Kurita Water Industries Ltd.

Results Presentation for theFiscal Year Ended March 31, 2016
(Stock code: 6370)

May 2, 2016

Table of Contents

I

Consolidated Financial Results for the Fiscal Year Ended March 31, 2016

II

Consolidated Business Plan for the Fiscal Year Ending March 31, 2017

III Direction of Management

Reference Material

I.

Consolidated Financial Results for theFiscal Year Ended March 31, 2016
1. Financial Highlights
2. Orders, Sales, Operating Income, and Operating Income Margin

3. Water Treatment Chemicals
4. Water Treatment Facilities (for the electronics industry)

5. Water Treatment Facilities (for general industries)
6. Financial Condition

I. Consolidated Financial Results for the
Fiscal Year Ended March 31, 2016

(Billions of Yen)
Fiscal Year
to March2015

Fiscal Year
to March2016

Year-on-Year
ChangeOrders

181.3

221.3

+22.1%

215.0

217.0

Net Sales

189.4

214.4

+13.2%

214.0

216.0

Operating Income

19.4

19.8

+2.0%

19.5

19.5

Ordinary Income

18.9

20.4

+7.9%

20.0

20.0

Net income attributableto owners of parent

10.4

12.6

+20.5%

12.3

12.3

RevisedInitialProjections Projections

 Orders increased primarily due to the consolidation of KEAG and an increase in orders in the Water Treatment
Facilities business.
 Net sales rose with the consolidation of KEAG.
 Operating income climbed, reflecting an improvement in the cost of sales ratio, which outweighed PPA associatedwith KEAG and an increase in retirement benefit obligations.
 Non-operating income improved as acquisition expenses declined significantly.
1

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2016

Water treatment chemicals

Water treatment facilities

TotalOrders(Billions of Yen)
220

221.3

215.0

83.4

84.2

181.3

110

(Billions of Yen)
220

214.4

214.060.0

83.7

84.2

129.4

130.7

129.803/2015

03/2016

189.4

110

121.9

137.803/2015

03/2016130.8
0Operating Income(Billions of Yen)
20

Operating Income Margin

19.4

19.8

19.5

7.9

6.5

7.0(%)
1413.1
10100

denotes revised projections

Sales

59.4

0

*

11.6

13.4

03/2015

03/2016

12.5

10.3
8.9

10.2 9.6
9.3 9.1
7.7

603/2015

8.3

03/20162

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2016
(Billions of Yen)

Orders90

 Overseas orders increased significantly, reflecting theconsolidation of KEAG.
4583.459.4003/2015

 Orders also increased in China and Southeast Asia.

84.2

 In Japan, orders for process treatment chemicals rose, orders forcooling water treatment chemicals increased slightly, and orders
for boiler water treatment chemicals fell slightly.

03/2016(Billions of Yen)

Sales

90

 Ditto
45

83.7

60.0
003/2015

84.203/2016(Billions of Yen)

(%)

1214

13.1

7.7

77.90

 Operating income declined due to the effects of PPA and theamortization of goodwill associated with the consolidation of KEAG.

8.3

6

Operating Income

6.503/2015
Operating income margin

7.003/2016*0denotes revised projections

3

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2016
(Billions of Yen)

Orders80

 Orders increased, reflecting the acquisition of large LCD andsemiconductor contracts in China, South Korea, and Taiwan.
40

79.1

69.3

75.0

 Orders for maintenance services increased steadily in Japan andoverseas.
 Orders in the ultrapure water supply business declined slightly.

003/2015

03/2016(Billions of Yen)

Sales80

 In Japan, sales both of hardware and maintenance services increased.
40075.4

76.103/2015

03/2016(Billions of Yen)

18

16.7

912.703/2015
Operating income margin An improvement in the cost of sales ratio outweighed an increase in
SG&A expenses.

12.103/2016*

Operating Income Unprofitable projects were curbed overseas.

15.8

12.9
9.7

0

 Sales of maintenance overseas were steady.

(%)

189

 Sales of hardware overseas fell as the posting of sales was completed.

76.1

0

denotes revised projections

4

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2016
(Billions of Yen)

Orders60 Orders for dry methane fermentation facilities were received.
30

052.6

58.8

03/2015

03/2016

 Orders for facilities for electric power and the food industry rose.

55.8(Billions of Yen)

Sales60

 Sales of hardware for general industries fell significantly.
30

054.0

54.6

03/2015

03/2016

53.7(Billions of Yen)
2.4

 Sales of hardware for electric power, soil remediation services, andmaintenance services increased.

(%)

3.4

4

Operating Income
 The fixed charge ratio rose due to a fall in sales of hardware forgeneral industries.

1.2

1.80.003/2015
Operating income margin

1.2

0.8

0.7

0.4

03/2016*2 SG&A expenses increased.

0denotes revised projections

5

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2016

AssetsLiabilities and Net Assets(Billions of Yen)

294.5
67.5

298.1
65.9
(-1.6)

81.5

84.6

Cash, deposits
andmarketablesecurities(Billions of Yen)

294.5

298.1

71.0

69.1

Liabilities(-1.9)

Other current
assets(+3.1)

75.0

78.4

Property, plantand equipment

223.5

229.0

Net assets(+3.4)

70.5

69.2(-1.3)

Mar. 31, 2015

Mar. 31, 2016

Othernoncurrentassets(+5.5)
Mar. 31, 2015

Mar. 31, 2016

 Property, plant and equipment rose due to an increase in facilities for the ultrapure water supply business.

6II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017
1. Key Assumptions
2. Overview
3. Orders, Sales, Operating Income, and Operating Income Margin
4. Water Treatment Chemicals
5. Water Treatment Facilities (for the electronics industry)
6. Water Treatment Facilities (for general industries)
7. Actual Sales and Sales Forecast in Ultrapure Water Supply Business8. Service Business Revenue9. Overseas Businesses (sales by region and business)
10. Capital Expenditures, Depreciation, and R&D Expenses
11. Dividend Policy

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

Water Treatment Chemicals
 Production activity in the domestic manufacturing industry
will remain roughly flat.

 In the domestic market, there will be increasing downward
pressure on prices.
 In Europe, demand will recover at a slow pace, and growthin Asia will slow.

Water Treatment Facilities Capacity utilization in the domestic electronics industry willdecline.
 In Japan, no large-scale investment is expected, but steadyinvestment in domestic demand-led industries and replacedemand for industrial complexes are expected.

 Overseas, expectations are placed on investment associatedwith semiconductor in China, South Korea, and Taiwan.

7II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2017

(Billions of Yen)
Fiscal Year toMarch 2016
ActualFiscal Year toMarch 2017
Projection

Year-on-Year
ChangeOrders

221.3

223.0

+0.8%

Net Sales

214.4

222.0+3.6%

Operating Income

19.8

21.5

+8.4%

Ordinary Income

20.4

22.0+7.6%

Net income attributable toowners of parent

12.6

14.0+11.3%

 Orders in the water treatment chemicals segment are expected to increase.
 Despite an increase in SG&A expenses, operating income is expected to rise due to an increase in sales.
 The tax burden rate is expected to be lower.
8

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

Water treatment chemicals

Water treatment facilities

Orders(Billions of Yen)
220

Sales

221.3

223.0

83.4

85.9

1100

(Billions of Yen)
220

137.8

137.1

03/2016

03/2017

222.0

83.7

85.9

130.7

136.1

003/2016

03/2017

Operating Income Margin

19.8

21.5

6.5

8.0

110

214.4

110

Operating Income(Billions of Yen)
22Total(%)
129

13.4

13.5

03/2016

03/2017

10.2
9.3

9.9
9.7
9.3

7.7
603/2016

03/20179

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

(Billions of Yen)

Orders90

 The Group will work to expand share in the domestic market byenhancing its ability to make proposals.
45

83.4

85.9

 Orders at KEAG are expected to grow overseas.
 Growth in orders, other than those at KEAG, in local currency terms willbe offset by a stronger yen.

003/2016

03/2017(Billions of Yen)

Sales90

 Ditto45083.7

85.903/2016

03/2017(Billions of Yen)

(%)

127.7

9.3

603/2016

8.0
03/2017

Operating Income
 Earnings at KEAG are expected to improve with no temporary
expenses.

66.5
012

 Earnings excluding those at KEAG are expected to rise due to anincrease in sales in Japan and improvement in the cost of sales ratio.

0

Operating income margin10II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

(Billions of Yen)

Orders80

 Orders for hardware are expected to decline both in Japan andoverseas.
40079.1

03/2016

 Orders for maintenance services in Japan are expected to fall due to adecline in capacity utilization at customers’ plants.

75.3

 Orders for maintenance services overseas are expected to continue
rising.

03/2017(Billions of Yen)

Sales

80

 Sales of hardware overseas are expected to increase, reflecting orders
in the previous fiscal year.
40

076.1

78.1

 Sales in ultrapure water supply business will rise slightly.
03/2016

03/2017(Billions of Yen)(%)

181816.7

Operating Income
 The cost of sales ratio is expected to deteriorate due to an increase inmaintenance cost in ultrapure water supply business.

15.8

90

 Sales of maintenance services are expected to decline in Japan but toincrease overseas.

912.7

12.3

03/2016

03/20170

Operating income margin11

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

(Billions of Yen)

Orders60

 Expectations are placed on emerging demand in electric powerindustries due to electric power deregulation.
30058.803/2016

61.7

 There are also expectations of replacement investment in hardware
for general industries in Japan.
 Orders for maintenance services for general industries are expected
to increase due to stronger proposal activities.

03/2017(Billions of Yen)

Sales60

 Sales of general industries hardware are predicted to rise due toprogress with construction.
30

054.6

57.9

03/2016

03/2017(Billions of Yen)

 Sales of maintenance services for general industries are also predicted
to rise on increased orders.

(%)

22

 The impact of increased revenues from general industries hardware isexpected.

2.010.7011.203/2016Operating Income SG&A expenses are expected to increase.

1.203/2017

0Operating income margin12

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2017

(Billions of Yen)
40

32.2

+1.9-2.0

New
construction,
addition

Expiration ofcontracts

32.0

+3.8

-3.6

New
32.0

Expiration
32.2of contracts

contracts,
addition

32.2

20003/2015

03/2016

03/201713

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2017

Service Business Revenue
in the Water Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)(Billions of Yen)
100

(Billions of Yen)

90.3

240

178.1

189.4

32.4

58.8

146.4

90.3

0

60.0
182.6

120
150.4

91.5

31.6

32.2

85.9

83.7
56.1

98.9

101.2

32.0

32.2

Ultrapure watersupply business

6.3

6.9

Tool cleaning

60.6

62.0

Maintenance,etc.

03/2016

03/2017
Projection

222.0

214.4
180.1

91.5

94.9

187.1

50

8.5

8.1

8.3

154.9

94.9

98.9

101.2

33.6

27.7

34.5

31.8

34.9

03/201303/201403/2015

03/2016

03/2017
Projection

Servicebusinessrevenue

0

49.4

51.8

54.4

03/201303/201403/2015

 In the fiscal year ended March 31, 2016, revenue from maintenance in Japan and overseas and soil remediation rose,
while revenue from tool cleaning fell.
 In the fiscal year ending March 31, 2017, revenue from maintenance in Japan and overseas is expected to be strong,
and revenue from tool cleaning is expected to rise. Revenue from soil remediation is expected to remain flat.
14II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

Sales by Region
Asia

N. America

Sales by Overseas Business Segment

EMEA (formerly Europe)(Billions of Yen)
72

63.9
3.0

Other70.3
3.5

Water treatment chemicals

Water treatment facilities(Billions of Yen)
72

70.3
63.9

21.5
20.7

36

0

30.5
3.0
1.2
2.3

33.6
3.3
1.3
1.8

23.9

27.2

03/201303/2014

39.1
3.5
1.6
2.0

32.1

03/2015

42.8
3.5

2.4

39.1
36

30.5

41.2

33.6
17.3

37.8

03/2016

12.0

41.8

03/2017
Projection

0

18.5
03/2013

15.9

17.7

21.8

22.7

03/201403/2015

03/201627.5

03/2017
Projection

 In the fiscal year ended March 31, 2016, sales rose, reflecting the consolidation of KEAG in the water treatment chemicals
business and growth in China and Southeast Asia.
 In the fiscal year ending March 31, 2017, sales are expected to rise given the extra month in the period for KEAG and anincrease in sales of facilities for the electronics industry overseas.
* New geographical segments have been applied from the fiscal year ended March 31, 2016, and they are applied to the fiscal year ended
March 31, 2015 retroactively.

15

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

Capital Expenditures and Depreciation
Capital expenditures Capital expenditures(ultrapure water(excl. ultrapure watersupply business)
supply business)(Billions of Yen)
20

R&D Expenses

Depreciation

R&D expenses(Billions of Yen)
7.0

18.8

(%)
3

2.3

10

15.8

8.5
14.4

0

8.4
13.4

6.0

Percentage of net sales

3.0

4.2

03/2015

03/2016

03/2017
Projection

 In the fiscal year ended March 31, 2016, capital expendituresof the ultrapure water supply business increased.
 In the fiscal year ending March 31, 2017, capital
expenditures of the ultrapure water supply business areexpected to decline.

2.5

3.5

4.2 13.6

2.5

2.5

1.54.4

5.3

5.5

0.0

003/2015

03/2016

03/2017
Projecton

 In the fiscal year ending March 31, 2017, the Group will
focus on enhancing product appeal and expanding
synergies with KEAG.

16

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2017

Basic Dividend Policy
Kurita Water Industries’ basic policy is to provide shareholders with stable dividends.
Setting a payout ratio of 30 to 50% as our target, we will continuously work to increase
dividends, making decisions based on the payout ratios for the most recent five years.
(Yen)
60

(%)
6056.1
52.4

50

45.4

44.3

50

41.5

40

3040

26.8

26.8

28.4

30.6
30

22.5

20

32

34

36

38

4442

40

46

48

50
20

1001003/2008

03/200903/2010

03/201103/201203/2013

Dividend per share

03/201403/2015

03/2016

03/2017
Projection

0Payout ratio
17III. Direction of Management

1. Achievement of Corporate Philosophy

2. To Achieve CK-17 (Competitive Kurita 2017) Plan
3. Continued Corporate Governance Reform
4. Improvement of Capital Efficiency

III. Direction of Management

Corporate Philosophy: Study the properties of water, master them, andwe will create an environment in which nature and man are in harmony

BusinessTechnology

Humanresources

Resolving water andenvironmental challenges

Helping to achieve a sustainable society
18III. Direction of Management

Achievements in the first year (fiscal year ended March 31, 2016)

1

Priority measures

Achievements in the first year Enhanced the functions of chemicals (Newly
Developed Multi-Functional Polymer)

1

Create competitive productsand services

 Used KCR Center (Kurita Customer RelationshipCenter) in the domestic chemicals market
 Development of KWSS (Kurita Water SupplyService) contracts

2

Cultivate new markets

 Tapped into new markets in Europe and China
through the acquisition of BKG’s water treatment
businesses
 Started ultrapure water supply business in SouthKorea

3

Optimize production systems
and utilize the Group's network Started cross-selling among KEAG and otherGroup companies in Japan and overseas

19III. Direction of Management

Initiatives from the second year (fiscal year ending March 31, 2017)

2

Priority measures

Initiatives from the second year Enhance the functions of chemicals (use the R&D
capabilities of the new KEG).

1

Create competitive products
and services

 Create new services that will help improvecustomers’ productivity and reduce theenvironmental burden by combining chemicals andfacilities, and sensing technology and IT.
 Expand the chemicals business in North America.

23

Cultivate new markets

Optimize production systems
and utilize the Group's network

 Expand ultrapure water supply business into newmarkets.
 Restructure the chemicals business overseas andexpand synergies with the new KEG.
 Optimize the Group’s production system in Japan,
East Asia, and Southeast Asia.

20

III. Direction of Management

Achievements in fiscal year ended March 31, 2016
 Review the roles and authority of the Board of Directors and management committees.
 Consider an officers’ compensation system that will be more closely linked to results.
 Improve transparency in the process of nominating officer candidates.

Continued governance reform

Prompt and bold decision making
and appropriate risk taking

Evaluation by theBoard of Directors

Enhancement in corporate value21III. Direction of Management

Uses of Cash (policy)¥87.0 ‒ ¥90.0 billion¥87.0 ‒ ¥90.0 billion
Dividends

M&A Prioritize investment in promising businesses
and consider share buybacks using surplus
funds.
 Consider M&A in North America.

CapitalExpenditures

 Invest in the ultrapure water supply business,among other businesses, in Japan andoverseas.

Share buybacks
Operatingcash flow

Generation of cash

 Strive to continue raising dividends, aiming fora payout ratio of 30-50% over 5 years.

Uses of cash

For three years from the fiscal year ended March
31, 2016 to the fiscal year ending March 31, 2018

 We will endeavor to curb surplus funds and increases in shareholders’ equity upon securing
operating funds and contingency funds.
 We will maintain ROE at a level that exceeds cost of shareholders’ equity and will strive toincrease it.
22Reference Material(Billions of yen)

+7.8

-11.1
19.4

Impact ofincreased revenue+3.7
Increase in
SG&A expenses

19.8

Effect of change incost of sales ratio

03/2015

03/2016

Note: The effect of change in the cost of sales ratio is calculated using the gross profit margin.
23

■ U R L ■h t t p : / / i r. k u r i t a . c o . j p /■ M A I L ■ir@kurita.co.jp

Forward-looking Statements
This presentation contains forward-looking statements, business plan projections, andjudgments based on information available to management at the time of writing. Due to theexistence of a variety of risk factors and uncertainties, actual results may differ from thosespecified or implied by these forward-looking statements and projections.