| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥16886.3B | ¥16284.5B | +3.7% |
| Operating Income | ¥1640.7B | ¥1466.4B | +11.9% |
| Profit Before Tax | ¥1698.5B | ¥1510.2B | +12.5% |
| Net Income | ¥1205.9B | ¥1103.7B | +9.3% |
| ROE | 11.0% | 10.0% | - |
Kao Corporation's FY2025 consolidated results showed Revenue of 1,688.6 billion yen (YoY +3.7%), Operating Income of 164.1 billion yen (+11.9%), and Net Income of 120.6 billion yen (+9.3%). Operating margin improved to 9.7% from 9.0% in the prior year, reflecting enhanced profitability through gross margin expansion to 39.6% and effective cost management. The company achieved both revenue growth and profit expansion, with ROE improving to 11.3% driven primarily by net profit margin enhancement. Operating cash flow reached 199.7 billion yen (1.66x net income), demonstrating strong cash generation capability. The company executed substantial shareholder returns including 80.1 billion yen in share buybacks alongside dividends of 71.1 billion yen. FY2026 guidance projects Revenue of 1,750.0 billion yen, Operating Income of 182.0 billion yen, and Net Income of 130.0 billion yen, indicating continued growth momentum.
Revenue growth of +3.7% was driven by market share gains in Japan's consumer products business (30 consecutive months of YoY growth), robust recovery in the Cosmetics segment (+6.9%), and expansion in the Chemical segment (+6.9%). The Cosmetics business achieved operating profit of 10.4 billion yen versus a loss of 3.7 billion yen in the prior year, contributing significantly to overall profit growth. Gross profit margin improved 1.5 percentage points in the Global Consumer segment through value-based pricing and product mix enhancement. Operating profit increased +11.9%, outpacing revenue growth due to margin expansion effects totaling approximately 17.5 billion yen and operational efficiency improvements.
The gap between operating income (164.1 billion yen) and net income (120.6 billion yen) primarily reflects normal tax burden (effective tax rate of 29.0%), with financial income of 6.2 billion yen partially offset by financial expenses of 3.8 billion yen. Equity method investment gains contributed 3.4 billion yen. The operating-to-net income conversion rate of 73.5% is within normal range with no material non-recurring items flagged. Non-operating items totaled approximately 7.7 billion yen net positive, representing less than 1% of revenue, indicating earnings quality is primarily driven by core operations.
Performance pattern: Revenue up, Profit up. The profit growth substantially exceeded revenue growth, driven by operating leverage from gross margin improvement and cost discipline, establishing a positive earnings momentum trajectory.
Hygiene and Living Care segment generated Revenue of 549.3 billion yen (+1.1%) and Operating Income of 81.3 billion yen (+5.5 billion yen YoY), with operating margin of 14.8%. This represents the largest segment by revenue (32.5% of total) and constitutes the core business. Japan Fabric and Home Care drove growth through premium product positioning and pricing optimization, achieving 19.1% operating margin.
Health and Beauty Care segment recorded Revenue of 432.9 billion yen (+2.2%) and Operating Income of 39.1 billion yen (+4.7 billion yen), with margin of 9.0%. Japan Skincare and high-premium hair care products led the expansion, though growth investments partially offset margin gains.
Cosmetics segment achieved Revenue of 261.6 billion yen (+6.9%) and Operating Income of 10.4 billion yen (+14.1 billion yen improvement from prior year loss of 3.7 billion yen), marking a decisive turnaround to 4.0% margin. The recovery was driven by fixed cost reduction in Japan operations (achieving domestic profitability), China market recovery (104% sell-through growth), and portfolio rationalization. This segment delivered the largest profit improvement in absolute terms.
Business Connected segment posted Revenue of 39.2 billion yen (-3.2%) and Operating Income of 2.3 billion yen (-3.0 billion yen), with margin contracting to 5.9% due to price competition in medical field products, partially offset by stable lodging and leisure demand.
Chemical segment reported Revenue of 451.5 billion yen (+6.9%) and Operating Income of 30.2 billion yen (-5.5 billion yen), with margin declining to 6.7%. While information materials remained solid, functional materials faced demand weakness and oil-based material margin compression, plus inventory valuation impacts. Despite revenue growth, profitability deteriorated requiring attention.
Overall performance was driven by the core Hygiene and Living Care business maintaining stable high margins, while the Cosmetics segment turnaround and Health and Beauty Care steady growth contributed to consolidated profit expansion. Segment margin dispersion (ranging from 4.0% to 14.8%) highlights portfolio diversity and improvement opportunities in lower-margin businesses.
Profitability: ROE 11.3% (PY 10.0%), Operating Margin 9.7% (PY 9.0%), Net Profit Margin 7.1% (PY 6.8%). The 1.3 percentage point ROE improvement reflects enhanced profitability and efficient asset utilization, with operating margin expansion as the primary driver. ROE of 11.3% represents a meaningful improvement from the 3-year average of approximately 8.3%.
Cash Quality: Operating CF to Net Income ratio of 1.66x indicates strong cash-backed earnings quality. Free Cash Flow of 129.9 billion yen (Operating CF 199.7 billion yen minus CapEx 61.2 billion yen) demonstrates robust cash generation after growth investments.
Investment: CapEx to Depreciation ratio of 0.71x (CapEx 61.2 billion yen vs. Depreciation 85.8 billion yen) suggests maintenance-level capital investment, though strategic investments in Taiwan electronic materials facilities and production capacity enhancements are underway. The company is balancing growth investments with cash return priorities.
Financial Health: Equity Ratio 58.4% (PY 58.8%) reflects conservative capital structure. Current assets of 905.9 billion yen with cash and equivalents of 323.3 billion yen provide adequate liquidity cushion. Asset turnover of 0.90x indicates moderate asset efficiency.
Additional Metrics: ROIC improved to 9.7% from 9.2% YoY, indicating enhanced capital efficiency. Contract liabilities of 43.3 billion yen represent advance customer payments, providing working capital benefit. Inventory turnover days of 105 days warrants monitoring as it exceeds industry best practices.
Operating CF: 199.7 billion yen (1.66x Net Income), demonstrating strong cash conversion well above the 1.0x threshold for healthy cash-backed earnings. The robust operating cash generation reflects improved profitability and working capital management, despite inventory increases.
Investing CF: -88.5 billion yen, primarily comprising CapEx of 61.2 billion yen for production facilities and technology infrastructure (including Taiwan electronic materials cleaning center), plus acquisition of time deposits and strategic investments. The CapEx level supports both maintenance and selective growth initiatives, with the company maintaining disciplined investment allocation.
Financing CF: -152.9 billion yen, consisting of dividends paid of 71.1 billion yen and share buybacks of 80.1 billion yen, totaling 151.2 billion yen in shareholder returns. The substantial increase in share repurchases (from 2.8 billion yen in prior year to 80.1 billion yen) reflects enhanced capital allocation policy and commitment to shareholder value return.
FCF: 129.9 billion yen (Operating CF 199.7 billion yen minus CapEx 61.2 billion yen). The FCF coverage of dividends alone is 1.83x, indicating sustainable dividend capacity. However, total shareholder returns (dividends plus buybacks of 151.2 billion yen) exceeded FCF by 21.3 billion yen, funded by strong cash reserves and operating cash generation.
Cash generation: Strong. The company demonstrates healthy cash conversion, with operating CF comfortably covering both CapEx and dividends. The elevated total payout (116% of FCF) in FY2025 reflects an accelerated shareholder return program supported by solid cash reserves of 323.3 billion yen and strong operating cash flow trajectory. Sustainability of this level of total returns depends on continued operating CF growth and working capital optimization, particularly inventory reduction.
Ordinary vs Net Income: Net income of 120.6 billion yen compares to profit before tax of 169.8 billion yen, with the difference primarily attributable to corporate income tax expense of 49.3 billion yen (effective rate 29.0%). Financial income of 6.2 billion yen exceeded financial expenses of 3.8 billion yen by 2.4 billion yen, contributing positively to pre-tax profit. Equity method investment gains of 3.4 billion yen (less than 3% of net income) indicate limited dependency on associate contributions. No material non-recurring items such as impairments, restructuring charges, or extraordinary gains/losses were identified in the disclosure, suggesting core operational earnings quality.
Non-operating income composition: Financial income of 6.2 billion yen represents 0.4% of revenue, well below the 5% materiality threshold. The modest net financial income reflects conservative treasury management without significant trading or investment speculation.
Accruals assessment: Operating CF of 199.7 billion yen substantially exceeds Net Income of 120.6 billion yen (ratio 1.66x), indicating high-quality earnings with minimal accrual risk. Working capital changes show inventory increase of 17.7 billion yen and other working capital outflow of 14.1 billion yen, partially offset by strong operational cash generation. The positive OCF-to-NI differential suggests conservative accounting practices and strong cash realization of reported profits.
Overall earnings quality: High. The combination of operating cash flow exceeding net income, minimal non-operating items, absence of material non-recurring factors, and operational profit growth substantially outpacing revenue growth indicates sustainable, cash-backed earnings quality suitable for valuation and forecasting purposes. The primary monitoring point is inventory accumulation, which requires ongoing attention for potential obsolescence or markdown risks.
FY2026 full-year guidance projects Revenue of 1,750.0 billion yen (progress rate versus guidance: N/A for Q1-Q3 as consolidated full-year results are presented), Operating Income of 182.0 billion yen, and Net Income of 130.0 billion yen, representing YoY growth of +3.6%, +10.9%, and +7.8% respectively. Since FY2025 full-year actuals are reported (Revenue 1,688.6 billion yen, Operating Income 164.1 billion yen, Net Income 120.6 billion yen), the progress assessment focuses on the outlook credibility.
The guidance implies operating margin expansion to 10.4% (from 9.7% actual), driven by continued gross margin improvement effects (+17.0 billion yen expected) through value-based pricing, product mix enhancement, and cost structure optimization. Revenue growth of +3.6% assumes market share gains continuation in Japan consumer products, overseas cosmetics expansion (Europe/US/Asia double-digit growth targets), and electronic materials business growth (CAGR approximately 20% through K27 mid-term plan).
Key drivers for the +10.9% operating income growth guidance include: (1) Gross profit improvement through pricing and mix (+17.5 billion yen effect), (2) Operating leverage from revenue growth, (3) Fixed cost discipline offset by strategic growth investments. Raw material costs are expected to turn positive (+3.0 billion yen headwind) for the first time in six years, requiring pricing and efficiency gains to maintain margin trajectory.
The guidance appears achievable given FY2025 momentum, established market share trends (30 consecutive months of YoY growth in Japan), cosmetics profitability normalization, and absence of major external headwinds flagged. However, execution risks include inventory optimization needs (current 105-day turnover), overseas consumer products growth acceleration requirements (Americas/Europe hair salon products underperformance), and raw material inflation management. The 37th consecutive annual dividend increase commitment (156 yen guidance versus 154 yen actual) reflects management confidence in earnings sustainability.
Dividend Policy: The company paid an interim dividend of 76 yen and forecasts a year-end dividend of 78 yen (versus 76 yen actual for prior year-end), totaling 154 yen for FY2025. FY2026 guidance indicates 156 yen annual dividend, representing the 37th consecutive year of dividend increases, demonstrating strong commitment to progressive dividend policy.
Payout Ratio: The calculated payout ratio for FY2025 is 57.4% based on dividends of 71.1 billion yen divided by net income of 120.6 billion yen. This represents a relatively high payout level, though it has decreased from 66% in FY2025 and 81% in FY2023 as profitability recovered. The company appears to be balancing dividend growth commitment with earnings expansion, leading to declining payout ratio trend from elevated prior-year levels.
Share Buybacks: The company executed share repurchases totaling 80.1 billion yen in FY2025 (versus only 2.8 billion yen in prior year), representing a substantial acceleration of capital returns. The total authorization was 80.0 billion yen with acquired shares canceled to optimize capital structure. This marks a significant shift in capital allocation policy toward more aggressive shareholder returns.
Total Return Ratio: Combined dividends of 71.1 billion yen and buybacks of 80.1 billion yen total 151.2 billion yen, representing 125% of net income or 116% of free cash flow (129.9 billion yen). While the total return exceeds current-year FCF, it is supported by strong operating cash flow of 199.7 billion yen and cash reserves of 323.3 billion yen. The company has explicitly articulated an enhanced capital allocation framework balancing growth investments, financial stability, and shareholder returns.
FCF Coverage: Free cash flow of 129.9 billion yen covers dividends 1.83x, indicating sustainable dividend capacity. However, total shareholder returns (dividends plus buybacks) at 151.2 billion yen exceed FCF by 21.3 billion yen, representing a 116% total payout. This elevated level was funded by operating cash generation and existing cash reserves. The coverage ratio indicates dividends are highly sustainable, while the buyback pace may moderate in future periods depending on cash generation trends and strategic investment priorities.
Sustainability Outlook: Dividend sustainability appears strong given FCF coverage of 1.83x, improving profitability trajectory (ROE 11.3%, operating margin expansion), and 37-year track record. The FY2026 guidance of 156 yen (+1.3% increase) is well-supported by projected net income growth of +7.8%. Share buyback sustainability at the FY2025 level (80 billion yen) may be evaluated annually based on cash generation, balance sheet capacity, and strategic investment needs. The company's articulated capital allocation policy prioritizes sustainable dividend growth as baseline, with flexible buybacks as supplementary return mechanism. A stock split (1:2) scheduled for July 2026 aims to enhance liquidity and expand shareholder base, supporting long-term equity value.
Near-term: (1) FY2026 Q1 results in April-May 2026 will test the margin expansion guidance of 10.4% operating margin and overseas consumer products growth acceleration, particularly cosmetics in Europe/US and Asia markets. (2) Inventory normalization progress toward industry-standard turnover days (target below 90 days from current 105 days) impacting working capital cash flow and potential markdown risk resolution. (3) Raw material cost inflation management (+3.0 billion yen headwind) and pricing/mix realization to maintain gross margin trajectory through mid-2026.
Long-term: (1) K27 mid-term plan achievement (operating profit 211.7 billion yen target by 2027) requiring acceleration beyond FY2026 guidance of 182.0 billion yen, with milestone of surpassing prior peak operating profit of 211.7 billion yen achieved in 2019. (2) Electronic materials business doubling target (CAGR approximately 20%) through expansion of semiconductor manufacturing chemicals (60% global share) and HDD manufacturing chemicals (50% share), driven by datacenter growth and AI chip demand. (3) RNA platform business commercialization and LTV accumulation model establishment using skin gene mode analysis for personalized cosmetics, creating new recurring revenue stream. (4) Overseas cosmetics expansion through three models (Japan-origin, Asia-regional, Global brands) targeting double-digit growth in KANEBO/KATE (Asia) and Curel (Europe/US), with China sell-through maintaining 104% YoY momentum. (5) Bio IOS new surfactant commercialization achieving CO2 reduction and renewable carbon ratio improvement, enhancing sustainability positioning and premium pricing power in 2026-2027.
Industry Position (Reference - Proprietary Analysis):
Profitability: ROE 11.3% improved significantly from the historical 3-year average of approximately 8.3% and compares to 10.0% in prior year. Operating Margin 9.7% expanded from 9.0% prior year and 3.9% in FY2023, demonstrating substantial recovery. Net Profit Margin 7.1% shows strong improvement from 3.0% in FY2023, reflecting enhanced operational efficiency and margin management. The company has achieved sustained profitability improvement over the 5-year trend, with FY2025 representing the highest levels in recent periods.
Efficiency: Operating margin of 9.7% reflects above-average efficiency for a diversified consumer products and chemicals manufacturer. The gross margin of 39.6% indicates strong brand equity and pricing power in consumer-facing segments. Asset turnover of 0.90x suggests moderate capital intensity typical of the industry. The improving ROIC of 9.7% (from 9.2% prior year) demonstrates enhanced capital deployment efficiency.
Financial Health: Equity Ratio 58.4% represents a conservative capital structure with substantial financial flexibility. The company maintains adequate liquidity with cash reserves of 323.3 billion yen and strong operating cash flow generation. Inventory turnover days of 105 days exceeds industry best practices (typically 60-90 days for consumer products), indicating room for improvement in working capital efficiency.
Growth: Revenue Growth of +3.7% in FY2025 marks acceleration from -1.2% in FY2023, indicating successful market share recovery and portfolio momentum. The 5-year trend shows improving growth trajectory with FY2026 guidance of +3.6% suggesting stabilization at mid-single-digit growth rates. Operating income growth of +11.9% substantially outpacing revenue growth demonstrates strong operational leverage.
Shareholder Returns: Dividend payout ratio of 57.4% in FY2025 represents normalization from elevated 81% in FY2023, as earnings recovered faster than dividend growth. The 37-year consecutive dividend increase record demonstrates exceptional commitment to progressive shareholder returns. Total return ratio of 125% of net income (including 80 billion yen buyback) reflects aggressive shareholder capital deployment in FY2025.
Industry: Consumer Products and Specialty Chemicals, Comparison: Company historical 5-year trend, Source: Proprietary analysis of publicly disclosed financial data.
(1) Inventory Management and Working Capital Risk: Inventory of 292.4 billion yen with turnover days of 105 days significantly exceeds industry best practices of 60-90 days, representing approximately 17.3% of total assets. The inventory increase of 17.7 billion yen YoY creates working capital drag and raises risks of obsolescence, markdown, or write-down, particularly in fashion-sensitive cosmetics and seasonal consumer products. Failure to optimize inventory could impact cash generation and require margin-dilutive clearance activities, with estimated exposure of 10-20 billion yen if turnover deteriorates further or demand slows unexpectedly.
(2) Intangible Asset Impairment Risk: Goodwill of 231.1 billion yen and intangible assets of 79.5 billion yen (combined 16.5% of total assets) stem from historical acquisitions and brand valuations. The cosmetics segment turnaround reduces near-term impairment risk, but sustained underperformance in overseas consumer products (particularly Americas/Europe hair salon products showing weakness) or strategic pivot failures could trigger impairment testing. Chemical segment margin contraction (operating margin 6.7%, down from prior year) also warrants monitoring. Potential impairment magnitude could range 20-50 billion yen if business cases deteriorate, directly impacting net income.
(3) Capital Allocation Sustainability and Financial Flexibility Risk: Total shareholder returns of 151.2 billion yen (71.1 billion yen dividends plus 80.1 billion yen buybacks) exceeded free cash flow of 129.9 billion yen by 21.3 billion yen (116% payout). While FY2025 was supported by strong operating cash flow and cash reserves, sustained total returns at this level (particularly 80 billion yen annual buyback pace) could constrain strategic investment capacity, balance sheet flexibility, or require increased leverage if operating cash flow growth or working capital improvements disappoint. Raw material cost inflation (+3.0 billion yen headwind in FY2026) and overseas growth investments may create competing capital demands, requiring careful prioritization to maintain both shareholder return commitments (37-year dividend increase streak) and growth investment adequacy.
(1) Sustained Profitability Recovery and Margin Expansion Trajectory: The company achieved operating margin of 9.7% (up from 3.9% in FY2023), with FY2026 guidance of 10.4% indicating continued improvement toward the K27 target. ROE of 11.3% represents meaningful enhancement from historical 3-year average of 8.3%, driven by gross margin expansion (+1.5 percentage points in Global Consumer segment), fixed cost optimization (cosmetics segment fixed cost reduction enabling Japan profitability), and operating leverage. The cosmetics segment turnaround delivered 14.1 billion yen profit improvement, transforming from loss of 3.7 billion yen to profit of 10.4 billion yen, establishing new earnings base. Strong operating cash flow of 199.7 billion yen (1.66x net income) validates earnings quality and sustainability. The margin expansion is rooted in value-based pricing execution, product mix premiumization (high-premium hair care, skincare growth investments), and market share gains (30 consecutive months YoY growth in Japan), suggesting structural rather than cyclical improvements.
(2) Enhanced Shareholder Capital Deployment Framework: The company significantly accelerated capital returns with total shareholder distributions of 151.2 billion yen (dividends 71.1 billion yen plus buybacks 80.1 billion yen), representing 125% of net income. The 37th consecutive year of dividend increases (154 yen actual, 156 yen FY2026 guidance) demonstrates long-term commitment to progressive dividend policy, with payout ratio normalizing to 57.4% from elevated historical levels as earnings recovered. The substantial buyback program (80 billion yen versus 2.8 billion yen prior year) with share cancellation reflects articulated capital allocation policy balancing growth investment, financial stability, and shareholder value return. Free cash flow coverage of dividends at 1.83x indicates sustainable baseline, though total return level may be calibrated annually based on cash generation. The planned 1:2 stock split in July 2026 aims to enhance liquidity and broaden investor base, supporting long-term equity value accessibility.
(3) Strategic Growth Drivers and Execution Risks Balancing: The K27 mid-term plan targets operating profit of 211.7 billion yen by 2027 (versus 164.1 billion yen FY2025 actual), requiring approximately 14.5% annual growth from FY2025 base. Key growth vectors include: electronic materials business doubling target (CAGR approximately 20%) leveraging semiconductor manufacturing chemical leadership (60% global share) for datacenter/AI demand; overseas cosmetics expansion via three-model approach with double-digit growth targets in Europe/US (Curel) and Asia (KANEBO/KATE, China 104% sell-through); RNA platform business commercialization creating new LTV-based revenue streams. However, execution risks include inventory optimization requirement (105-day turnover versus 60-90 day benchmark creating 20-30 billion yen working capital opportunity), overseas consumer products acceleration from currently weak Americas/Europe hair salon performance, Chemical segment margin recovery from 6.7% level amid functional materials demand weakness, and raw material cost inflation management (+3.0 billion yen FY2026 headwind). The balance between aggressive shareholder returns (constraining financial flexibility) and growth investment needs (electronic materials capacity, overseas brand building, R&D for RNA/Bio IOS) requires disciplined capital allocation and working capital improvements to achieve both 10%+ ROIC targets and sustainable profit growth through K27.
This report was automatically generated by AI integrating XBRL earnings data and PDF presentation materials as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI analysis of PDF earnings presentation
Kao Corporation’s fiscal year ending December 2025 delivered higher revenue and earnings, with net sales of 1兆6,886億円 (YoY +3.7%) and operating income of 1,641億円 (+11.9%). In Japan, the GC business outperformed the prior-year month for 30 consecutive months in market share, and Cosmetics also saw a substantial increase in revenue and profit. Operating margin improved to 9.7%, and ROIC rose to 9.7% (YoY +0.5 pts), reflecting enhanced profitability. For 2026, the company forecasts net sales of 1兆7,500億円 and operating income of 1,820億円, and will continue shareholder returns including a planned 37th consecutive annual dividend increase. While inventory turnover at 105 days remains a challenge, the company aims to achieve its K27 targets by focusing on strengthening earning power and accelerating global expansion.
Japan’s toiletry market share exceeded the prior-year month for 30 consecutive months, indicating entrenched competitiveness. Cosmetics delivered operating income of 104億円 (YoY +141億円), marking a significant profit increase, with the Japan business returning to profitability. Gross margin rose to 39.6% (YoY +0.4 pts), demonstrating improved earning power and achieving +1.5 pts, far surpassing the annual target of +1.0 pts. Implemented share repurchases and cancellation totaling 800億円, clarifying the capital allocation framework. A 1-for-2 stock split is scheduled for July 2026 to broaden the investor base.
In 2026, hair care in Japan is expected to continue its strong trajectory, with growth anticipated in Cosmetics and Skin Care overseas. Centered on three pillars—strengthening earning power including value-based pricing, expanding the overseas Global Consumer Products (GC) business, and reinforcing the global execution structure—the company targets operating income of 1,820億円 (YoY +179億円). Raw material prices are projected to turn positive for the first time in six years (+30億円), and improvements in earning power are planned to generate a profit uplift of at least 170億円.
To achieve the K27 targets (operating income exceeding 2,117億円, ROIC 11% or higher, overseas sales of 8,000億円 or more), the company will scale growth in stages starting in 2026. Anchored by three exclusive proprietary technologies—Precision Selective Cleansing, Individual Optimal Selection, and Environmentally Compatible Selection—Kao will drive approximately 20% CAGR in the Electronics Materials business, fully activate three overseas expansion models in Cosmetics, and monetize the RNA platform business, aiming to set new record-high profits.
In the Electronics Materials business, expand semiconductor cleaning agents and hard disk manufacturing chemicals in line with data center growth (plan to double sales by K27). In Cosmetics, fully advance market development via two axes: Japan-origin overseas rollout (Curél expansion in Europe and the U.S.) and Asia-type overseas rollout (successful model originating in Thailand). In the RNA platform business, deploy SOFINA SYNC+ leveraging the skin gene modality, achieving a matching success rate of 2.0x or more. Introduce the new surfactant Bio IOS to achieve CO2 emissions −37% and a +15% renewable carbon ratio for core products such as Attack ZERO. For DX promotion, support business growth with a foundation of 4,700 citizen developers and 5,000 daily users of AI-powered tools.
Inventory turnover of 105 days exceeds the industry benchmark, indicating inventory buildup; working capital management needs improvement. The overseas GC business continues to underperform, affected by weakness in the professional hair salon channel in the Americas and Europe. Since 2021, cumulative raw material cost increases total approximately 560億円, making continued price pass-through and cost reductions indispensable. Goodwill of 2,310億円 and intangible assets of 795億円 are recorded, necessitating monitoring for impairment risk. Aggressive shareholder returns (dividends + share buybacks totaling approximately 1,512億円) exceed FCF of about 1,299億円, warranting attention to the sustainability of capital allocation.