Message from the President

This year marks the 75th anniversary of the Kurita Group. More than merely making water cleaner, we have grown in concert with developments throughout industry and society, by consistently providing optimal solutions and value for the issues that customers are facing by pursuing and leveraging the full functionality and potential of water. Remaining close to the issues that our customers are facing allowed us to create points of contact with sites in a broad range of industries and build up "water knowledge"—the information, data and experience related to water treatment in industry and society—to establish our competitive edge. While water treatment is a business that inherently creates a high level of social value, we firmly believe that we are able to deliver an even higher level of value to customers and thereby contribute to society. This concept is incorporated in our corporate philosophy of "Study the properties of water, master them, and we will create an environment in which nature and humanity are in harmony."

As the president of Kurita, my mission is "to provide greater value to a broader range of customers worldwide and play a role for making the world better—thus bringing long-term, of strong growth for the Kurita Group and consistently enhance our corporate value."
I believe that picking up "changes and movements" are crucial as a way of identifying the approach to be taken from a medium- to long-term perspective, and I am setting aside as much time as possible for internal and external communications and trying to visit sites myself to achieve this. An example that highlights this is the UNGC Leaders Summit that I attended last year. I really felt the high level of awareness with regards to climate change that other countries have and how serious they are working to address the issue, and it reminded me again that, as a company dealing with the environment, we need to approach this issue by delving deeper.
To date, we have long worked on enhancing and improving our products and services with customer issues as the starting point, and this will remain our cornerstone going forward. Yet only working to resolve issues that are already present is inadequate for responding to demand for solutions to environmental issues like climate change and the ever-changing business environment, as well as growing in a sustainable manner in line with society, leverage our "water knowledge" to address potential issues will help us develop new businesses and markets and provide an even higher level of social value further around the world, in terms of social value as our starting point. It is this type of extra effort that is essential.

Our corporate vision for 2030 is "Pioneering ʻnew value for waterʼ to contribute to the realization of a sustainable society," and we aiming to achieve sustainable growth based on the interaction of corporate activities with the natural environment and social systems, with sustainability underpinning our management. The key issues for achieving this vision are set forth in the "Kurita Group's Materiality," which comprises three shared value themes and five basic themes chosen from global issues related to sustainability, and supporting efforts to achieve them. Each materiality item has been integrated in an organic manner into strategy for our five-year medium-term management plan "Pioneering Shared Value 2027 (PSV-27 Plan)" that kicked off from April 2023, and efforts toward resolving this materiality play a crucial role for achieving the targets of PSV-27 Plan .

PSV-27 Plan has been formulated upon the basic policy of refining human resources, technologies and business processes to create value that exceeds expectations from stakeholders through overwhelming speed and problem-solving ability. By expanding our diverse service business and CSV business* to suit market characteristics with the two-pronged competitive strategy of "achieve transformation with customer value as the starting point" and "create innovation with social value as the starting point," we are not only aiming to create social value through our businesses, but also seek to have that value recognized so that we are able to grow such that the Kurita Group consistently provides value to society. In light of this, PSV-27 Plan sets outs both financial and non-financial indicators that the entire group is working to achieve as a whole.

The first step in moving ahead with this was to make significant changes to our organizational structure. Customer requirements vary greatly from market to market, so we separated our segments to the Electronics Industry and General Industry markets and reviewed our organizational structure as a means of providing the value needed in each market in a quicker and more accurate manner. With the market environment becoming increasingly complex, we changed our institutional design to a Company with Nominating Committee, etc. separated our executive and supervisory functions, and also transferred authority substantially to the executive side as a means of making management decisions with a sense of speed. As a result, I feel that the pace of management decisions has increased. Another effective change that I have witnessed is a sense of tension that is present under the supervision from our stakeholder's perspective.

I think that the results for the fiscal year ended March 31,2024, the first year of PSV-27 Plan , have started well so far, with both net sales and profits increasing from the previous year and exceeding target figures, despite a drop in profitability due to the impact of conditions in the semiconductor market and strategic projects for developing contacts with new customers. While we were unfortunately unable to achieve our targets for non-financial indicators other than greenhouse gas (GHG) emissions reduction, we have made steady progress with our priority measures, and this has given us a sense of confidence and positivity toward achieving PSV-27 Plan.

I think that the electronics industry is a market with significant growth potential, given the growing demand for generative AI and the fact that various countries are ramping up production capacity for semiconductors with the view of building value chains from a geopolitical perspective. Given the substantial impact the timing of production ramp-ups have on profitability, there is considerable focus on how fast value can be delivered, which translates to the ability to shorten the lead time from the initial consideration of capital expenditures to execution. To address this, we consolidated all of the Kurita Groupʼs functions which serve the electronics industry, from sales to engineering and R&D, into a single organization. We are also working on four priority measures : "Evolving the Water Supply Business," "Building New Business Foundations in Europe and North America," "Reforming Production Process and Strengthening the Supply Chain," and "Strengthening Foundations of the Precision Tool Cleaning Business" with the aim of becoming an indispensable partner for our customers in the electronics industry by acquiring a broad range of customer contacts worldwide.

The main results for the fiscal year ended March 31, 2024 were expanding the scope of services provided from the existing water supply business toward acquiring new projects in the water supply business. A new model has been adopted by customers contributing to reducing the environmental impact of plants, which led to growing our customer base.

The Group's production capacity remains a crucial issue, and to keep up with new projects, we are adopting a front-loading approach where comprehensive preparations for the frontend of production processes are made based on demand forecasting from sales information to lower the workload and reworking for back-end processes—we will be transitioning to full-scale operation phase for digital tools, including automated designs, from the fiscal year ending March 31, 2025. With these efforts, we are aiming to shorten the lead time of all our production activities by 30%, and to expand our response capacity some 1.5-fold by the fiscal year ending March 31, 2028.

Our efforts toward building a new business foundation in Europe and North America included making Arcade Engineering a consolidated subsidiary in Europe last year, and launching a facilities business in North America comprising EP (Engineering & Procurement) + module methods, as part of efforts to develop a foundation for global business expansion in the electronics market. We will disseminate the experience and know-how we have built up so far—mainly in Japan and Asia—to Europe and North America, and together with production process reform and supply chain strengthening, establish a resilient and productive value chain on a worldwide scale.

The precision tool cleaning business, however, remains a challenge, with worsening conditions in the semiconductor market and the decline in cleaning demand in the previous fiscal year. While a recovery in business performance is anticipated as market conditions recover, we need to break free from a position that is affected by market trends—to this end, we will continue with growth investments and increase sales by expanding on the areas we provide services to and acquiring new customers, and also enhance profitability by expanding the scope of services we provide beyond cleaning.

Our customer makeup in the general industry covers a diverse range of industries and regions, enabling us to operate our business with relatively few fuctuations, even with the rapid pace of changes in the business environment. This sector encompasses a broad customer base with growth generally expected to remain in line with the economic growth of each country, furthermore I think we will be able to achieve further growth by shifting our business model here. In the four key regions that the Kurita Group operates in—Japan, Asia, North & South America, and EMEA—we will be accelerating efforts toward expanding value-added business models suited to characteristics of each region and industry. The priority measures for achieving this are: "Expanding the CSV Business," "Utilizing Digital Infrastructure to Accelerate Business Expansion," "Improved Profitability in the U.S. Business," and "Challenging New Businesses that Contribute to a Circular Economy Society."

Providing customers with value—what they perceive as positive effects—is crucial for the expanding the CSV business, and the speed of development remained a challenge, given that it takes time for customers to make decisions on purchases. Yet we have built up models ensuring outstanding value creation, and have received a positive response to this expansion.

We have also completed developing a data integration platform for collecting and accumulating data pertaining to water treatment worldwide, including equipment operation, water quality and injection of chemicals, in a centralized manner. Looking ahead, this platform will be utilized throughout the Group, and will also play a role for enhancing communications with customers and provide more advanced solutions.

For improved profitability in the U.S. business, the fruits of the various initiatives we have been implementing are also beginning to show, including integrating products and reviewing our business portfolio. We will continue increasing efficiency and full-scale expansion of the CSV business so as to raise profitability up to the same level as other regions over the next four years.

And finally in terms of challenging new businesses that contribute to a circular economy society, we have made progress with the recycling business for used paper diapers. We have concluded partnership agreements with local governments and public agencies, and are pushing ahead with demonstration tests, which has led to securing even more projects. To build on challenges like this, we are working on developing a system for bringing about innovation with social value as the starting point.

In May 2024, we established the new company Kurita AquaChemie India, which has started its business activities. India is one of the largest economies in the world and is slated to grow even further going forward, and demand for water treatment is increasing across various industries. With this platform, we will be ready to provide solutions that address challenges related to water and the environment in India

I am of the view that business models have a finite life— without developing new or updated business models with a competitive edge, we will not be able to continue providing for our customers or society. The four strategies of "Production," "Intellectual Property," "Innovation," and "Digital Technology" that underpins all these are vital for establishing a competitive edge for the Kurita Group.

The production strategy helps the Kurita Group achieve the quality of its products and services and the speed at which they are delivered, and also leads to improvements in productivity. We will be building a foundation for transforming production processes and strengthening supply chains, which includes the use of digital technology, and also leverage the "water knowledge" we have acquired through our production activities, with the view to preventing non-compliance issues and improving safety and quality throughout the Group.
In addition to ensuring that the Kurita Group's rights are protected, our intellectual property strategy will focus on maintaining and enhancing our competitive edge with both a defensive approach to intellectual property activities, which includes applying for patents to keep our competitors in check and enhancing our cooperation with partner companies, and an offensive approach to intellectual property activities, such as developing business models and shaping our businesses by leveraging the IP landscape.

Next, our Innovation strategy focuses on creating new business models, businesses and markets with both customer value and social value as starting points, as well as efforts for cultivating the seeds that will lead to a competitive edge in the future over a long-term perspective. I previously touched on the fact that innovation is essential for ensuring sustainable growth of the Kurita Group. To hasten innovation throughout the Kurita Group, in April 2024 we defined the shape that innovation should take, and also transitioned our organization to a function-driven structure to improve and enhance our existing products and services and create groundbreaking innovations, with suitable persons assigned to each role. While only several months have elapsed since forming this new organization, I have already seen some unique ideas coming to light across a broad range of areas, and there are positive signs of the efforts being made toward creating new businesses that can bring about innovation.

The last area is our digital strategy. The use of AI and IoT has become mainstream in line with the rapid pace of digitalization in recent years, and these are expected to continue presenting a significant impact on society and industry in the future—the rate at which these will change will also increase further. The amount of information that companies need to handle will also certainly continue to rise. In light of these circumstances, we also need to incorporate transformation into our business models and processes through the use of digital technology, or risk being unable to deliver even greater value or meet the expectations of customers and society. Operational Transformation will focus on developing a foundation for consolidating information, and Business Transformation on transforming information distilled from immense amounts of data into "water knowledge," which can be harnessed in full for securing business opportunities that are broad-ranging and cutting-edge.

I am of the belief that the thoughts, ambitions and skills of people, and more than anything, their actions, are the catalysts for things that happen, and that "human resources" are the driving force behind the growth strategy of the Kurita Group. Through my interactions with employees from various regions, I have sensed that the Kurita Group is a collection of people with a high level of sympathy with our corporate philosophy, and with a strong desire to make the world better through water—this is a sense of pride for our group. I am looking forward to changes that will go on to generate new value by maintaining this uniformity, combined with the diversity that comes from the knowledge and expertise built on outside experience.

The Kurita Group has quickly reached a global scale over the past decade, but looking back at our past, we tended to view the Japanese approach as the correct one, and expanded that line of thinking to other regions. Yet a glimpse at other regions reveals that there are countless better methods and ideas available. Germany may be the leader when it comes to one particular field, and China or Indonesia may be the best in another—if we are able to expand on a worldwide scale with the experts in their respective fields at the helm, we will be able to provide greater value in an all-encompassing manner. I think it is essential that we build a multi-polar network brimming with diversity in order to achieve this, so the leaders of major initiatives throughout the Group, including the non- Japanese executive officer appointed from 2023 as the head of the EMEA & Americas region, will play a key role in driving this notion ahead.

When it comes to enhancing engagement, I want our employees to value their communications and relationships, not only at their workplaces but also at other times. We are planning to hold the "Kurita Global Award" group-wide award program and exchange events this year in commemoration of our 75th anniversary since being established. More than just business performance, these will serve as opportunities to celebrate the contributions we all make to society and our actions that are based on cherished values, and help to broaden our horizons, not only for work but in terms of our minds and actions as human beings.

Our stakeholders provide essential backing for the Kurita Group, and I have also been actively engaging in communication with a broad range of stakeholders like our partner companies, shareholders, investors, and employees in addition to our customers. While some of the feedback I receive has been tough, these present valuable opportunities for identifying areas that require changing or that should be maintained, new insights, as well as crucial changes and developments required for making management decisions. I am certain that we will be able to improve ourselves and grow into a group that can contribute to society by harnessing the knowledge gained with communication. Nothing would make me happier than receiving feedback from society expressing gratitude towards the Kurita Group. I ask all of our stakeholders for their continued understanding and support as we make positive steps forward toward achieving the Kurita Group's corporate vision and philosophy.

I ask all of our stakeholders for their continued understanding and support as we make positive steps forward toward achieving the Kurita Group's corporate vision and philosophy.

July 2024
Hirohiko Ejiri
President and Representative Executive Officer

• This message was quoted from Integrated Report 2024.