FOR IMMEDIATE RELEASE
Kurita Water Industries Reports First Quarter Earnings
Tokyo, Japan July 29, 2004—Kurita Water Industries Ltd. (TSE Ticker 6370)
announced revenue for the first quarter ended June, 2004 of 26.277 billion yen andearnings of 471 million yen, or 3.67 yen per share.
Results of Operations
Total consolidated orders for the Kurita Group declined by 8.8% for the quarter over theprevious year to 38.430 billion yen, while net sales increased 5.3% year-on-year to26.277 billion yen. Operating income increased by 68.9% year-on-year to 657 million yenand ordinary income grew by 50.0% year-on-year to 810 million yen, resulting in a net
income increase of 89.2% year-on-year to 471 million yen. By segment, water treatment
chemicals sales increased by 0.4% year-on-year to 11.319 billion yen, while water
treatment facilities sales grew by 9.4% year-on-year to 14.958 billion.
During the quarter, Japan’s economy was buoyed by exports, a steady recovery inprivate sector demand, and a recovery in corporate profits, which in turn supported anincrease in corporate capital expenditures. The operating environment for the Kurita
Group improved on stronger capital expenditures in the electronics industries of Japan,
China, Taiwan and Korea, which were driven by expanding digital home appliancedemand. However, there was no cause for optimism in the capital expenditure trend ofother industries, as well as in the public segment, both of which remained weak.
The Kurita Group’s first quarter and third quarter sales are lower than other quarters
due to seasonal reasons, owing to the tendency for sales in the water treatment facilities
business to be concentrated at the end of the first half and at the end of the fiscal year.
Additionally, the Company’s earnings are influenced by the efforts of its customers toreduce costs amid intensifying competition. Consequently, in addition to the seasonalityof the water treatment facilities business, earnings are also affected by water treatment
demand trends, cost cutting efforts on the part of Kurita’s customers, competition withother firms in the industry and rises in basic material prices.

Segment Information
Water Treatment Chemicals
Total group orders for the division increased by 1.3% from the same period a year earlier
to 12.988 billion yen and accounted for 33.8% of total orders versus 30.4% of total orders
in the first quarter of the previous fiscal year. Sales increased by 0.4% year-on-year to
11.319 billion yen and were 43.1% of total sales versus 45.2% of sales in the first quarterof the previous year. The relatively higher weight of the division to total Group sales
during the first quarter reflects the aforementioned seasonality of the water treatment
facilities business.
Water treatment chemical orders for the quarter were supported by increases in theCompany’s mainstay cooling water chemicals and waste water treatment chemicals,
while boiler water treatment chemical orders declined. In process chemicals, orders
from the pulp and paper industry increased, while chemicals used in oil refining
processes declined. In addition, there was an increase in orders for agents that solidify
heavy metal contained in waste incineration fly ash.
Water Treatment Facilities
Total group orders for the division declined by 13.2% from the same period a year earlier
to 25.442 billion yen and accounted for 66.2% of total orders versus 69.6% of total orders
in the first quarter of the previous fiscal year. Conversely, sales increased by 9.4%
year-on-year to 14.958 billion yen and were 56.9% of total sales versus 54.8% of sales in
the first quarter of the previous year.
The increase in private sector orders was driven by orders for the Company’s mainstay
ultrapure water production systems from the electronic industries in China, Taiwan
and South Korea, and increases were also seen in orders from general industries forwater treatment facilities, and for the maintenance services of these facilities. On theother hand, large declines were seen in public sector orders for human waste treatment
facilities as the previous year saw a surge in public sector orders in the first quarter.

Financial Condition
Total assets for the first quarter ended June 30, 2004 declined by 5.223 billion yen fromthe end of the previous fiscal year. In terms of current assets, cash and deposits
increased by 5.984 billion yen, while inventories increased by 5.479 billion yen,reflecting an increase in work in progress in the water treatment facilities division.
Progress in collecting accounts receivable that had accumulated at the end of theprevious fiscal year resulted in a 15.617 billion yen decrease in accounts receivable. On
the other hand, progress in payment for purchase liabilities that had accumulated at
the end of the previous fiscal year resulted in a 4.156 billion yen decrease in accounts
payable. In the capital account, payment of year-end dividends resulted in a 699 million
yen decline in retained earnings. As a result, the Company’s shareholder’s equity ratio
increased from 70.1% to 71.8% at the end of the previous fiscal year.
Outlook for the Full Fiscal Year
Because of the favorable business performance for the first quarter, the Company
believes it can achieve its forecasts for the March, 2005 full fiscal year and interim toSeptember, 2004 that were announced on May 11, 2004 and contained in its March,
2004 summary of operating results.
About the Kurita GroupThe Kurita Group provides a wide range of products, technologies, and maintenanceservices related to water treatment. The two core lines of the Group’s business consistof; 1) water treatment chemicals used for boiler water, cooling water, waste water, andin manufacturing processes; and 2) water treatment facilities such as ultrapure waterproduction systems, waste water treatment facilities, and sewage treatment facilities.
The business scope of both lines includes production, sales, and maintenance services.
For additional information about the Kurita Group, please visit the Company’s website
at www.kurita.co.jp.
Except for the historical information contained herein, matters discussed in this news
release may contain forward-looking statements that involve risks and uncertainties,
including but not limited to factory operating ratios at major clients in the steel,
petroleum and paper and pulp industries; capital expenditure trends in the electronics,
food, pharmaceuticals, basic material and automobile industries; and the financial
condition and budgeting actions of national and local governments in Japan.

KURITA WATER INDUSTRIES, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(in million yen)
1Q ended June 30,2004

1Q ended June 30,2003

Increase/Previous Fiscal Year

(April 1, 2004 to(April 1, 2003 to(Decrease)(April 1, 2003 toJune 30, 2004)

June 30, 2003)

% of

% of

% ofAmountMarch 31, 2004)

Net Sales

AmountNet Sales

AmountAmountNet Sales

Net Sales

26,277100.0

24,952

100.0

1,325

146,819

100.0

Cost of Sales

17,42066.3

16,603

66.5

817

101,433

69.1

Gross Profit

8,856

33.7

8,348

33.5

508

45,386

30.9

Selling, General and

8,199

31.2

7,958

31.9

241

31,895

21.7

Operating Income

657

2.5

389

1.6

268

13,4909.2

Non-operating Income

240

0.9

295

1.2(55)

1,034

0.7

Non-operating Expense

870.3

1440.6(57)

586

0.4

Ordinary Income

810

3.1

540

2.2

270

13,938

9.5Special Gains

-----

1,479

1.0

Special Losses-----499

0.3

Income before Income Taxes

810

3.1

540

2,2

270

14,918

10.2

Income Taxes

326

1.3

232

0.9

94

6,347

4.3

Minority Interests in

12

0.0

57

0.3(45)

126

0.1

471

1.8

249

1.0

222

8,444

5.8

Administrative Expenses

Earnings of Consolidated
Subsidiaries
Net Income

CONDENSED CONSOLIDATED BALANCE SHEET(in million yen)
Increase/decrease over
As of June 30, 2004

As of June 30, 2003

As of March 31, 2004

June 30,March 31,2003

2004[Assets]
Current Assets
Cash and Deposits

41,49635,58835,512

5,908

5,984

Notes Receivable - Trade

10,547

10,783

10,607

(236)

(60)

Accounts Receivable - Trade

40,45736,23056,074

4,227(15,617)

Marketable Securities

6,119

7,537

6,720

(1,418)(601)

Inventories

12,192

9,467

6,713

2,725

5,479

Other

3,373

2,857

3,435

516

(62)

Allowance for Doubtful Accounts

(133)

(106)

(140)

(27)

7

114,053

102,357

118,923

11,696(4,870)

Tangible Fixed Assets

41,75040,98041,67177079Intangible Fixed Assets

3,409

2,846

3,347

563

62Investments and Other Assets

19,18423,451

19,678(4,267)(494)

Total Fixed Assets

64,344

67,27864,697(2,934)(353)

Total Assets

178,397

169,636

183,620

8,761(5,223)

Notes Payable - Trade

1,746

1,599

1,371

147

375

Accounts Payable - Trade

21,361

20,961

25,517400(4,156)

Outstanding Payments/Expenses

6,696

7,269

7,128

(573)

(432)

471

690

3,593

(219)

(3,122)

Accrued Employees’ Bonuses

1,301

1,370

2,173

(69)

(872)

Other

6,696

3,872

3,169

2,824

3,527

38,27335,762

42,9542,511(4,681)

9,776

11,616

9,808(1,840)

(32)

1,175

820

1,149

355

26

10,951

12,437

10,958(1,486)(7)

Total Current Assets
Fixed Assets[Liabilities]
Current Liabilities

Income Taxes Payable

Total Current Liabilities
Fixed Liabilities
Accrued Employees’
Retirement Benefits
Other
Total Fixed Liabilities

Total Liabilities

49,224

48,19953,912

1,025(4,688)

1,000

1,020

1,031

(20)

(31)

Common Stock

13,45013,45013,450--Additional Paid-in Capital

11,398

11,398

11,398--Retained Earnings

107,481

100,684

108,180

6,797

(699)

Revaluation Surplus of Other Securities

1,482

394

1,367

1,088

115

Foreign

(748)

(625)

(829)

(123)

81(4,892)(4,886)(4,890)(6)(2)

128,171

120,415

128,676

7,756

(505)

178,397

169,636

183,620

8,761(5,223)[Minority Interests]
Minority Interests[Shareholders’ Equity]

Currency

Translation

Adjustments
Treasury Stock
Total Shareholders’ Equity
Total Liabilities, Minority
Interests and Shareholders’ equity========= =========SOURCE: Kurita Water Industries, Ltd.
CONTACT: Kurita Water Industries, Ltd.
Corporate Communications Section
ir@kurita.co.jp<END>