Kurita Water Industries Ltd....Iron and steel, oil refining, petrochemicals 【Major areas of sales...

Results Presentation for the Year Ended March 31, 2008

May 9, 2008

Kurita Water Industries Ltd.( Stock code : 6370 )

Table of Contents

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【 1 】

【 2 】

【 3 】

【 4 】

【 5 】

【 6 】

【 7 】

【 8 】

【 9 】

【10】

Financial Highlights

Business Development

Orders, Net Sales, Operating Income, and Operating Income Margin

Water treatment chemicals

Water treatment facilities (for the electronics industry)

Water treatment facilities (for general industries)

Service Business Revenue

Overseas Businesses

Capital Expenditures, Depreciation, and R&D Expenses

Assets, Liabilities, and Net Assets

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

(Billions of Yen)

2007/3 2008/3 Year-on-year change

Orders 192.5 208.7 + 8.4%

Net Sales 197.1 204.9 + 3.9%

Operating Income 24.3 30.5 + 25.5%

Ordinary Income 25.2 31.2 + 23.9%

Net Income 14.2 18.3 + 28.8%

【1】 Financial Highlights

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

1

2

【2】 Business Development

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

Improved domestic product mixOverseas growth contributing to higher salesAbsorb the surge in raw material prices by reducing costs, boosting revenue, and improving product mix

Increased sales to electronics industries on the back of a favorable domestic market environmentSteady expansion in service businessesImproved hardware profitability

Water Treatment Chemicals Business

Water Treatment Facilities Business

136.0 149.7

56.6 59.0

0

100

200 192.5 208.7

15.5 16.2

11.0

14.3

12.3

14.9

10

14

18

211.0

151.9

59.1

140.5 146.2

56.7 58.6

0

100

200 197.1 204.9 207.0

148.3

58.7

15.5 20.9

8.8

9.5

0

15

30 24.3

30.5 27.5

18.1

9.4 16.0

12.213.3

Operating Income MarginOperating Income

SalesOrders(Billions of Yen) (Billions of Yen)

(Billions of Yen) ( % )

2007/3 2008/3 2007/3 2008/3

2007/3 2008/3 2007/3 2008/3

【3】 Orders, Sales, Operating Income, and Operating Income Margin

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

3

Water treatment chemicals Water treatment facilities Total * denotes projections

56.6 59.0 56.7 58.6

0

30

60

2007/3 2008/3

8.8 9.5

15.5 16.2

0

10

20

0

5

10

2007/3 2008/3

【Major areas of growth】Cooling water treatment chemicals; Paper/pulp process treatment chemicals (Japanese market)Overseas subsidiaries

16.0

【Major determinants of change】Improved domestic product mixSurge in raw material pricesHigher revenues overseas

9.459.1 58.7

(Billions of Yen) ( % )(Billions of Yen)

【4】 Water treatment chemicals

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

Operating Income and Operating Income MarginOrders and Sales

4

Orders Sales* denotes projections

Operating income Operating income margin* denotes projections

【Orders/sales growth areas】Wafers, semiconductors, ultrapure water supply, tool cleaning (Japanese market)

【Major determinants of income growth】Increased revenue / improved profitability for domestic hardwareIncreased revenue from the ultrapure water supply business

77.9 88.1 77.0 91.2

0

50

100

13.1 16.9

17.1 18.6

0

10

20

0

10

20 16.1

15.091.1 93.2

【5】 Water treatment facilities (for the electronics industry)

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

(Billions of Yen) ( % )(Billions of Yen)

2007/3 2008/3 2007/3 2008/3

Operating Income and Operating Income MarginOrders and Sales

5

Orders Sales* denotes projections

Operating income Operating income margin* denotes projections

【Major determinants of income growth】Improved hardware profitability

【Major areas of orders growth】Iron and steel, oil refining, petrochemicals

【Major areas of sales declines】Iron and steel, food, public sector demand

58.1 61.5 63.5 55.1

0

30

60

2.3 4.0

3.7

7.3

0

5

10

0

3

6

5.6

3.1

60.8 55.1

【6】 Water treatment facilities (for general industries)

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

(Billions of Yen) ( % )(Billions of Yen)

2007/3 2008/3 2007/3 2008/3

Orders and Sales Operating Income and Operating Income Margin

6

Orders Sales* denotes projections

Operating income Operating income margin* denotes projections

Ultrapure water supply

business

Tool cleaning

Soil remediation

55.2 52.8

85.2 93.5

56.7 58.6

0

100

200

49.9 51.9

12.4 10.4

13.1 14.4

9.8 16.8

0

50

100

197.1 204.9 85.293.5 (+8.3)

54.1

9.8

14.4

16.5

【7】 Service Business Revenue

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

Service Business Revenuein the Water Treatment Facilities BusinessWater treatment chemicals

Water treatment facilities (services)

Water treatment facilities (hardware) (Billions of Yen)

(Billions of Yen)

2007/3 2008/3 2007/3 2008/3

* denotes projections

7

Maintenance, etc.

22.6 23.7

3.4 2.8 1.3 1.7 2.2 3.1

0

15

30 29.531.3

20.6 20.1

8.9 11.2

0

15

30 29.531.3

25.7

3.21.72.4

33.0

21.8

11.2

33.0

【8】 Overseas Businesses

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

(Billions of Yen) (Billions of Yen)

2007/3 2008/3 2007/3 2008/3

Asia N. America Europe Other* denotes projections

Water treatment chemicals Water treatment facilities

* denotes projections

8

Sales by Region Sales by Overseas Business Segment

3.2 3.5 5.6 8.5

0

15

30

19.0

19.815.7

23.3

4.4 4.6

2.2 2.2

0

2

4

0

3

6

8.06.0

30.0

36.0

4.7

2.3

【9】 Capital Expenditures, Depreciation, and R&D Expenses

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

( % )(Billions of Yen) (Billions of Yen)

2007/3 2008/3 2007/3 2008/3

Capital Expenditures and Depreciation R&D Expenses

Capital expenditures(ultrapure water supply business)

Capital expenditures(excl. ultrapure

water supply business)

Depreciation

* denotes projections

R&D Expenses Percentage of net sales

* denotes projections

9

Liabilities

Net assets

Other fixed assets

Other current assets

Cash, deposits and Marketable securities

Tangible fixed assets

30.8 27.9

67.3 82.0

93.4 87.3

43.6 34.3

235.1 231.5

158.2 171.1

76.9 60.4

235.1 231.5

( - 2.9)

( + 14.7)

( - 6.1)

( - 9.3)

( + 12.9)

( - 16.5)

(Billions of Yen) (Billions of Yen)

Mar. 2007 Mar. 2008

【10】 Assets, Liabilities, and Net Assets

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2008

Assets Liabilities and Net Assets

Mar. 2007 Mar. 2008

10

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

Overview

Key Assumptions

Strategic Focuses for the Fiscal Year Ending March 31,2009

【 1 】

【 2 】

【 3 】

【 4 】

【 5 】

【 6 】

【 7 】

【 8 】

【 9 】

Orders , Sales, Operating Income, and Operating Income Margin

Water treatment chemicals

Water treatment facilities (for the electronics industry)

Water treatment facilities (for general industries)

Capital Expenditures, Depreciation, and R&D Expenses

Profit Distribution Policy

(1) Expansion of Service

(2) Overview of the Ultrapure Water Supply Business

(3) Ultrapure Water Supply Business (Trends)

(4) Ultrapure Water Supply Business (Trends)-2

(5) Expand Ultrapure Water Supply Business

(6) Expand Overseas Businesses

(Billions of Yen)

2008/3 2009/3(Projected)

Year-on-yearchange

Orders 208.7 218.0 + 4.5%

Net Sales 204.9 213.0 + 4.0%

Operating Income 30.5 32.0 + 5.0%

Ordinary Income 31.2 32.3 + 3.4%

Net Income 18.3 18.5 + 1.1%

【1】 Overview

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

11

【2】 Key Assumptions

Operating rates maintained in the domestic materials sector and at electronics plantsClient companies: continued strong productivity increases, cost cutting efforts, and environmental requirementsContinued expansion of Asian economiesContinued rise in raw material prices

Growing demand in the ultrapure water supply businessTemporary pause in large capital expenditures in the domestic electronics industryOverseas capital expenditure: Signs of a recovery for LCDs; Uncertainty for semiconductorsContinued capital investment in the domestic materials sector

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

12

Water Treatment Chemicals Business

Water Treatment Facilities Business

Ultrapure water supply business

Tool cleaning

Maintenance, etc.

Soil remediation

52.8 47.9

93.5 104.4

58.6 60.7

0

100

200

51.9 54.9

10.4 10.5

14.4 15.0

16.8 24.0

0

50

100

204.9 213.0 93.5

104.4 (+10.9)

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

(1) Accelerate Expansion of Service Businesses

Service Business Revenue in theWater Treatment Facilities Business

Water treatment chemicals

Water treatment facilities (services)

Water treatment facilities (hardware)

(Billions of Yen)

(Billions of Yen)

2008/3 2009/3 (Projected)

2008/3 2009/3(Projected)

13

Semiconduction/FPD manufacturing process

payment of fees

supply of ultrapure water

Client Factory

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

(2) Overview of the Ultrapure Water Supply Business

Rawwater

Reclaimed water

Waste-water

Discharge

Pretreatment facility

Ultrapure water production system

Wastewaterreclaim system

Wastewatertreatment facility

・ Construction（CAPEX）・ Ownership（Capitalize）・ Operation/Management・ Maintenance

Kurita

Pays fees based on volume of water usedClient

14

2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/32002/3

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

(3) Ultrapure Water Supply Business (Trends)

【 to LCD plants in Singapore 】

【 to domestic large-scale LCD plants 】

【 to domestic semiconductor plants 】

【 to domestic large-scale LCD plants 】

【 to domestic wafer plants 】

【 to domestic semiconductor plants 】

【 to domestic large-scale LCD plants 】

【 to domestic large-scale plasma display panel (PDP) plants 】

15

Completed LCD industrial complex (conceptual image)

(4) Ultrapure Water Supply Business (Trends)-2

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

16

11.9 15.7 19.8

47.0

24

40

59

106

0

60

120

0

30

60

2006/3

5.7 9.8

16.8

24.0

0

12

24

Capital expenditure (left axis)

Total cumulative investment(right axis)

2007/3 2008/3 2009/3(Projected)

(5) Expand Ultrapure Water Supply Business

(Billions of Yen) (Billions of Yen)

Capital Expenditures andTotal Cumulative Investment Sales

(Billions of Yen)

2006/3 2007/3 2008/3 2009/3(Projected)

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

17

22.6 23.7 25.3

3.4 2.8 2.6 1.3 1.7 1.9 2.2 3.1 2.7

0

20

40

29.5

20.6 20.1 20.0

8.9 11.2 12.5

0

20

40

31.3 32.529.5 31.3 32.5

(6) Expand Overseas Businesses

(Billions of Yen) (Billions of Yen)

Water treatment chemicals Water treatment facilitiesAsia N. America Europe Other

2007/3 2008/3 2009/3(Projected)

2007/3 2008/3 2009/3(Projected)

【3】 Strategic Focuses for the Fiscal Year Ending March 31,2009

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

18

Sales by Region Sales by Overseas Business Segment

149.7 157.2

59.0 60.8

0

100

200 208.7 218.0

16.2 16.6

14.3 14.4 14.9

15.0

13

15

17

146.2 152.3

58.6 60.7

0

100

200 204.9 213.0

20.9 21.9

9.5 10.1

0

15

30 30.5 32.0

【4】 Orders, Sales, Operating Income, and Operating Income Margin

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

Water treatment chemicals Water treatment facilities Total

SalesOrders

(Billions of Yen) (Billions of Yen)

Operating Income MarginOperating Income

(Billions of Yen)( % )

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

19

59.0 60.8 58.6 60.7

0

30

60

9.5 10.1

16.2 16.6

0

10

20

0

5

10

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【5】 Water treatment chemicals

(Billions of Yen)( % )

Operating income Operating income margin

(Billions of Yen)

Orders Sales

Operating Income and Operating Income MarginOrders and Sales

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

【Major areas of growth】Japan: Cooling water treatment chemicals, paper/pulp process treatment chemicalsOverseas: China, Thailand, Europe

【Major determinants of change】Improved domestic product mixHigher revenues overseasSurge in raw material prices

20

88.1 95.0 91.2 92.4

0

50

100

16.9 17.5

18.6 19.0

0

10

20

0

10

20 (Billions of Yen) ( % )(Billions of Yen)

Operating Income and Operating Income MarginOrders and Sales

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【6】 Water treatment facilities (for the electronics industry)

【Major determinants of change】Decrease in domestic hardwareGrowth in the ultrapure water supply business

【Major determinants of change】Decreased revenue from domestic hardwareIncreased revenue from the ultrapure water supply business

21

Operating income Operating income marginOrders Sales

61.5 62.2 55.1 59.9

0

30

60

4.0 4.4

7.3 7.4

0

5

10

0

3

6

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【7】 Water treatment facilities (for general industries)

(Billions of Yen) ( % )(Billions of Yen)

Operating Income and Operating Income MarginOrders and Sales

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

【Major determinants of change】Increased revenue from domestic hardware

【Major areas of sales growth】Iron and steel

22

Operating income Operating income marginOrders Sales

3.5 4.0 8.5 11.5 0

25

50

23.3 47.0

19.8

51.0

4.6 4.8

2.2 2.2

0

2

4

0

3

6

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【8】 Capital Expenditures, Depreciation, and R&D Expenses

R&D Expenses Percentage of net salesCapital expenditures

(ultrapure water supply business)

Capital expenditures(excl. ultrapure

water supply business)

Depreciation

Capital Expenditures and Depreciation R&D Expenses

2008/3 2009/3 (Projected) 2008/3 2009/3 (Projected)

(Billions of Yen) ( % )(Billions of Yen)

23

1822

2832

34

0

20

40

Basic Dividend PolicyKurita’s basic policy is to maintain stable dividends, and the company will work to increase dividends while giving due consideration to trends in results and investments in its businesses.

+ 4

2005/3 2006/3 2007/3 2008/3

+ 6+ 4

+ 2

+ 2

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2009

【9】 Profit Distribution Policy

(Yen)

2009/3(Projected)

24

Reference Materials

Reference Materials

Analysis of Changes in Operating Income for the Fiscal Year Ended March 31, 2008

24.3

0.0 0.0 0.0 0.0

30.5

0

15

30

Rise in prices of primary chemical products resulting from the surge inraw material prices

Increase in personnel expensesIncrease in advertising and promotional expensesIncrease in research and development expenses

Improved domestic product mix in chemicalsImproved cost ratio for the hardware segment of the facilities business

- 0.8

+ 5.4+ 2.3

- 0.6

(Billions of Yen)

2007/3 2008/3

* Effects of improved cost ratio and higher income are calculated using the gross profit margin. “Cost ratio” refers to the sales-to-cost ratio.

Higher costof raw

materials

HigherSG&A

expenses

Effect ofimprovedcost ratio*

Effect ofhigher

income*

25

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h t t p : / / w w w . k u r i t a . j p /

i r @ k u r i t a . c o . j p

Kurita Water Industries Ltd.

Forward-looking StatementsThis 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.