Summary of the Q&A Session at the Financial Results Briefing
for the First Half of the Fiscal Year ending March 31, 2020

Date and Time:
Venue:

November 12, 2019 (Tue.) 10:00 - 10:50
Belle Salle Tokyo Nihonbashi

Notice: This summary is a reference designed for the convenience of those who could notattend the financial results briefing stated above. Please note that this is not a word-for-wordtranscript of all remarks made at that session, but is a summary prepared by Kurita Water
Industries Ltd.
Q. Please disclose the level of expenses you have assumed for the integration of the North
American water treatment chemicals business.
A. For the newly consolidated subsidiary, we have factored in a ¥1 billion impact from PPA inour 2H segment profit forecast. We have also included PMI expenses in other expenses.
Q. While the 1H operating profit margin was high, full-year guidance implies a lower profit
margin in 2H. Do you have concerns about a deterioration in the 2H CoGS ratio?
A. Our assumption for the water treatment facilities segment's 2H CoGS ratio is conservative,
rather than a reflection of concerns. However, the forecast for the water treatment
chemicals segment is not that conservative; we have factored in an increase in SG&A.
Q. Please discuss conditions for the overseas water treatment facilities business for theelectronics industry by region, broken out into FPD and semiconductors.
A. Our impression is that conditions differ by customer. In China, there were some FPD
projects where investment decisions were relatively early, but on the other hand, there
were some semiconductor projects that were pushed out as a result of US-China tradetensions. Our overall impression is that FPD is slightly weak but semiconductors are likely
to start picking up.
Q.You mentioned that it now looks like electronics industry investments in South Korea will
increase. What is the background to the change?
A. There are customers making investment decisions now as a function of their respective
strategies. Kurita Water Industries’ added value is its ability to ramp up rapidly. We areprepared to move quickly if asked.
Q. You indicated that within the domestic water treatment chemicals segment, the businessfor the steel-making industry was strong. Could you discuss conditions for some of theother industries, such as pulp & paper?
A. In the domestic market, our focus since last year has been on putting service contracts inplace, in addition to initiatives to improve unit prices through price hikes. Service contracts
for our pulp & paper customers have increased as well. It may be a little difficult to see thegrowth in service contracts because of our current counting system.

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Q. For total solutions and the value of the benefit to customers, is the figure cited the value
calculated by your customers or is it based on your estimates in consultation with yourcustomers?
A. Quantifying the value of the benefit to the customer is the key consideration for totalsolutions. However, the value cited is neither our estimate nor a value calculated by ourcustomers. Instead, it is the value that emerges as a result of the visualization process.
Q. In the example presented this time, are the facilities necessary for providing the service
Kurita Water's assets?
A. The service contract is based on our ownership of the control equipment and sensors.
Q. In both the 1H results and the full-year forecasts you have been able to control costs. How
are you able to control these costs?
A. We are in the midst of trialing many measures to control costs. What is different this timeis that as we migrate toward service contracts, we have focused on ensuring we have agood grasp of the profit base. We are now better able to track costs in greater detail.
Q. Are you making progress in structurally reducing fixed costs?
A. There are still businesses within the portfolio that generate low margins. There are alsosome facilities that are quite dated. We would like to address these in the early stages ofthe MVP-22 plan and believe this will result in lower fixed costs going forward.
Q. Earlier, you mentioned that there was a change in distribution for the water treatment
chemicals business in China. What is your view of the changing operating environment?
A. The change in distribution referred to earlier was a decision to cease handling low-margin
products. This measure will contribute to higher profitability. In China, we believe thatdemand for contract-type services to supply recycled water will grow. This will be an areaof focus.

Business forecasts presented and other statements relating to the future made in thisdocument are based on information currently available and certain assumptions theCompany considers reasonable. A variety of factors may cause actual financial results andother forward-looking statements to differ materially from the forecasts.

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