results presentation for the year ended march 31, …Ⅱ. consolidated business plan for the fiscal...

Kurita Water Industries Ltd.

( Stock code : 6370 )

Results Presentation for the Year Ended March 31, 2013

May 2, 2013

Table of Contents

Ⅰ

Ⅱ

Ⅲ

Consolidated Financial Results for the Fiscal Year Ended March 31, 2013

Consolidated Business Plan for the Fiscal Year Ending March 31, 2014

Initiatives of Medium-term Management Plan ―“Take Action 2014 (TA -14)”

Reference Material

Consolidated Financial Results for the Fiscal Year Ended March 31, 2013

1 .

2 .

3 .

4 .

5 .

6 .

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)

Financial Condition

Ⅰ. Consolidated Financial Results for the Fiscal Year Ended March 31, 2013

1

Fiscal year to March 2012

Actual


Actual Year-on-year

change Revised

Projections Initial

Projections

Orders 197.3 186.7 - 5.3% 198.0 201.0

Net Sales 193.8 180.1 - 7.0% 196.0 200.0

Operating Income 29.4 21.0 - 28.6% 25.0 29.5

Ordinary Income 30.4 22.0 - 27.4% 25.7 30.0

Net Income 16.5 11.5 - 30.7% 13.6 17.5

1. Financial Highlights

(Billions of Yen)


2

2. Orders, Sales, Operating Income, and Operating Income Margin

140.5 130.7

56.7 56.0

197.3 186.7

0

100

200

03/2012 03/2013

16.4 14.9 14.7

10.2

15.2

11.7

8

13

18

03/2012 03/2013

198.0

140.8

57.2

137.3 124.1

56.4 56.1

193.8 180.1

0

100

200

03/2012 03/2013

196.0

138.9

57.1

20.1 12.6

9.3

8.3

29.4

21.0

0

15

30

03/2012 03/2013

25.0

16.0

9.0

15.8

11.5 12.8

Sales (Billions of Yen) (Billions of Yen)

(Billions of Yen) ( % )

Orders Sales

Operating Income Margin Operating Income

Water treatment chemicals Water treatment facilities Total * denotes revised projections


3

3. Water Treatment Chemicals

9.3 8.3

16.4 14.9

0

9

18

0

5

10

03/2012 03/2013

9.0 56.4 56.1

0

30

60

03/2012 03/2013

57.1 56.7 56.0

0

30

60

03/2012 03/2013

57.2

15.8

* denotes revised projections

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

Sales Orders Operating Income and Operating Income Margin

[Major areas of change in Orders / Sales] Japan : Decline primarily in core products (-) Overseas : Growth primarily in Asia (+)

[Major determinants of change] Increase in SG&A expenses (-) Change in sales mix (-)

Operating income Operating income margin




4

4. Treatment Facilities (for the electronics industry)

15.2 11.5

19.1

15.7

0

10

20

0

8

16

03/2012 03/2013

13.0 79.6 73.3

0

45

90

03/2012 03/2013

82.0 84.3 75.4

0

45

90

03/2012 03/2013

84.4

15.9




[Major areas of change] Decrease in hardware (-) Decrease in maintenance services (-) Decrease in ultrapure water supply

business (-)




[Major areas of change] Decrease in maintenance services (-) Decrease in ultrapure water supply

business (-) Decrease in hardware (-)

[Major determinants of change] Impact of decline in revenue (-) Change in sales mix (-) Increase in SG&A expenses (-)


5

5. Treatment Facilities (for general industries)

4.9

1.1

8.6

2.2

0

5

10

0

3

6

03/2012 03/2013

3.0

57.7 50.7

0

30

60

03/2012 03/2013

56.9 56.2 55.3

0

30

60

03/2012 03/2013

56.4

5.2




[Major areas of change in Orders / Sales] Increase in general industries hardware (+) Decrease in electric power industry (-) Decrease in maintenance services (-)




[Major determinants of change] Impact of sales decline (-) Change in sales mix (-) Increase in SG&A expenses (-)


Liabilities

Net assets

Other fixed assets

Other current assets

Cash, deposits and

Marketable securities

Tangible fixed assets

6

6. Financial Condition

27.8 29.9

98.4 86.9

75.6 69.8

69.4 77.0

271.1 263.6

210.0 209.1

61.1 54.5

271.1 263.6

(+ 2.1)

(- 11.5)

(- 5.7)

(+ 7.6)

(- 0.9)

(- 6.7)

(Billions of Yen) (Billions of Yen)

Assets Liabilities and Net Assets

Mar. 31, 2012 Mar. 31, 2013 Mar. 31, 2012 Mar. 31, 2013

1 . 2 . 3 . 4 . 5 . 6 . 7 . 8 . 9 .

10 . 11 .

Key Assumptions 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 Revenue Overseas Businesses Ultrapure Water Supply Business Capital Expenditures, Depreciation, and R&D Expenses Dividend Policy

Consolidated Business Plan for the Fiscal Year Ending March 31, 2014

Ⅱ. Consolidated Business Plan for the Fiscal Year Ending March 31, 2014

7

1. Key Assumptions

Domestic customers’ capacity utilization will gradually recover from the summer months onward

Firm overseas demand, particularly in emerging countries

Capital investment in semiconductors/LCD will vary according to product and customer

Capital investment in general industries will be largely unchanged

Water Treatment Chemicals Segment

Water Treatment Facilities Segment


8

2. Overview

(Billions of Yen)


Actual

Fiscal year to March 2014 Projection

Year-on-year change

Orders 186.7 197.0 + 5.5%

Net Sales 180.1 191.0 + 6.0%

Operating Income 21.0 23.5 + 12.0%

Ordinary Income 22.0 24.0 + 8.9%

Net Income 11.5 14.0 + 22.0%


9

3. Orders, Sales, Operating Income, and Operating Income Margin

130.7 136.2

56.0 60.8

186.7 197.0

0

100

200

03/2013 Actual

03/2014 Projection

14.9 16.3

10.2 10.4 11.7 12.3

9

13

17

03/2013 Actual

03/2014 Projection

124.1 130.2

56.1 60.8

180.1 191.0

0

100

200

03/2013 Actual

03/2014 Projection

12.6 13.6

8.3 9.9

21.0 23.5

0

12

24

03/2013 Actual

03/2014 Projection



Orders Sales


Water treatment chemicals Water treatment facilities Total


10

4. Water Treatment Chemicals

8.3 9.9

14.9 16.3

0

9

18

0

5

10

03/2013 Actual

03/2014 Projection

56.1 60.8

0

30

60

03/2013 Actual

03/2014 Projection

56.0 60.8

0

30

60

03/2013 Actual

03/2014 Projection




[Major areas of change in Orders / Sales] Japan : Recovery from the summer months onward, primarily in core products (+) Overseas : Growth primarily in Asia (+)

[Major determinants of change] Impact of increase in revenue (+) Improvement in sales mix (+) Increase in SG&A expenses (-)


11

11.5 12.0

15.7 15.2

0

9

18

0

7

14

03/2013 Actual

03/2014 Projection

73.3 79.5

0

40

80

03/2013 Actual

03/2014 Projection

75.4 80.1

0

40

80

03/2013 Actual

03/2014 Projection




[Major determinants of change] Impact of increase in revenue (+) Change in sales mix (-)

5. Treatment Facilities (for the electronics industry)

[Major areas of change in Orders / Sales] Increase in hardware (+) Increase in maintenance services (+) Decrease in ultrapure water supply business (-)


12

1.1 1.6

2.2

3.1

0

2

4

0

1

2

03/2013 Actual

03/2014 Projection

50.7 50.7

0

30

60

03/2013 Actual

03/2014 Projection

55.3 56.1

0

30

60

03/2013 Actual

03/2014 Projection




[Major areas of change] Increase in maintenance services (+) Decrease in general industries

hardware (-)

[Major areas of change] Increase in general industries hardware (+) Increase in maintenance services (+) Decrease in electric power industry sales (-)

[Major determinants of change] Improvement in sales mix (+) Increase in SG&A (-)

6. Treatment Facilities (for general industries)


146.4 153.6

152.8 157.0

152.1

Maintenance, etc.

Ultrapure water supply

business

Tool cleaning

13

7. Service Business Revenue

53.6 51.3 56.4 49.4 52.5

10.2 9.7 9.3

8.5 8.7

34.6 35.1 34.8

32.4 31.6

98.4 96.1 100.5

90.3 92.8

0

50

100

03/2010 03/2011 03/2012 03/2013 03/2014 Projection

26.4 28.4 36.7 33.6 37.4

98.4 96.1 100.5

90.3 92.8

53.7 56.7 56.4

56.1 60.8

178.5 181.2 193.8

180.1 191.0

0

100

200

03/2010 03/2011 03/2012 03/2013 03/2014 Projection

Service Business Revenue in the Water Treatment Facilities Segment

(Billions of Yen)

(Billions of Yen)

Service business revenue

Water treatment chemicals

Water treatment facilities (services)

Water treatment facilities (hardware)

8. Overseas Businesses


Sales by Region Sales by Overseas Business Segment

13.4 19.2

22.5 23.9

33.1 1.6

2.8 2.3 2.3

3.0

1.4

1.3 1.4 1.2

1.6

2.6

3.1 3.0 3.0

3.3

19.0

26.4 29.3 30.5

41.0

0

20

40

03/2010 03/2011 03/2012 03/2013 03/2014 Projection

9.6 15.5 17.8 18.5

25.6 9.4

10.9 11.5 12.0

15.5

19.0

26.4 29.3 30.5

41.0

0

20

40

03/2010 03/2011 03/2012 03/2013 03/2014 Projection


Asia N. America Europe Other Water treatment chemicals

Water treatment facilities

14


15

9. Ultrapure Water Supply Business

Sales Capital Expenditures

34.6 35.1 34.8 32.4 31.6

0

20

40

03/2010 03/2011 03/2012 03/2013 03/2014 Projection

5.7

3.9

5.3

3.2

1.4

0

3

6

03/2010 03/2011 03/2012 03/2013 03/2014 Projection



10. Capital Expenditures, Depreciation, and R&D Expenses

Capital Expenditures and Depreciation R&D Expenses

Capital expenditures (ultrapure water supply business)

Capital expenditures (excl. ultrapure

water supply business)

Depreciation

4.2 4.4 4.5

2.2 2.4 2.4

0.0

1.5

3.0

0.0

3.0

6.0

03/2012 03/2013 03/2014 Projection

7.7 6.1

4.0

2.4 2.9 2.6

15.4 14.5 14.4

0

8

16

03/2012 03/2013 03/2014 Projection

3.2 1.4

5.3

( % )

R&D Expenses Percentage of net sales


16


17

11. Dividend Policy

Basic Dividend Policy

Kurita’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.

18 22

28 32 34 36 38 40 42 44

0

25

50

03/2005 03/2006 03/2007 03/2008 03/2009 03/2010 03/2011 03/2012 03/2013 03/2014 Projection

+ 6 + 4

+ 2 + 2 + 2

+ 2

+ 2

+ 4

+ 2 + 2

(Yen)

1 .

2 .

3 .

4 .

5 .

6 .

7 .

8 .

9 .

Basic Theme and Medium-term Vision

Operating Performance Targets

Segment Projections

Overseas Business Growth [Bolster Foundation]

Unparalleled reliability and Market Share Growth in Domestic Business

Creation of New Products and New Businesses [Key Themes]

Creation of New Products and New Businesses [Strategic Products]

Improve Capital Efficiency

Enhance Corporate Governance

Initiatives of Medium-term Management Plan ―“Take Action 2014 (TA-14)”

Ⅲ. Initiatives of Medium-term Management Plan ―“Take Action 2014 (TA-14)”

18

1. Basic Theme and Medium-term Vision

Basic Theme : Execution and Evolution

Dramatic overseas business growth

Enhance earnings base of domestic

business Chemicals

Maintenance

Hardware

Mobilize Kurita Group's Strengths

Resolve Customers'

Issues


19

2. Operating Performance Targets


Actual


Revised Projections


Initial Projections

Orders 186.7 210.0 240.0

Net Sales 180.1 205.0 235.0

Operating Income 21.0 30.0 36.0

Ordinary Income 22.0 30.5 36.5

Net Income 11.5 18.5 22.0

Net Sales (overseas) 30.5 55.0 64.4

Overseas Sales Ratio 16.9% 26.8% 27.4%

(Billions of Yen)

Recovery of Profitability (Maintain operating income margin around the target of 15%) Maintain Overseas Sales Growth (Keep overseas sales ratio around the target of 27%)


20

130.7 145.0

56.0 65.0

186.7 210.0

0

100

200

03/2013 Actual

03/2015 Projection

14.9

18.5

10.2

12.9 11.7

14.6

9

14

19

03/2013 Actual

03/2015 Projection

124.1 140.0

56.1 65.0

180.1 205.0

0

100

200

03/2013 Actual

03/2015 Projection

12.6 18.0

8.3

12.0 21.0

30.0

0

15

30

03/2013 Actual

03/2015 Projection



Orders Sales


Water treatment chemicals Water treatment facilities Total

3. Segment Projections

Taiwan

South Korea Dalian

Shanghai Suzhou

Thailand

Malaysia Singapore

Indonesia

Tianjin

Guangzhou

Brazil

Europe

US

Southeast Asia

General

industries


4. Overseas Business Growth [Bolster Foundation]

Localize advanced analytics and applications testing

R&D Alliances / M&As

Set target for selection of local resin and membrane manufacturers

Targeted Europe and North America

Overseas staff Added approximately 80 staff in the fiscal year

ended March 31, 2013 Opened sales office in Malaysia Enhanced business framework in Singapore

Increase No.'s of Local Employees / Business Bases

Water treatment chemicals locations

Water treatment facilities locations

21

China/Taiwan/ South Korea

Electronics

industry


1

5. Unparalleled reliability and Market Share Growth in Domestic Business

22

Customer Plants Kur i t a

Equipment diagnostics

Operating status monitoring

Resolve Issues

Water treatment facilities

Utility facilities

Sensing Comprehensive

maintenance Facility purchase

comprehensive operations management

Effect visualization

Share issues


23

6. Creation of New Products and New Businesses [Key Themes]

Quick development of new products and new

technologies

Match the specific needs of overseas

markets

Expand Products for Overseas Markets

Membranes

Polymers

Ion exchange

Advanced analysis / sensing

Electronic device cleaning / surface treatment

Bolster Core Technologies

Food water

Energy water

Space water

Cultivate New Markets

Slime control


24

7. Creation of New Products and New Businesses [Strategic Products]

Semiconductor manufacturing process

Wastewater reclaim facilities Seawater desalination facilities

Electrolyzed Sulfuric Acid Generator Reverse Osmosis Membrane Treatment Chemicals


25

8. Improve Capital Efficiency

MP-11 April 1, 2009 to March 31, 2012 (accumulated)

TA-14 April 1, 2012 to March 31, 2015 (accumulated)

Capital Investment 20.7 15.5 *

Depreciation 45.6 44.9

R&D Expense 12.4 13.6

* Only includes capital investment which has already been decided as of March 31, 2013.

Share Buybacks in fiscal year ended Mar. 31, 2013

Acquisition Period

November 1, 2012 to November 29, 2012

Acquisition Price 1,630 yen per share

Number of Shares Acquired

7,493,665 shares (Ratio of total number of

shares issued: 5.64%)

Total Acquisition Cost

12,214,673,950 yen

Capital investment in promising fields R&D Overseas alliances / M&As

Strive for continuous dividend increases (Plan to increase dividend for the 10th consecutive year in fiscal year ending March 31, 2014)

Flexible share buybacks (Acquired company shares via tender offer)

1. Invest in Growth Fields 2. Enhance Shareholder Returns

(Billions of Yen)


26

9. Enhance Corporate Governance

Aim to appoint an external director with a greater emphasis on independence, with a view to respecting shareholder value and enhancing management transparency

Selection of New External Director Candidate

Target an optimal management structure that is reviewed in an agile and flexible manner to respond to significant changes in the market environment.

Shorten the Term of Office for Directors to 1 Year

Reference Material

27

Analysis of Changes in Operating Income for the Fiscal Year Ended March 31, 2013

29.4

21.0

0

15

30

03/2012 03/2013

- 0.07 - 2.8

- 1.6

- 3.9 (Billions of Yen)

*The effects of decline in revenue and change in the cost of sales ratio are calculated using the gross profit margin.

Effect of decline in revenue*

Effect of raw materials

prices

Effect of change in cost of sales ratio*

Increase in SG&A

expenses

U R L

M A I L

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

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

Kurita Water Industries Ltd.

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.

results presentation for the year ended march 31, …Ⅱ. consolidated business plan for the fiscal...

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