FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Nine Months Ended December
31, 2017
Tokyo, Japan, January 31, 2018—Kurita Water Industries Ltd. (TSE Securities Code6370) announced net sales of 163,511 million yen and profit attributable to owners ofparent of 13,545 million yen, or 120.60 yen per share, for the nine months ended
December 31, 2017 (April 1, 2017 – December 31, 2017).
Results of Operations
Total consolidated orders for the Kurita Group (Kurita Water Industries Ltd. and its
consolidated subsidiaries and equity method affiliates) in the nine months ended
December 31, 2017 rose 15.9% from the level of the year-ago period, to 187,926
million yen, and net sales increased 7.5%, to 163,511 million yen.
Operating income was 14,854 million yen, up 8.9% versus the same the year-ago
period, and ordinary income was 14,726 million yen, up 4.4%. Profit attributable toowners of parent amounted to 13,545 million yen, up 33.5%. The Group recorded a gain
on step acquisitions of 2,443 million yen in extraordinary income associated with theacquisition of additional shares of Hansu Co., Ltd., an equity-method affiliate in South
Korea. The Group also recorded extraordinary income of 1,572 million yen from thesale of shares of other listed companies.
Looking at the market environment surrounding the Kurita Group, in Japan, therecovery of production activities of the manufacturing industry became increasingly
evident, and capital expenditure also remained firm, reflecting an improvement incorporate earnings. Overseas, the U.S. economy and the European economy continued
to grow, and positive indicators of an economic recovery continued to appear inemerging economies, particularly the Chinese economy.
In this environment, the Group sought to develop and market competitive products
and services using IT and sensing technologies. It also proposed solutions to customers’
challenges including the reduction of environmental footprints, energy saving andimprovements in productivity. Results at Fremont Industries, LLC, a U.S. company theGroup has acquired, are being consolidated from the first quarter of this fiscal year.
Segment Information
The Group consists of two reportable segments in its segment information: Water
Treatment Chemicals and Water Treatment Facilities
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 66,511 million
yen, up 8.6% versus the same period of the fiscal year ended March 31, 2017, whilesales rose 8.5%, to 66,498 million yen.
Operating income was down 4.6% to 5,602 million yen, reflecting an increase in
selling, general and administrative expenses caused by increases in personnel expenses
due to the active development of overseas businesses, and IT-related expenses despite
the effect of the increase in sales.
In Japan, capacity utilization recovered at customers’ plants, and the Group sought togain new customers by proposing solutions using new products and services. This effort
produced growth in our main products, boiler water treatment chemicals and cooling1water treatment chemicals. Process treatment chemicals for paper and pulp andchemicals for iron and steel also grew. As a result, both orders and sales increased inJapan.
Overseas, both orders and sales increased, reflecting the consolidation of results at theacquired subsidiary based in the United States from the first quarter of this fiscal year,
in addition to higher sales in each geographical area.
Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 121,415 million
yen, up 20.4% versus the same period of the previous fiscal year. Sales rose 6.8%, to97,013 million yen.
Operating income climbed 18.9%, to 9,260 million yen mainly due to the increase insales and an improvement in profitability through thorough process control and costmanagement in installment in construction work.
In Japan, in the electronics industry, orders in the water treatment facilities increased
due to orders for large-scale projects. Sales also increased with progress in construction
work for large-scale projects the orders for which were received in the previous fiscal
year. In maintenance services, due to the strong orders associated with expansion andremodeling projects against a backdrop of a rise in capacity utilization at customers’
plants, both orders and sales have increased.
In general industries, orders declined but sales increased in water treatment facilities.
Orders and sales in maintenance services increased mainly due to demand for the
renewal and expansion of facilities at customers’ plants. Orders for water treatment
facilities for electric power declined, but sales for them increased. Both orders and sales
in soil remediation declined in a backlash to the posting of orders and sales of large
projects in the previous fiscal year.
Overseas, orders rose significantly on orders for large-scale projects in China andSouth Korea. Sales also increased, reflecting progress in construction work for projects
the orders for which were received in the previous fiscal year.
Total sales in the ultrapure water supply business in Japan and overseas declined dueto the effect of a decrease in sales resulting from changes in contracts with a certain
customer in the previous fiscal year, despite the posting of sales from expansion
projects.
Financial Condition
Current assets totaled 152,133 million yen at the end of the third quarter (December 31,2017), a decrease of 3,797 million yen versus the end of the previous fiscal year (March
31, 2017). This was mainly a result of a decrease of 16,703 million yen in funds in hand,or cash and deposits and marketable securities, which outweighed increases of 6,664
million yen in trade accounts receivable, 3,222 million yen in work in process, and1,212 million yen in raw materials and supplies. The increase in trade accounts
receivable was chiefly the result of relatively strong sales in the nine months underreview. The rise in work in process, raw materials and supplies are attributable mainly
to progress in construction in the Water Treatment Facilities business. The decrease infunds in hand, cash and deposits and marketable securities was mainly the result of theuse of funds for capital expenditure mainly on facilities in the ultrapure water supply
business, the conversion of the water treatment chemicals business company(equity-method affiliate) in South Korea into a consolidated subsidiary and the2acquisition of own shares.
Non-current assets totaled 156,956 million yen at the end of the third quarter(December 31, 2017), an increase of 13,638 million yen versus the end of the previous
fiscal year. The increase reflected increases of 7,309 million yen in property, plant andequipment, 6,043 million yen in intangible fixed assets and 288 million yen in
investments and other assets. The increase in property, plant and equipment was
primarily due to capital expenditure mainly on facilities in the ultrapure water supply
business in excess of depreciation. The increase in intangible fixed assets was chiefly
the result of posting goodwill of 6,246 million yen associated with the conversion of thewater treatment chemicals business company in South Korea into a consolidated
subsidiary. The increase in investments and other assets was due primarily to a rise of
1,929 million yen in investment securities as a result of an increase in unrealized gains
on shares held due to a rise in share prices, as well as a decline of 1,642 million yen in“other” in investments and other assets due mainly to a decrease in shares ofsubsidiaries and associates attributable to the conversion of water treatment chemicals
business company in South Korea into a consolidated subsidiary.
Current liabilities totaled 47,757 million yen at the end of the period, an increase of
3,347 million yen versus the end of the previous fiscal year. The increase mainlyreflected a rise of 5,425 million yen in “other” current liabilities due to an increase inaccounts payable related to capital expenditure, as well as a decrease of 1,095 million
yen in provision.
Non-current liabilities totaled 26,100 million yen at the end of the period, an increaseof 20 million yen versus the end of the previous fiscal year.
Net assets totaled 235,232 million yen, an increase of 6,474 million yen versus theend of the previous fiscal year. The increase was due mainly to increases of 2,177
million yen in shareholders’ equity and 3,491 million yen in accumulated othercomprehensive income. The increase in shareholders’ equity was attributable mainly toa decline of 773 million yen in retained earnings and a decrease of 2,949 million yen intreasury stock (an increase in net assets). The fall in retained earnings was attributable
to a decrease of 14,318 million yen as a result of dividends of 5,793 million yen, thesum of year-end dividends of 2,865 million yen for the previous fiscal year and interim
dividends of 2,928 million yen for the current fiscal year, and the retirement of treasury
shares of 8,525 million yen, which outweighed the posting of a profit attributable toowners of parent of 13,545 million yen for the first nine-month period under review.
The decrease in treasury stock (an increase in net assets) was attributable to an increaseof 5,590 million yen mainly through market purchases and a decrease of 8,539 million
yen mainly due to retirement. The increase in accumulated other comprehensive income
resulted mainly from an increase of 2,596 million yen in unrealized gains onavailable-for-sale securities in association with a rise in unrealized gains on investment
securities and a rise of 1,994 million yen in foreign currency translation adjustments dueto the weakening of the yen against the euro, which outweighed a decrease of 1,085
million yen in deferred gains on hedges.

3Outlook for the Fiscal Year Ending March 31, 2018
In light of financial results for the nine months ended December 31, 2017 and the strong
performance of the water treatment facilities business for the electronics industry, theconsolidated earnings forecast for the fiscal year ending March 31, 2018 has beenrevised as stated below.
The forecast is produced by the Company based on information available at the time of
publication of this document. Actual results may differ significantly from the forecast
due to a change in a range of factors.
(Consolidated earnings forecast)
Revision of the consolidated earnings forecast for the fiscal year ending March 31, 2018
(April 1, 2017 – March 31, 2018)(Million yen)
Net sales

OperatingincomeOrdinary
incomeProfitattributableto owners ofparent

Net income
per share

Million yen

Million yen

Million yen

Million yen

Yen

Previous forecast (A)230,000

21,00021,50015,000133.57

Revised forecast (B)235,000

21,70021,70018,300162.95

5,000

700

200

3,300

29.38

2.2

3.3

0.9

22.0

22.0

214,187

19,452

20,074

14,506125.23

Change (B – A)
Percent change (%)
For reference:
Fiscal year ended
March 31, 20174

Financial Statements — Consolidated
Balance Sheet — Consolidated(Million yen)

AssetsCurrent assets
Cash and deposits
Notes receivable – trade
Accounts receivable – tradeMarketable securities
Finished products
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings (net)
Machinery and equipment (net)Other (net)Total property, plant and equipment
Intangible fixed assets
Goodwill
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

As ofMarch 31, 2017
Amount

As ofDecember 31, 2017
Amount

72,7507,843
60,439
603
3,114
4,181
2,229
5,016
(246)
155,930

56,445
8,743
67,103
205
3,875
7,403
3,441
5,202
(286)
152,133

13,20335,93624,89674,036

11,83534,69834,811
81,34515,04910,25925,30821,512
9,839
31,351

34,8449,317(189)
43,972
143,318
299,249

36,7737,675(188)
44,260156,956
309,0905

(Million yen)

As ofMarch 31, 2017
Amount

As ofDecember 31, 2017
AmountLiabilities
Current liabilities
Notes payable – trade
Accounts payable – trade
Income taxes payable
Provision
Other
Total current liabilities
Non-current liabilities
Net defined benefit liability
Provision
Other
Total noncurrent liabilities
Total liabilities

1,710
21,715
2,875
3,244
14,86344,4102,154
20,987
2,177
2,149
20,28847,757

16,05425
9,999
26,08070,49016,67986
9,333
26,10073,85813,45010,993
205,586(13,891)
216,138

13,45010,993204,813(10,942)
218,315

14,792

17,388670(380)(3,593)(3)
11,484
1,135
228,758
299,249

(415)
(380)
(1,599)(16)
14,975
1,942
235,232
309,090

Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

6

Statements of Income and Comprehensive Income — Consolidated
Statement of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of unconsolidated subsidiaries
and affiliates
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange losses
Acquisition-related expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on step acquisitions
Total extraordinary income
Income before income taxes
Income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Nine months ended
December 31, 2016
Amount152,086
102,076
50,00936,363
13,646Nine months ended
December 31, 2017
Amount163,511
109,381
54,13039,275
14,854

138
477

139
537

124

140

315
1,056

419
1,236

151
55
129
261
597
14,104

303
105
530
426
1,364
14,726391
391
14,496
4,256
10,23994
10,144

1,572
2,443
4,015
18,742
5,121
13,621
76
13,545

7

Statement of Comprehensive Income(Million yen)

Net income
Other comprehensive income
Unrealized gains (losses) on available-for-salesecurities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Components:
Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests

Nine months ended
December 31, 2016
Amount10,239Nine months ended
December 31, 2017
Amount13,621(1,528)2,568

284(6,515)76(1,085)
1,599
(12)

(156)

75

(7,840)
2,398

3,145
16,766

2,385

16,69013768Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Nine months ended December 31, 2017 (April 1, 2017 – December 31, 2017)
Not applicable(Notes on Significant Changes in Shareholders’ Equity)
Nine months ended December 31, 2017 (April 1, 2017 – December 31, 2017)(1) Based on a resolution at a meeting of the Board of Directors held on February 28, 2017, 2,004,400
shares of own shares was acquired. As a result, treasury stock increased 5,586 million yen.
(2) Based on a resolution at a meeting of the Board of Directors held on March 30, 2017, treasury stock
was canceled. The retirement of treasury stock did not have any impact on the total amount ofshareholders’ equity. However, treasury stock declined by 8,525 million yen (shareholders amountincreased), and retained earnings declined by the same amount.
1) Class of stock canceled
Common stock of the Company
2) Number of shares canceled
2,963,900 shares
3) Value of shares canceled
8,525 million yen
4) Date of retirement of stock
April 6, 20175) Number of issued shares after the retirement of treasury stock
116,200,694 shares(Application of Accounting Unique to the Creation of Quarterly Consolidated Financial Statements)
Calculation of tax expense
The Company reasonably estimates an effective tax rate after the application of tax effect accounting fornet income before income taxes for the consolidated fiscal year and multiplies the net income before
income taxes by the estimated effective tax rate.
(Business Combinations)
Business combination through acquisition(1) Overview of the combined companies(i) Name of the acquiree and the overview of its business
Name: Hansu Co., Ltd.
Business: Manufacture and sale of water treatment chemicals(ii) Main reason for conducting the business combination
Hansu Co., Ltd. was established as a joint venture company with the Company in 1974 and hassince been developing the water treatment chemicals business for more than 40 years in South
Korea. Hansu Co., Ltd. has built community-based sales and service networks and has a numberof staff with knowledge of water treatment in the electronics and various other manufacturingindustries. The Company has acquired shares of Hansu Co., Ltd. on this occasion for the purposeof promoting the unification of business strategies by strengthening the operating base of Hansu
Co., Ltd.
(iii) Date of business combination
November 30, 2017(iv) Legal form of business combination
Acquisition of shares with cash as consideration

9

(v) Name of the acquiree after business combination
The name will remain unchanged.
(vi) Percentage of voting rights acquired
Percentage of voting rights owned immediately before business combination

33.2%

Percentage of voting rights additionally acquired on the date of business combination

51.8%

Percentage of voting rights after the acquisition

85.0%(vii) Main reason for deciding the acquirer
The Company has acquired shares with cash as consideration.
(2) Period of financial results of the acquiree included in the consolidated statement of income of theacquirer for the nine months ended December 31, 2017
Financial results of the acquiree from January 1, 2017 to November 30, 2017 are recorded as aninvestment gain/loss of an entity accounted for using equity method.
(3) The acquisition cost of the acquiree and the breakdown of consideration by typeMarket value of equity in Hansu Co., Ltd. held immediately before the date of business combination
3,991 million yen
Cash spent for the acquisition of additional shares

6,241 million yen

Acquisition cost

10,232 million yen(4) Difference between the acquisition cost of the acquiree and the sum of acquisition costs fortransactions that came to acquire it
Gain on step acquisitions: 2,443 million yen(5) The amount of goodwill generated, causes for goodwill, the amortization method and theamortization period(i) Amount of goodwill generated
6,246 million yen
The above amount is provisionally calculated, because the period from the date of businesscombination to the closing date was short, the specification of identifiable assets and liabilities
and the estimation of their market values were unfinished as of the date of business combinationand the allocation of the acquisition cost was not completed.
(ii) Causes for goodwill
Goodwill was generated due to an expected future excess earnings power.
(iii) Amortization method and the amortization period
Goodwill will be amortized by the straight-line method over the period when it is effective. The
amortization period will be determined based on the results of allocation of the acquisition cost,
etc.

10

(Segment Information)
1. Sales and income by reportable segment
Nine months ended December 31, 2016 (April 1, 2016 – December 31, 2016)(Million yen)

Reportable Segments

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Sales
Sales to outside customers
Inter-segment sales or transfers

61,276
185

90,810146

152,086
332

–
(332)

152,086–

Total

61,462

90,956

152,418(332)

152,086

5,870

7,791

13,661(15)

13,646

Segment income

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

Nine months ended December 31, 2017 (April 1, 2017 – December 31, 2017)(Million yen)

Reportable Segment

Sales
Sales to outside customers
Inter-segment sales or transfers
Total
Segment income

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

66,498301
66,7995,602

97,013
192
97,205
9,260

163,511493
164,005
14,863

Amounts
reported on
Adjustments the quarterly
statements of(note 1)income(note 2)
–
(493)
(493)
(8)

163,511–
163,511
14,854

Notes:
1. Adjustments related to sales represent elimination of inter-segment sales. Resultant adjustment of segment
income is reflected in segment income adjustments.
2. Segment income is shown at the operating income level.

11Supplementary Information — Consolidated(1) Order Intake(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 30,
2016
2017
Amount%Amount61,24637.8%
66,511%
35.4%

Water Treatment Facilities

100,868

62.2

121,415

64.6

Total

162,115

100.0

187,926100.0(2) Net Sales(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 30,
2016
2017
Amount%Amount61,27640.3%
66,498%40.7%

Water Treatment Facilities

90,81059.7

97,013

59.3

Total

152,086

100.0

163,511100.0(3) Capital Expenditures (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 30,
2016
2017
Amount%Amount
1,290
20.7%
1,534

%
10.2%

Water Treatment Facilities

4,932

79.3

13,466

89.8

Total

6,222

100.0

15,001

100.0(4) Depreciation (Property, Plant and Equipment)(Million yen)

Business segment
Water Treatment Chemicals

Nine months ended December 30,
2016
2017
Amount%Amount
1,192
11.9%
1,294

%
13.0%

Water Treatment Facilities

8,784

88.1

8,638

87.0

Total

9,976

100.0

9,933

100.0

12