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November 1, 2017
Results Presentation for the First Half
of the Year Ending March 31, 2018
Kurita Water Industries Ltd.
(Securities code: 6370)
Table of Contents
Consolidated Financial Results for the First Half of the Year
Ending March 31, 2018
Consolidated Business Plan for the Fiscal Year
Ending March 31, 2018
Priority Measures
Reference Material
I
II
III
I. Consolidated Financial Results for the First Half
of the Year Ending March 31, 2018
1.
2.
3.
4.
5.
6.
7.
8.
9.
Financial Highlights
Orders, 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 Sales
Overseas Sales
Capital Expenditures, Depreciation, and R&D Expenses
Financial Condition
1H of the FY ended March 2017(Actual)
1H of the FY ending March
2018(Initial Projection)
1H of the FY ending March 2018(Actual)
Year-on-Year Change
Orders 112.5 112.0 125.3 +11.4%
Net Sales 103.8 104.0 108.1 +4.1%
Operating Income 9.6 7.7 10.2 +5.3%
Ordinary Income 9.6 7.9 10.3 +6.6%
Profit attributable to
owners of parent 6.5 5.3 7.4 +13.3%
1
Orders increased significantly due to new consolidation in the Water
Treatment Chemicals business and large orders in the Water Treatment
Facilities business.
Operating income rose, reflecting an improvement in the cost of sales ratio in
the Water Treatment Facilities business.
A gain on sales of shares of other listed companies was posted to
extraordinary income.
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
(Billions of Yen)
Exchange
rate (Yen) 09/2016 09/2017
USD 111.81 112.37
EUR 124.62 121.64
RMB 17.07 16.39
2
70.5 80.7
42.0 44.6
112.5 125.3
0
70
140
09/2016 09/2017
9.9
8.7 8.9
9.8
9.3 9.4
8
9
10
09/2016 09/2017
62.4 64.0
41.5 44.1
103.8 108.1
0
70
140
09/2016 09/2017
5.6 6.3
4.1 3.9
9.6 10.2
0
6
12
09/2016 09/2017
112.0
44.4
67.6
104.0
44.3
59.7
7.7
4.1
3.6 9.2
7.4
6.0
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
Orders Sales
Operating Income Operating Income Margin
(Billions of Yen)
(Billions of Yen)
(Billions of Yen)
(%)
Water treatment chemicals Water treatment facilities Total * denotes initial projections
3
42.0 44.6
0
25
50
09/2016 09/2017
41.5 44.1
0
25
50
09/2016 09/2017
4.1 3.9
9.9 8.7
0
5
10
0
3
6
09/2016 09/2017
44.4
4.1
9.2
44.3
Despite the rise in sales, operating income decreased due to a
rise in selling, general and administrative expenses.
The cost of sales ratio remained roughly flat.
Domestic orders rose 2.7% year on year.
Overseas orders increased 10.1% year on year due to new
consolidation.
Domestic sales rose 3.2% year on year.
Overseas sales climbed 9.8% year on year due to new
consolidation.
Except for the effect of new consolidation, overseas sales rose
around 1% year on year.
In Japan, sales of boiler water, cooling water, and process
treatment chemicals rose.
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
Orders
Operating Income
Sales
Operating income margin * denotes initial projections
(Billions of Yen)
(Billions of Yen)
(Billions of Yen) (%)
4
5.5 5.4
15.4 14.5
0
10
20
0
4
8
09/2016 09/2017
34.6 45.0
0
25
50
09/2016 09/2017
36.0 37.1
0
20
40
09/2016 09/2017
34.3
3.3
9.8
33.7 Sales of hardware increased in Japan due to the progress of
construction work.
Sales of maintenance services in Japan rose with the expansion
of customer facilities.
Sales of the ultrapure water supply business declined due to the
revision of contracts.
Operating income was adversely affected by the decline in sales
in the ultrapure water supply business.
Operating income was positively affected by an increase in sales
overseas and an improvement in the cost of sales ratio.
Orders for hardware in Japan included large order for
semiconductors.
Orders for hardware overseas included large orders in China
and South Korea.
Orders in the ultrapure water supply business declined due to
the revision of contracts.
Orders for maintenance services in Japan increased due to
expansion and repairs at facilities of customers.
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
(Billions of Yen)
(Billions of Yen)
(Billions of Yen)
Orders
Sales
Operating Income
Operating income margin * denotes initial projections
(%)
5
0.0
0.9
0.1
3.5
-5.0
0.0
5.0
0
0.6
1.2
09/2016 09/2017
35.8 35.7
0
20
40
09/2016 09/2017
26.4 26.9
0
15
30
09/2016 09/2017
33.3
0.3
1.2
26.0
Sales of hardware from electric power industry rose slightly.
Sales from chemical cleaning increased.
Soil remediation sales declined.
The cost of sales ratio improved for both hardware and services.
Orders for large scale soil remediation projects were received.
Orders for maintenance services for general industries
increased due to demand associated with renovating old
facilities and demand for new facilities and expansion.
Maintenance services for public offices declined.
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
(Billions of Yen)
(Billions of Yen)
(Billions of Yen) (%)
Orders
Sales
Operating Income
Operating income margin * denotes initial projections
16.2 17.8
46.2 46.2
41.5 44.1
103.8 108.1
0
50
100
09/2016 09/2017
6
Revenue in the ultrapure water supply business declined in Japan but increased overseas. Overall, revenue
in the business exceeded the initial forecast.
Revenue from tool cleaning and maintenance rose on the back of firm capacity utilization at customers.
27.9 29.3
3.1 3.4
15.2 13.5
46.2 46.2
0
25
50
09/2016 09/2017
90.3 87.6
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
Ultrapure water
supply business
Maintenance, etc.
Tool cleaning
(Billions of Yen)
(Billions of Yen)
Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)
Service Business Revenue
in the Water Treatment Facilities Segment
Service business
sales
30.9 34.0 34.0 30.9
2.4
1.4
1.0
1.2
7
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
Sales increased in both the Water Treatment Chemicals and the Water Treatment Facilities businesses.
The impact of foreign exchange rates was minor.
Asia North America
Overseas Sales by Region Overseas Sales by Business Segment
Water treatment chemicals Water treatment facilities EMEA Other
(Unit: billions of yen)
09/2016 09/2017 09/2016 09/2017
(Unit: billions of yen)
18.4
10.3
20.0
10.2
19.5
11.4
21.4
12.6
8
2.4 2.6
2.3 2.4
0
1.5
3
0
1.7
3.4
09/2016 09/2017
Capital expenditures of the ultrapure water supply
business made good progress.
Depreciation was in line with the initial plan.
R&D expenses were in line with the initial plan.
1.4 1.6
2.4
7.2 3.8
8.8
6.7 6.6
0
5
10
09/2016 09/2017
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
(Billions of Yen) (Billions of Yen) (%)
Capital Expenditures and Depreciation R&D Expenses
Capital expenditures (ultrapure water supply business)
Capital expenditures (excl. ultrapure water
supply business)
Depreciation R&D expenses Percentage of net sales
228.8 229.4
70.5 70.7
299.2 300.1
69.3 70.2
74.0 76.3
82.6 86.0
73.4 67.5
299.2 300.1
9
Cash on hand declined
Reasons:
- Capital expenditure on facilities in the ultrapure water supply business exceeded depreciation, and property, plant
and equipment increased.
- Purchase of own shares in addition to an increase in trade notes and accounts receivable and inventories
(+0.9)
(+2.3)
(+3.4)
(-5.8)
(+0.6)
(+0.2)
I. Consolidated Financial Results for the
First Half of the Year Ending March 31, 2018
Assets Liabilities and Net Assets
(Billions of Yen) (Billions of Yen)
Liabilities
Net assets
Cash, deposits
and
marketable
securities
Other current
assets
Property, plant
and equipment
Other
noncurrent
assets
Mar. 31, 2017 Sep. 30, 2017 Mar. 31, 2017 Sep. 30, 2017
II. Consolidated Business Plan for the Fiscal Year
Ending March 31, 2018
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Business Environment
Overview
Orders, 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 Sales
Sales Plan for the Ultrapure Water Supply Business
Major Contracts in the Ultrapure Water Supply Business
Overseas Sales
Capital Expenditures, Depreciation, and R&D Expenses
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
10
Production activities in the domestic manufacturing industry are expected to be firm.
Economies in Europe, the United States, and Asia are expected to be firm.
Production activities and capital expenditures in the domestic electronics industry are expected
to be firm.
Capital expenditures in the electric power industry and general industries will remain roughly
flat.
The replacement and enhancement of old facilities and the improvement of efficiency will
advance in industries other than the domestic electronics industry.
Active semiconductor- and FPD-related investment will continue in China and South Korea.
1. Business Environment
Water Treatment Chemicals
Water Treatment Facilities
Exchange
rate (Yen) 03/2017
Assumptions for 03/2018
USD 108.84 112.00
EUR 120.33 124.00
RMB 16.37 16.40
11
FY ended March 2017
(Actual)
FY ending March 2018
(Initial Projection)
FY ending March 2018
(Revised Projection)
Year-on-Year Change
Orders 218.7 221.0 238.0 +8.8%
Net Sales 214.2 223.0 230.0 +7.4%
Operating Income 19.5 18.5 21.0 +8.0%
Ordinary Income 20.1 19.0 21.5 +7.1%
Profit attributable to
owners of parent 14.5 13.0 15.0 +3.4%
The projection for orders has been revised upward on the assumption of active
capital expenditures in the electronics industry in Japan and overseas.
The projection for net sales has been revised upward, reflecting the rise in
orders.
The projection for income has been revised upward on the assumption of an
improvement in the cost of sales ratio in the Water Treatment Facilities business.
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen)
12
136.6 148.5
82.1 89.5
218.7 238.0
0
125
250
03/2017 03/2018 Projection
8.8
8.3
9.2
9.7
9.1 9.1
8
9
10
03/2017 03/2018 Projection
132.3 140.6
81.9 89.4
214.2 230.0
0
125
250
03/2017 03/2018 Projection
12.2 13.6
7.2 7.4
19.5 21.0
0
11
22
03/2017 03/2018 Projection
221.0
89.5
131.5
223.0
89.4
133.6
18.5
7.7
10.8
8.1
8.3
8.6
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
Orders Sales
Operating Income Operating Income Margin
(Billions of Yen)
(Billions of Yen)
(Billions of Yen)
(%)
Water treatment chemicals Water treatment facilities Total * denotes initial projections
13
82.1 89.5
0
45
90
03/2017 03/2018 Projection
81.9 89.4
0
45
90
03/2017 03/2018 Projection
7.2 7.4
8.8 8.3
0
6
12
0
6
12
03/2017 03/2018 Projection
Operating income fell short of the plan in the first half, which is
reflected in the full-year projection.
The cost of sales ratio is assumed not to change significantly.
Orders are expected to rise 2% in Japan.
Orders are expected to increase 16% overseas, reflecting new
consolidation. 89.5
7.7
8.6
89.4
Sales are projected to rise 3% in Japan, and the initial projection
has been revised upward.
Sales are expected to increase 16% overseas, reflecting new
consolidation, but the initial projection has been revised
downward.
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
Orders (Billions of Yen)
(Billions of Yen)
(Billions of Yen)
Operating Income
(%)
Sales
Operating income margin * denotes initial projections
14
10.8 10.8
14.5 13.6
0
9
18
0
8
16
03/2017 03/2018 Projection
72.5 86.8
0
45
90
03/2017 03/2018 Projection
74.4 79.4
0
45
90
03/2017 03/2018 Projection
The projection for sales of hardware in Japan has been revised
upward, reflecting orders in the first half.
The projection for sales of hardware overseas has also been
revised upward, reflecting orders in the first half.
The initial projections for sales in the ultrapure water supply
business in Japan and overseas have been revised upward
slightly.
Sales of hardware will rise, and the cost of sales ratio will
improve.
Income from domestic maintenance and tool cleaning will
expand.
The full-year projection for orders for hardware in Japan has
been revised upward given orders in the first half.
The full-year projection for orders for hardware overseas has
been revised upward, reflecting strong demand in China and
South Korea.
69.0
8.6
11.8
72.7
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen)
(Billions of Yen)
(Billions of Yen)
Orders
Sales
Operating Income
(%)
Operating income margin * denotes initial projections
15
1.5 2.8
2.5
4.6
0
3
6
0
2
4
03/2017 03/2018 Projection
64.2 61.7
0
35
70
03/2017 03/2018 Projection
57.9 61.2
0
35
70
03/2017 03/2018 Projection
The full-year projections for sales of hardware for the electric
power and other industries have been revised downward, but
sales will rise from the previous fiscal year.
The full-year projection for sales of maintenance services for
general industries has been revised upward. Sales of
maintenance for general industries will rise from the previous
fiscal year.
Profitability in the hardware business for the electric power
industry and general industries will improve.
The income plans for maintenance services for general
industries and for chemical cleaning have been revised upward.
The full-year projection for orders for soil remediation has been
revised upward based on results in the first half.
The full-year projections for orders for hardware for the electric
power industry and general industries have been revised
downward, reflecting results in the first half.
62.5
2.2
3.7
60.9
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen)
(Billions of Yen)
(Billions of Yen) (%)
Orders
Sales
Operating Income
Operating income margin * denotes initial projections
27.7 34.5 31.8 34.5 42.0
91.5 94.9 98.9 97.8
98.6
58.8 60.0
83.7 81.9 89.4 178.1
189.4
214.4 214.2 230.0
0
120
240
03/2014 03/2015 03/2016 03/2017 03/2018 Projection
16
51.8 54.4 60.6 62.6 65.2
8.1 8.3
6.3 6.4 6.6
31.6 32.2
32.0 28.8 26.8
91.5 94.9
98.9 97.8 98.6
0
50
100
03/2014 03/2015 03/2016 03/2017 03/2018 Projection
179.7
150.4 154.9
182.6 188.0
The projection for the ultrapure water supply business has been revised upward.
The projection for maintenance services for general industries has been revised upward.
64.5
6.5
25.9
96.9
223.0
36.7
96.9
89.4
186.3
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
Service business
sales
(Billions of Yen)
(Billions of Yen)
Maintenance,
etc.
Tool
cleaning
Ultrapure
water supply
business
Service Business Revenue
in the Water Treatment Facilities Segment
Water treatment chemicals
Water treatment facilities (services)
Water treatment facilities (hardware)
* denotes initial projections
17
28.8
25.7 25.7 26.8
0
17
34
03/2017 03/2018 Projection
-0.8 +1.1 -2.0 -1.4 +1.1
First half Second half
8. Sales Plan for the Ultrapure Water Supply Business
(Billions of Yen)
Expiration of
contracts,
etc.
New
construction or
addition of
facilities
Revision to
contracts New
construction or
addition of
facilities
Expiration of
contracts,
etc.
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
18
07/3 08/3 09/3 10/3 11/3 12/3 13/3 06/3 14/3 05/3 04/3 16/3 15/3 17/3 18/3 19/3 20/3 21/3 22/3 23/3 03/3
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
9. Major Contracts in the Ultrapure Water Supply Business
Original contract Renewal or extension
* Key contracts are shown above. This does not cover all contracts.
(Overseas)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Domestic)
(Overseas)
(Domestic)
(Domestic)
(Domestic)
19
27.2 32.1
37.8 39.9 44.3 1.8
2.0
2.4 1.9
5.3
1.3 1.6
20.7 19.8
21.1
3.3 3.5
3.0 2.6
3.2
33.6
39.1
63.9 64.2
73.9
0
40
80
03/2014 03/2015 03/2016 03/2017 03/2018 Projection
Sales in the Water Treatment Chemicals business rose, but the initial projection has been revised downward slightly.
The projection of sales of hardware in the Water Treatment Facilities business has been changed from the declined plan
to the raised plan.
17.7 21.8 22.7 25.7 29.2
15.9 17.3
41.2 38.5
44.7
33.6 39.1
63.9 64.2
73.9
0
40
80
03/2014 03/2015 03/2016 03/2017 03/2018 Projection
41.3
26.4
6.0
21.3
2.8
71.4
45.0
71.4
(Billions of Yen) (Billions of Yen)
Asia North America
Overseas Sales by Region Overseas Sales by Business Segment
Water treatment chemicals Water treatment facilities EMEA (formerly Europe) Other
* denotes initial projections * denotes initial projections
* 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.
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
20
3.0 3.0 6.7
15.8
6.3
17.3
18.8
9.3
24.0
13.4 13.2 13.0
0
12
24
5.3 5.0 5.3
2.5 2.4 2.3
0
1.5
3
0
3.5
7
03/2016 03/2017 03/2018 Projection
13.0
20.0
14.0
6.0
2.5
5.5
The focus will be on the global strengthening of
development functions.
II. Consolidated Business Plan for the
Fiscal Year Ending March 31, 2018
(Billions of Yen) (Billions of Yen) (%)
The initial projection has been revised upward, reflecting
the decision to make an additional investment in the
ultrapure water supply business.
Capital Expenditures and Depreciation R&D Expenses
Capital expenditures (ultrapure water supply business)
Capital expenditures
(excl. ultrapure water
supply business)
Depreciation R&D expenses Percentage of net sales
* denotes initial projections * denotes initial projections
03/2016 03/2017 03/2018
Projection
III. Priority Measures
1.
2.
3.
Expansion of the overseas business foundations
Development of a new service business
Business organization reform
III. Priority Measures
1. Expansion of the overseas business foundations
21
Expanding the water treatment business using
M&A
Seeking expansion in North America
Decided to acquire the paper and pulp process
treatment chemicals production base of Akzo Nobel
in France.
Expanding the production system in Europe
Aims to expand KEG’s paper and pulp process
treatment chemicals business and improve
profitability.
Developing the business base
Close cooperation within the Group
Use of alliances and M&A
III. Priority Measures
2. Development of a new service business
22
Developing standardized wastewater
reclamation service Standardized wastewater reclamation system
Building a track record for delivery in Japan
Developing service agreements and reaching for target
markets in Japan and overseas
Water saving at commercial facilities
Sensor
Sewage water
Gaining new customers and increasing the number of
agreements in the United States to 700
Starting business in Japan
APANA Inc.
Kurita Group
Determining needs for water saving at commercial facilities
and proposing implementation on a trial basis
Aiming to create a solution business for plants
Water saving service using the IoT
III. Priority Measures
3. Business organization reform
23
Water Treatment Facilities
Water Treatment Chemicals
Domestic Overseas
Ultrapure Water Supply
Maintenance services
EPC
Overseas
Domestic
Overseas
Water Treatment Chemicals
Water Treatment Facilities
Water Treatment
Chemicals
Maintenance
services
Ultrapure Water
Supply
EPC
Until March 2017 From April 2017
* A revised evaluation system from October 2017
Reference Material
24
9.6 10.2
0
6
12
09/2016 09/2017
+0.6
+1.6 -1.7
(Billions of yen)
Note: The effect of change in the cost of sales ratio is calculated using the gross profit margin.
Increase in
SG&A expenses
Effect of change
in cost of sales ratio
Impact of increase
in revenue
■ U R L ■
■MAIL■
http://ir.kurita.co.jp/en/
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.
