales

Asia

North
America

Europe

Other

Total

8,942

199

567

629

10,33871,170

12.5%

0.3%

0.8%

0.9%

14.5%

Year ended March 31, 2005 (April 1, 2004 to March 31, 2005)(In million yen)

I. Overseas net sales
II. Consolidated net sales
III. Percentage of overseas net
sales to consolidated net sales

Asia

North
America

Europe

Other

Total

18,966

979

1,015

1,440

22,402160,896

11.8%

0.6%

0.6%

0.9%

13.9%

Notes:
1. Countries and regions are classified into segments according to geography and proximity.
2. The major countries or regions classified in each geographic segment are as follows:(1) Asia:
South Korea, China, Taiwan, Singapore, Indonesia, Thailand(2) North America:
U.S.A.
(3) Europe:
Germany(4) Other areas:
Brazil3. Overseas sales refer to sales outside Japan generated by the Company and its consolidated
subsidiaries.

Order Intake

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

First half ended
September 30, 2005

First half ended
September 30, 2004

Amount26,52145,97872,499Amount
24,76046,40971,170%36.6
63.4
100.00

%
34.8
65.2
100.0

(In million yen)
(Reference)Year ended
March 31, 2005
Amount%50,63731.5
110,25968.5
160,896
100.0

Sales

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

%
31.0
69.0
100.0

(In million yen)
(Reference)Year ended
March 31, 2005
Amount%52,12030.4
119,213
69.6
171,334
100.0

First half ended
September 30, 2004
(B)
Amount%4,256
8.1
48,50791.9
52,764 100.0(In million yen)
(Reference)Year ended
March 31, 2005
Amount%4,253
8.6
45,46791.4
49,720100.0First half ended
September 30, 2005

First half ended
September 30, 2004

Amount27,21363,19490,407

Amount26,24658,40484,651

%
30.1
69.9
100.0

Order Backlog

Business Segment
Water Treatment Chemicals
Water Treatment Facilities
Total

First half ended
September 30, 2005
(A)
Amount%4,944
7.3
62,683
92.7
67,628 100.0