Kurita Water Industries Ltd.

Results Presentation for theFiscal Year Ended March 31, 2017
(Securities code: 6370)

May 2, 2017

Table of Contents

I

Consolidated Financial Results for the Fiscal Year Ended March 31, 2017

IIConsolidated Business Plan for the Fiscal Year Ending March 31, 2018

III Direction of Management
Reference Material

I.

Consolidated Financial Results for theFiscal Year Ended March 31, 2017
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, 2017
(Billions of Yen)
Fiscal Year
to March2016

Fiscal Year
to March2017

Orders

221.3

218.7

-1.1%

218.0

223.0

Net Sales

214.4

214.2

-0.1%

216.0

222.0

Operating Income

19.8

19.5

-1.9%

18.5

21.5

Ordinary Income

20.4

20.1

-1.8%

19.0

22.0

Net income attributableto owners of parent

12.6

14.5

+15.3%

12.0

14.0

Year-on-Year
RevisedChangeProjections The temporary cost from PPA ceased to exist in the cost of sales.
 The temporary effects of retirement benefit obligations in SG&A expenses
were reduced.
 Tax expense was reduced.

InitialProjections

Exchangerate (Yen)

03/2016

03/2017USD

121.05108.84EUR

134.31120.33

RMB

19.22

16.37

1

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2017
Water treatment chemicals

Water treatment facilities

TotalOrders(Billions of Yen)
240

221.3

218.7

218.0

83.4

82.1

82.7

(Billions of Yen)
240

137.8

136.6

03/2016

03/2017

135.3
0

214.2

216.0

83.7

81.9

82.7

130.7

132.3

133.3

03/2016

03/2017

Operating Income Margin

19.8

19.5

18.5

6.5

7.2

7.5

120

214.4

120

Operating Income(Billions of Yen)
24

denotes revised projections

Sales

1200

*(%)
1110.2913.4

12.2

03/2016

03/2017

11.0

9.3

9.2
9.1
8.8

8.3
8.6
9.1

7.7
703/2016

03/20172

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2017
(Billions of Yen)

Orders / Sales

90

 Orders and sales in yen terms at overseas subsidiaries were
adversely affected and declined with the stronger yen.

45

83.4

82.1

82.7

 Domestic sales rose 2.1% year on year.
 Overseas sales declined 6.5% year on year.

0(Billions of Yen)

03/2016

03/201783.7

81.903/2016

03/2017

 Overseas sales increased 6% year on year in local currencies.
 In Japan, orders for and sales of boiler water treatment
chemicals and cooling water treatment chemicals rose.

90450(Billions of Yen)
10

8.8

7.7

6.5

7.203/2016

03/2017

Operating income margin

9.1(%)
10

Operating Income Of the effects of PPA, temporary costs ceased to exist.

5082.7*7.5

50denotes revised projections

3I. Consolidated Financial Results for theFiscal Year Ended March 31, 2017
(Billions of Yen)

Orders80

 Orders for LCDs and semiconductors in China and Taiwan
declined.

79.1

400

(Billions of Yen)

72.5

03/201673.1

 Orders for hardware in Japan increased thanks to large contracts
for electronics components.
 Orders in the ultrapure water supply business in Japan fell,reflecting revisions to contracts with a certain customer.

03/2017

Sales

80

400

(Billions of Yen)

76.1

74.4

03/2016

03/201774.2

 Sales in the ultrapure water supply business in Japan declined,reflecting revisions to contracts with a certain customer.

(%)

201816.7

14.5

100

 Sales of hardware overseas increased due to the posting of large
contracts in China and South Korea.

12.7

10.803/201603/2017

Operating income margin*

Operating Income
 The decrease in sales in the ultrapure water supply business had
an adverse impact.

13.1
99.7

 Profitability in the overseas business improved.

0

denotes revised projections

4

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2017
(Billions of Yen)

Orders70

 Orders for large projects were received in water treatment
facilities for thermal power plants and in soil remediation.

350(Billions of Yen)

58.8

64.203/2016

03/201762.2

 Orders for maintenance services increased in response to theaging of facilities and demand for improved efficiency.

Sales

70

 Sales of electric power industries hardware declined.
350(Billions of Yen)

54.6

57.9

03/2016

03/2017

2.5

21

 Sales of hardware, maintenance services and soil remediation
for general industries increased.

59.1

2.2(%)
3.0

 Operating income of electric power industries hardware fell,reflecting the decline in sales.

1.2

1.5

1.3

1.503/2016
Operating income margin

03/2017*

 Profitability in hardware in general industries improved.
 Income from maintenance services and soil remediation rose.

0.7
0Operating Income

0denotes revised projections

5

I. Consolidated Financial Results for theFiscal Year Ended March 31, 2017

Assets298.1
65.9

Liabilities and Net Assets

299.2
73.4

Cash, deposits
andmarketablesecurities

82.6

Other current
assets(+7.4)

84.6(Billions of Yen)

(Billions of Yen)

298.1

299.2

69.170.5

Liabilities

229.0

228.8

Net assets(+1.3)(-2.0)

78.4

74.0(-4.4)

69.2

69.3

Mar. 31, 2016

Mar. 31, 2017(+0.1)

Property, plantand equipment

Othernon-current
assets(-0.2)
Mar. 31, 2016

Mar. 31, 2017

 Property, plant and equipment declined, with the depreciation of facilities for the ultrapure water supply businessexceeding capital expenditure.
 Intangible assets increased, reflecting the posting of goodwill and customer-related assets associated with anacquisition in the United States.

6II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
1. External Environment
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. Sales Plan for the Ultrapure Water Supply Business
8. Major Contracts in the Ultrapure Water Supply Business9. Service Business Revenue
10. Overseas Businesses (sales by region and business)
11. Capital Expenditures, Depreciation, and R&D Expenses

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
1. External Environment
Water Treatment Chemicals
 Production in Japan is expected to be steady.
 Economies in Europe, the United States, and Asia are expected to be steady, but there isdownside risk associated with policies.

Water Treatment Facilities
 Production in the domestic electronics industry is expected to be steady.
 Major investments in the domestic electronics industry will likely be limited.
 Capital expenditure in electric power industries and general industries is likely to remainroughly flat. Investment in aging facilities and for improving efficiency will continue.
 Investment in the semiconductor and LCD industries in China and South Korea is expected tocontinue.

7II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen)
Fiscal Year toMarch 2017
ActualFiscal Year toMarch 2018
Projection

Year-on-Year
Change

CK-17 Initial
Projection

Orders

218.7

221.0

+1.0%

240.0

Net Sales

214.2

223.0

+4.1%

235.0

Operating Income

19.5

18.5

-4.9%

24.5

Ordinary Income

20.1

19.0-5.4%―

Net income attributableto owners of parent

14.5

13.0-10.4%―

 Orders, net sales, and SG&A expenses will increase in association with theconsolidation of Fremont Industries.

Exchangerate (Yen)

03/2017

Assumptionsfor 03/2018

 The effects of revisions to contracts in the ultrapure water supply businesswill remain.

USD

108.84108.00EUR

120.33120.00

RMB

16.37

16.37

8

II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018

Water treatment chemicals

Water treatment facilities

Orders(Billions of Yen)
240

Sales

218.7

221.0

82.1

89.5

(Billions of Yen)
240

136.6

131.5

03/2017

03/2018
Projection

0

Operating Income(Billions of Yen)
24

120

214.2

223.0

81.9

89.4

132.3

133.6

03/2017

03/2018
Projection

1201200

TotalOperating Income Margin

19.5

18.5

7.2

7.7

12.2

10.803/2017

03/2018
Projection

(%)
9.5

8.5

7.5

9.2
9.1
8.803/2017

8.6
8.3
8.1
03/2018
Projection
9II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
(Billions of Yen)

Orders / Sales

9045

0

82.1

89.5

03/2017

03/2018
Projection

81.9

89.4

03/2017

03/2018
Projection(Billions of Yen)

 Orders and sales will rise, reflecting the consolidation ofFremont Industries.
 Domestic sales are expected to rise 2.4%.
 Overseas sales are expected to increase around 17%(around 7% except for new consolidation).

90450(Billions of Yen)
128.8

608.6

7.2

7.703/2017

03/2018
Projection

(%)
126

Operating Income Operating income is expected to rise, reflecting an increase insales.
 The consolidation of Fremont Industries is expected not to have
any impact.

0

Operating income margin10II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
(Billions of Yen)

Orders

80

40

072.5

69.003/2017

03/2018
Projection(Billions of Yen)

 Orders for hardware in Japan and the ultrapure water supply
business are expected to decline.
 In maintenance services in Japan, capacity utilization atcustomers is expected to remain flat.
 Orders for hardware and maintenance services overseas areexpected to rise.

Sales

80400

(Billions of Yen)
1680

74.4

72.7

03/2017

03/2018
Projection

14.5

10.8
03/2017

11.8

 Sales of hardware in Japan are expected to increase, reflecting
orders in the previous fiscal year.
 Sales of maintenance services are expected to remain roughly
flat in Japan and to rise overseas.
 Sales in the ultrapure water supply business will likely decline.
(%)
189

Operating Income Operating income is expected to decline, reflecting a decrease insales in the ultrapure water supply business.

8.603/2018
Projection

0

Operating income margin11

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
(Billions of Yen)

Orders

7035

064.2

62.5

03/2017

03/2018
Projection(Billions of Yen)

 Orders in electric power industries are expected to be less thanin the previous fiscal year, when large-scale contracts were won.
 With regard to orders for hardware and maintenance services ingeneral industries, expectations are placed on the replacementof aging facilities and investment for improving efficiency.

Sales

7035057.9

60.903/2017

03/2018
Projection(Billions of Yen)
3.2

2.5

1.6

1.5003/2017

 Sales of hardware in electric power industries and hardware ingeneral industries are expected to climb.
 Sales in the soil remediation services are expected to decline
from the previous fiscal year, when sales were strong.

(%)
4

3.7
2.203/2018
Projection

2

Operating Income Operating income is expected to increase, reflecting animprovement in profitability in the hardware business for electricpower industries and general industries.

0

Operating income margin12

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
7. Sales Plan for the Ultrapure Water Supply Business(Billions of Yen)
40

+3.5

-3.3
-3.4

32.0

Expiration ofNew
construction, contracts,
Revision toetc.
additioncontracts

+1.5
28.8

-2.4

-2.0

New
Expiration ofconstruction,contracts, Revision toaddition
etc.
contracts

25.9

20003/2016

03/2017

03/2018
Projection
13II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
8. Major Contracts in the Ultrapure Water Supply Business
Original contract

Renewal or extension(Domestic)(Domestic)(Domestic)(Overseas)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Domestic)(Overseas)

03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3 20/3 21/3 22/3 23/3
* Key contracts are shown above. This does not cover all contracts.

14II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
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)
240

214.4
178.1
58.8

120
150.4

189.4
60.0
154.9

31.6
83.7
182.6

32.2

89.4

81.9
179.7

186.3

94.9

98.9

97.8

96.9

27.7

34.5

31.8

34.5

36.7

03/201403/2015

03/2016

03/2017

03/2018
Projection

91.5

0

223.0

214.2

91.5

94.9

50

Servicebusiness
revenue

0

8.1

8.3

51.8

54.4

03/201403/2015

98.9

97.8

96.9

32.0

28.8

25.9

6.3

6.4

6.5

Ultrapure watersupply business

60.6

62.6

64.5

03/2016

03/2017

03/2018
Projection

Tool cleaning

Maintenance,etc.

 In the fiscal year ended March 31, 2017, domestic maintenance services and soil remediation services performed well.
 In the fiscal year ending March 31, 2018, revenue from maintenance services in Japan and overseas is expected to rise,
and revenue from soil remediation services is likely to fall.
15

II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
Overseas Sales by Region
Asia

N. America

EMEA (formerly Europe)

Overseas Sales by Business Segment
Other(Billions of Yen)

33.6
3.3
1.3
1.8
27.2

003/2014

Water treatment facilities(Billions of Yen)

72

36

Water treatment chemicals

39.1
3.5
1.6
2.0
32.1

63.9
3.0

64.2
2.6

20.7

19.8

2.4

37.8

1.9

39.9

71.4
2.8

71.4

72

03/2016

03/2017

64.2

41.2

38.5

22.7

25.7

21.3
6.0
36

33.6
15.9

41.3

17.7
03/2015

63.9

39.1

45.0

17.3

21.8

26.4

0

03/2018
03/2014 03/2015 03/2016 03/2017 03/2018
Projection
Projection
 In the fiscal year ended March 31, 2017, sales in the Water Treatment Chemicals business declined with the effect of foreignexchange conversion. Sales in the Water Treatment Facilities business increased significantly in East Asia.
 In the fiscal year ending March 31, 2018, sales are expected to rise chiefly due to the consolidation of Fremont Industries
and increases at the existing subsidiaries.
* 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.

16II. Consolidated Business Plan for theFiscal Year Ending March 31, 2018
Capital Expenditures and Depreciation

R&D Expenses

Capital expenditures Capital expenditures Depreciation(ultrapure water (excl. ultrapure water (Property, plant
supply business)
supply business) and equipment)(Billions of Yen)
2010

15.8

9.3
13.4

0

(Billions of Yen)
7.0

20.0

18.8

14.0

6.3 13.2

3.0

3.003/2016

03/2017

R&D expenses

2.5

Percentage of net sales

2.4

2.5

3.5

13.0

(%)
3

1.5

5.3

5.0

5.503/2016

03/2017

03/2018
Projection

6.003/2018
Projection

0.00

 In the fiscal year ended March 31, 2017, capital expenditurein the ultrapure water supply business decreased.

 In the fiscal year ended March 31, 2017, R&D expenses
fell partly due to the effect of foreign exchange conversion.

 In the fiscal year ending March 31, 2018, capital expenditurein the ultrapure water supply business and investment in thereplacement and reinforcement of other facilities will rise.

 In the fiscal year ending March 31, 2018, the development
function will be strengthened globally.
17

III. Management Initiatives
1. Policy for the Final Year of Competitive Kurita 2017 (CK-17) Plan
2. Acceleration of Business Expansion Overseas
3. Acquisition of Leading-Edge Technologies and New Development
4. Promotion of Services Business5. Improvement of Capital Efficiency
6. Acquisition of Own Shares and Retirement of Treasury StockIII. Management Initiatives
1. Policy for the Final Year of Competitive Kurita 2017 (CK-17) Plan

Basic policy
Improve customer intimacy by providing the best
customer solutions

Reconfigurebusiness
processes withuse of information
technologies

Invest in focused
growth areas andreorganize
business portfolio

Enhancecompetitive
advantage andreduce risk bystepping up
CSR activities

18III. Management Initiatives
2. Acceleration of Business Expansion Overseas (1)Establish a businessbase in North Americathrough M&A

Kurita Europe GmbH
Fremont Industries, LLC
Kurita Turkey Kimya A.S.

Establish Kurita
Middle East FZE

Establish Kurita-GK
Vietnam Co., Ltd.

Developing service businessmodels, including the ultrapure
water supply business andwastewater reclamation
A new water treatment
chemicals plant inMalaysia

Technology, business model, goods

19III. Management Initiatives
2. Acceleration of Business Expansion Overseas (2)Acquisition targets
West Coast andMountain States

Midwest States

NortheastStates Indigenous sales network
 Unique technologies

Southwest and Texas

Southeast States

Business base acquired from Fremont Industries
Products

Customers

Boiler water treatment chemicals,cooling water treatment chemicals,
and wastewater treatment chemicals

2,000 companies in areas suchas the food industry, hospitals,
and building air-conditioning

Establish full geographicalcoverage across the U.S.
through acquisitions

20

III. Management Initiatives
3. Acquisition of Leading-Edge Technologies and New Development
Investment in APANA Inc.
SensorCommercial facility

Sewagewater

Convoluted plumbing system and highly
scattered water outlet locations

Technological advantage
 Sensor technology

Customer benefits realized
Rationalized water usage for air conditioning,cooking, and cleaning at large commercial facilities

 Power-saving data communication technology
 Data analysis technology based on unique logic

Possible application to commercial facilities andplants in Japan21

III. Management Initiatives
4. Promotion of Services Business
Expansion of service type business models

Standardized wastewater reclamation system
The ultrapure watersupply business

Pure water supply service

22III. Management Initiatives
5. Improvement of Capital Efficiency
Uses of Cash (Plan): During the tenure of CK-17

Operatingcash flowDividends

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

Share buybacks

 Discuss/execute acquisition of own sharesusing surplus funds.

M&ACapital
expenditures

Generation of cash Discuss/execute M&A in the UnitedStates..
 Invest in promising businesses in Japanand overseas.

Uses of cash Control unwarranted accumulation of internal cash and resultant increases in shareholders’equity, while securing sufficient working capital and reserve funds for contingencies.
 Maintain and improve ROE above the cost of equity.
23

III. Management Initiatives
6. Acquisition of Own Shares and Retirement of Treasury Stock
Planned acquisition
4 million shares (maximum)

Number of shares tobe acquired(Ratio to the number of shares outstanding (excluding treasurystock): 3.45%)

Total value

10 billion yen (maximum)

Acquisition period

From March 2 to May 31, 2017Retirement
Number of shares tobe canceled(Ratio to the number of issued shares before retirement: 2.49%)

Date of retirement

April 6, 2017

Number of issued
shares after retirement

116,200,694 shares

2,963,900 shares

24

Reference Material(Billions of yen)

+1.3
19.8

Decrease inSG&A expenses-0.1
Impact of decreased
revenue-1.5
Effect of change incost of sales ratio

03/2016

19.5

03/2017

Note: The effect of change in the cost of sales ratio is calculated using the gross profit margin.
25

■URL■

http://ir.kurita.co.jp/en/■ M AI L ■ir@kurita.co.jp

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