Kuraray (3405) Investor update summary

Market and regulatory environment

• Global water quality regulations are becoming more stringent, driving demand for activated carbon solutions.

• The U.S. EPA set enforceable PFAS limits in drinking water, requiring compliance by April 2029, with some utilities allowed up to two additional years; early adoption is expected due to state regulations and public pressure.

• Europe is strengthening regulations for both drinking water and industrial applications, with new directives impacting demand and EU remediation and wastewater treatment growing at over 11% CAGR.

• Japan has revised its Water Supply Act, contributing to a more regulated environment.

Business growth outlook and capacity expansion

• Significant growth is expected in the U.S. due to PFAS regulations, with a projected 600% revenue increase for PFAS treatment from 2023 to 2032.

• Facility expansions are underway in the U.S., including a new 25,000 metric ton line in Mississippi, debottlenecking projects, and nearly $100 million invested in the Columbus reactivation facility.

• Top-line revenues for the Environmental Solutions Division are expected to increase by over 2.5 times from 2023 to 2032, with global revenue growth driven by PFAS, biogas, battery materials, and regulatory demand.

• European growth will be driven by new industrial and wastewater regulations, though the impact on drinking water is less pronounced than in the U.S.

• Additional land has been secured in South Carolina for future expansion.

Technology and market positioning

• Activated carbon, especially granular activated carbon (GAC), is favored for PFAS removal due to low operating costs, ease of use, recyclability, and EPA recognition as Best Available Technology.

• The company manufactures activated carbon from coal, wood, coconut, and lignite, enabling tailored solutions for over 700 applications across six key markets.

• GAC is expected to be the preferred technology for both surface and groundwater treatment, with higher adoption in surface water facilities and a projected 2–4x increase in change-out frequency.

• Proprietary products like Filtrasorb™ and Filtrasorb RX™ deliver high PFAS removal and durability, with expanded U.S. capacity ensuring supply.

• The business is evolving from a product-centered model to a full solution platform, integrating products, services, and digital capabilities.