Kao (4452) FY2026 Q1 Earnings Report

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Executive Summary

For Q1 of the fiscal year ending December 2026, Kao posted higher revenue and earnings, primarily due to improved profitability in its Consumer Products Business. Revenue was ¥4132.2 million (+6.0% YoY), Operating Income was ¥449.0 million (+45.3%), Profit Before Tax was ¥459.8 million (+45.6%), and profit for the quarter attributable to owners of the parent was ¥310.0 million (+35.7%). In addition to higher gross profit, the increase in other operating income by ¥122.0 million YoY contributed to the earnings growth, with the Operating Margin improving by 294bp from 7.9% to 10.9%. Meanwhile, Operating Cash Flow (OCF) represented an outflow of ¥167.6 million, highlighting a gap between accounting profit and cash generation.

Factors Affecting Performance

【Revenue】Revenue was ¥4132.2 million (+6.0% YoY), with all 6 reporting segments recording revenue growth. By composition, the Global Consumer Care Business accounted for 74.3% (Hygiene and Living Care 31.2%, Health and Beauty Care 25.8%, Cosmetics 15.2%, and Business Connected 2.1%), while the Chemical Business accounted for 25.7%. By growth rate, Health and Beauty Care (+8.8%) and Cosmetics (+7.9%) grew relatively strongly, whereas Chemicals (+5.4%) and Business Connected (+3.1%) posted more moderate growth.

【Profit and Loss】Operating Income was ¥449.0 million (+45.3% YoY), driven by a ¥107.2 million increase in gross profit and a ¥122.0 million increase in other operating income. SG&A expenses increased by ¥126.4 million (+7.4% YoY), outpacing revenue growth, making cost discipline an area to monitor going forward. Profit Before Tax was ¥459.8 million (+45.6%), while profit for the quarter attributable to owners of the parent was ¥310.0 million (+35.7%); both grew at rates close to Operating Income, indicating limited extraordinary non-operating factors. Revenue and earnings both increased, and improvement in the core business was confirmed even excluding the temporary contribution from other operating income.

Segment Analysis

The Hygiene and Living Care Business recorded revenue of ¥1289.7 million (+3.6%) and Operating Income of ¥195.5 million (+16.9%), with its margin improving from 13.4% to 15.2%, making it the largest contributor to consolidated earnings growth. The Health and Beauty Care Business posted revenue of ¥1064.7 million (+8.8%) and Operating Income of ¥79.2 million (+17.4%), with its margin rising to 7.4%. The Cosmetics Business recorded revenue of ¥628.9 million (+7.9%) and Operating Income of ¥20.9 million, turning profitable from an Operating Loss of ¥5.7 million in the same period of the previous year. The Business Connected Business also achieved profitability of ¥0.9 million. In contrast, the Chemical Business recorded revenue of ¥1064.0 million (+5.4%), while Operating Income declined to ¥36.0 million (△55.3%), with its margin falling sharply from 7.2% to 3.4%. While improved profitability in the four Consumer Products Businesses led consolidated earnings growth, deteriorating profitability in the Chemical Business was the primary headwind within the portfolio.

Key Financial Metrics

【Profitability】The Operating Margin was 10.9% (7.9% in the same period of the previous year), improving by 294bp, while the gross profit margin was 38.4% (37.9%). ROE was 2.8%; however, this is based on quarterly results and does not directly represent annualized full-year earnings power.【Cash Flow Quality】OCF was an outflow of ¥167.6 million. Compared with profit attributable to owners of the parent of ¥310.0 million, cash conversion was delayed, mainly due to ¥310.9 million in corporate income tax payments and a ¥335.3 million outflow in other working capital.【Investment Efficiency】The Equity Ratio increased to 58.6% (56.7% in the same period of the previous year), while total assets declined from the end of the previous fiscal year to ¥1,831.16B. Inventories increased to ¥300.30B, warranting close monitoring of inventory efficiency.【Financial Soundness】Current assets of ¥870.21B exceeded current liabilities of ¥495.01B, resulting in a robust current ratio of approximately 176%. Interest-bearing debt, comprising bonds and borrowings, totaled ¥132.20B, while total lease liabilities were ¥108.65B. Operating Income covered financial expenses by approximately 31 times, indicating substantial capacity to absorb interest expenses.

Cash Flow Analysis

Cash flow from operating activities was an outflow of ¥167.6 million, improving from the ¥198.9 million outflow in the same period of the previous year but remaining negative. OCF before changes in working capital was positive at ¥143.3 million; however, corporate income tax payments of ¥310.9 million were the primary cause of the net cash outflow. In terms of working capital, inventories increased by ¥57.1 million and the decrease in trade payables resulted in a ¥67.1 million cash outflow, indicating that growth accompanied by higher inventories is constraining cash-generation capacity. Cash flow from investing activities was an inflow of ¥54.1 million, as proceeds from the sale of property, plant and equipment of ¥141.1 million exceeded capital expenditures of ¥134.0 million; this does not indicate an expansion in recurring investment capacity. Cash flow from financing activities was an outflow of ¥412.9 million, of which dividend payments accounted for ¥343.1 million. As a result, cash and cash equivalents decreased by ¥484.4 million from the beginning of the period to ¥2748.4 million. However, considering the current ratio and Equity Ratio, concerns regarding short-term liquidity remain limited.

Earnings Quality

Of the ¥140.0 million increase in Operating Income to ¥449.0 million, the ¥122.0 million increase in other operating income made a substantial contribution, equivalent to 4.0% of revenue. Equity-method investment income was ¥11.5 million, while other investment gains were ¥13.6 million (compared with a ¥5.1 million loss in the same period of the previous year); both made limited contributions to earnings. Financial income was ¥0.1 million, versus financial expenses of ¥14.3 million, resulting in a net financial expense of ¥14.3 million. Profit Before Tax exceeded Operating Income by only ¥10.8 million, with no significant earnings uplift from non-operating factors. Meanwhile, OCF was below profit attributable to owners of the parent, confirming weak cash conversion of accounting profit. However, excluding changes in inventories, trade payables, and other items, the underlying revenue recognition itself does not appear excessively dependent on estimates. Concerns regarding earnings quality primarily relate to the timing of cash conversion.

Earnings Forecast and Guidance

Q1 progress against the full-year company forecast was 23.6% for revenue (¥4132.2 million/¥1,750.0B) and 24.7% for Operating Income (¥449.0 million/¥182.0B), with no significant deviation from the standard quarterly progress rate of 25%. Q1 actual Operating Margin was 10.9%, slightly above the full-year forecast of 10.4%; however, because this includes a temporary increase in other operating income, it is difficult to regard this as straightforward upside potential. Neither the earnings forecast nor the dividend forecast was revised. Evaluation of progress toward the full-year plan will focus on the recurrence of other operating income and the recovery of profitability in the Chemical Business.

Shareholder Returns

Dividend payments during Q1 were ¥343.1 million attributable to parent-company shareholders, while share buybacks were minimal at ¥0.03 million. The Board of Directors resolved in February 2026 to conduct a 1-for-2 stock split. On a pre-stock-split basis, the annual dividend forecast for the fiscal year ending December 2026 is ¥156.00 (forecast year-end dividend: ¥78.00). Based on this annual dividend forecast and the average number of shares outstanding during the period, the full-year Payout Ratio is estimated to be approximately in the low 50% range. Free cash flow for the quarter was negative ¥113.5 million, and dividends were not fully funded by internally generated cash from operating activities. Nevertheless, given cash and cash equivalents of ¥2748.4 million and an Equity Ratio of 58.6%, the company’s ability to continue paying dividends in the near term remains intact.

Risk Factors

1. Inventory efficiency risk: Inventories increased to ¥3003.0 million, with annualized inventory days exceeding 100 days. If inventories become excessive relative to demand, discounting and inventory valuation losses could pressure gross profit and OCF.

2. Deteriorating profitability in the Chemical Business: While revenue increased by 5.4%, Operating Income declined by 55.3% to ¥36.0 million, and the margin fell from 7.2% to 3.4%. Changes in raw-material prices, demand cycles, and the competitive environment could become downside factors for company-wide earnings.

3. Weak operating cash flow: OCF was an outflow of ¥167.6 million, mainly due to corporate income tax payments and other working-capital outflows. Cash outflows have continued when combined with dividend payments, and if improvement is delayed, the pace of decline in cash liquidity could accelerate.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Company’s Operating Margin and Net Profit Margin exceed the industry median, indicating that profitability is relatively high within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is slightly above the industry median; however, compared with the IQR upper bound of 13.9%, the growth rate itself is not exceptionally high within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Improved profitability in the Consumer Products Business led consolidated earnings growth. In particular, the Cosmetics Business turned from an Operating Loss into a profit of ¥20.9 million. Meanwhile, the decline in Chemical Business margins partially offset overall growth, resulting in divergent performance across the portfolio.

2. The increase in other operating income accounted for most of the increase in Operating Income. The nature and recurrence of this income will be key considerations in assessing future margin trends.

3. While OCF was negative, profit attributable to owners of the parent increased, creating a timing gap between accounting profit and cash generation. Higher inventories and corporate income tax payments were the primary factors, and working-capital trends from the next quarter onward will provide important evidence for assessing earnings quality.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,157–¥2,284 at Cost of Equity ±1%, and ¥2,214–¥2,222 at ω±0.1.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
• Net assets as of the quarter-end are used (there is a timing difference versus the full-year forecast).

(Calculation model: Residual Income Model (Ohlson type; explicit 5-year fade) / Interest-rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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AI Financial Analysis

Executive Summary

Kao delivered a strong headline FY2026 Q1 earnings result, although the scale of operating-profit growth was materially aided by non-core other operating income. Revenue rose 6.0% year on year to ¥413.2bn. Operating income increased 45.3% to ¥44.9bn. Profit attributable to owners rose 35.7% to ¥31.0bn, and basic EPS increased to ¥68.53 from ¥49.19. Gross profit grew 7.2% to ¥158.7bn, exceeding revenue growth. The gross margin improved to 38.4% from 37.9%, an expansion of approximately 44bp. The reported operating margin expanded to 10.9% from 7.9%, a substantial 294bp improvement. The net margin rose to 7.5% from 5.9%, or approximately 164bp. However, other operating income increased sharply to ¥16.6bn from ¥4.4bn, while the cash-flow statement records ¥11.2bn of gains on sales and retirement of property, plant and equipment and intangible assets. This suggests that a significant portion of consolidated operating-profit growth was non-recurring rather than purely driven by underlying trading improvement. Segment operating profit before the large corporate adjustment rose more modestly, from ¥30.9bn to ¥33.2bn. The consumer-care portfolio improved, with cosmetics returning to profit, while the chemical business experienced a substantial decline in operating income. Operating cash flow remained negative at ¥16.8bn despite the higher earnings base, resulting in an OCF/net income ratio of negative 0.54x. Inventory rose ¥7.9bn from the December 2025 balance, and annualized inventory days of 108 remain elevated. Free cash flow was negative ¥11.3bn, although investing cash flow was positive because ¥14.1bn of proceeds from property sales exceeded capital expenditure and intangible purchases. Balance-sheet resilience remains sound, supported by a 58.6% equity ratio, ¥274.8bn of cash, and a current ratio of approximately 1.76x. Management retained its FY2026 guidance, implying Q1 progress of 23.6% for revenue, 24.7% for operating income, and 23.8% for profit attributable to owners, broadly in line with the typical 25% first-quarter run rate. The key issue for the remainder of the year is whether segment-level profit recovery, especially in cosmetics and consumer care, can offset the absence of the Q1 asset-sale-related operating income and restore cash conversion.

Profitability Analysis

Annualized ROE was 11.2%, a good level under the stated 10-15% benchmark. The supplied DuPont decomposition attributes this annualized ROE to a 7.5% net profit margin, 0.903x annualized asset turnover, and 1.66x financial leverage. Margin expansion was the principal driver of returns rather than balance-sheet leverage: the operating margin expanded by approximately 294bp year on year and net margin by approximately 164bp. Gross margin also improved by approximately 44bp to 38.4%, indicating that the revenue gain translated into a modestly better gross-profit outcome. The strongest reported operating-income uplift was not entirely operational, as other operating income increased ¥12.2bn year on year to ¥16.6bn and gains on disposals were ¥11.2bn. Accordingly, the underlying segment operating-profit increase was only ¥2.4bn, or about 7.7%, before the change in corporate and adjustment items. Hygiene & Living Care remained the core business by segment operating-income contribution, generating ¥19.6bn of operating income on ¥129.0bn of revenue; its margin was 15.2%, up from 13.4%. Health & Beauty Care generated ¥7.9bn of operating income on ¥106.5bn of revenue, for a 7.4% margin versus 6.9% a year earlier. Cosmetics improved from a ¥0.6bn operating loss to a ¥2.1bn profit on revenue growth of 7.9% to ¥62.9bn, lifting its margin to 3.3%. Business Connected moved from a ¥0.1bn loss to a ¥0.1bn profit on ¥8.5bn of revenue. Chemical revenue increased 5.4% to ¥106.4bn, but operating income fell 55.3% to ¥3.6bn and margin compressed to 3.4% from 8.0%, making this the main drag on segment-level profitability. SG&A increased 7.4% to ¥126.4bn, faster than revenue growth of 6.0%, which would ordinarily pressure operating leverage; the reported margin expansion was therefore dependent on gross-margin improvement and other operating income. The tax burden was 0.674, below the 0.70 reference point, while the effective tax rate increased to 31.9% from 27.1%, limiting the conversion of pre-tax profit to net income.

Growth Assessment

Revenue growth was broad-based across all five reported segments. Hygiene & Living Care revenue grew 3.6%, Health & Beauty Care grew 8.8%, Cosmetics grew 7.9%, Business Connected grew 3.1%, and Chemicals grew 5.4%. The return of Cosmetics to profitability is strategically important because it adds earnings leverage to a segment that was loss-making in the prior-year quarter. Hygiene & Living Care is the principal earnings engine and combined revenue growth with a 174bp segment-margin improvement. Health & Beauty Care also expanded revenue and margin, supporting the consumer-care recovery. In contrast, the Chemicals segment's 55.3% operating-profit decline indicates that topline growth has not yet translated into favorable mix, pricing, or cost recovery in industrial operations. Consolidated operating-profit growth therefore overstates the underlying segment earnings trajectory because corporate and adjustment operating income rose to ¥11.7bn from nearly nil. The ¥11.2bn gain on property and intangible asset sales is a clear source of non-recurring support to Q1 results. Full-year guidance calls for revenue of ¥1,750.0bn, operating income of ¥182.0bn, and profit attributable to owners of ¥130.0bn. Q1 progress is 23.6% for revenue, 24.7% for operating income, and 23.8% for owner-attributable profit, each within 10 percentage points of the standard 25% Q1 progress rate. The unchanged guidance implies that management is not extrapolating the Q1 headline operating-profit growth rate into the remainder of the year. A more sustainable growth outcome would require continued consumer-care margin expansion, a durable cosmetics turnaround, and stabilization in Chemicals as the disposal-related gain does not recur.

Financial Health

Liquidity is sound. Current assets of ¥870.2bn exceeded current liabilities of ¥495.0bn, producing a current ratio of approximately 1.76x, above the 1.5x healthy benchmark. Cash and cash equivalents of ¥274.8bn alone covered current bonds and borrowings of ¥51.6bn by more than five times. Trade receivables were ¥241.6bn and inventories were ¥300.3bn, while trade payables were ¥262.0bn. The reported debt-to-equity ratio was 0.66x, below the 1.0x conservative benchmark and well below the 2.0x aggressive-debt threshold. The equity ratio improved to 58.6% from 56.7% at December 2025, while total equity increased ¥83.7bn to ¥1,103.1bn. Total bonds and borrowings were broadly stable at ¥132.2bn, but their composition shifted: current borrowings increased ¥255.7bn while non-current borrowings declined ¥250.2bn. This maturity shift does not create an immediate mismatch because cash materially exceeds short-term borrowings and the current ratio is robust. Lease liabilities totaled ¥108.6bn, comprising ¥21.1bn current and ¥87.6bn non-current, and should be considered alongside funded borrowings in evaluating fixed financial commitments. Right-of-use assets were ¥110.1bn, broadly matching lease obligations. Goodwill was ¥233.8bn, equal to 21.2% of equity and 12.8% of assets; both measures remain within the stated healthy ranges and do not indicate balance-sheet dependence on acquisition value retention. Intangible assets were 4.3% of assets, also well within the 20% balance benchmark. Net defined-benefit liabilities of ¥35.6bn are manageable relative to total equity. Other comprehensive income was positive ¥12.5bn, principally from ¥12.3bn of foreign-currency translation gains, which supported equity but remains market-sensitive rather than distributable operating cash generation.

Notable B/S Changes

Current bonds and borrowings: +¥255.7bn from December 2025 to ¥51.6bn, while non-current bonds and borrowings fell ¥250.2bn to ¥80.6bn — a substantial maturity reclassification/shift; immediate liquidity risk is limited by ¥274.8bn of cash. Trade payables: -¥81.5bn to ¥262.0bn — the reduction contributed to Q1 operating-cash outflow and reduced supplier financing. Cash and cash equivalents: -¥484.4bn to ¥274.8bn — driven by negative operating cash flow, dividends, and financing outflows, partly offset by property-sale proceeds. Inventories: +¥79.3bn to ¥300.3bn — the increase is consistent with the 108-day annualized DIO alert and warrants monitoring for inventory efficiency and cash conversion.

Cash Flow Quality

Cash-flow quality is the principal weakness in Q1. Operating cash flow was negative ¥16.8bn versus net income of ¥31.3bn, producing an OCF/net income ratio of negative 0.54x, materially below the 0.8x concern threshold. This explicitly signals that reported earnings were not converted into operating cash during the quarter. Operating cash flow was nevertheless modestly better than the negative ¥19.9bn recorded a year earlier. The primary cash burden was ¥31.1bn of income-tax payments, which exceeded the ¥14.3bn pre-tax operating cash-flow subtotal. Working-capital movements were also unfavorable overall: inventory increased by ¥5.7bn, payables declined by ¥6.7bn, and other working-capital changes consumed ¥33.5bn. Receivables released ¥5.8bn of cash, partially mitigating these outflows. The 2.6% accruals ratio remains below the 5% high-quality benchmark, indicating that the weak quarterly OCF outcome is concentrated in cash-tax timing, working capital, and other cash-flow movements rather than a broad accruals-quality deterioration. Annualized inventory days of 108 are high relative to both the 60-day manufacturing efficiency benchmark and the 90-day warning threshold. This elevated inventory position increases risks of obsolescence, promotional pressure, and cash tied up across a consumer-products and chemical supply chain. Free cash flow was negative ¥11.3bn after ¥13.4bn of capital expenditure. Investing cash flow was positive ¥5.4bn only because proceeds from sales of property, plant and equipment were ¥14.1bn; excluding those proceeds, investment activity would have been cash consumptive. Consequently, the Q1 positive investing cash flow should not be treated as recurring internally generated funding capacity.

Dividend Sustainability

Dividend cash payments to owners were ¥34.3bn in Q1, exceeding owner-attributable profit of ¥31.0bn. The quarterly cash dividend-to-owner-profit ratio was therefore approximately 111%. On an EPS basis, the ¥77.00 prior-period dividend per share exceeded Q1 EPS of ¥68.53, similarly indicating that the quarterly dividend distribution exceeded current-quarter earnings. Free cash flow was negative ¥11.3bn, so it did not cover the ¥34.3bn dividend payment. Cash resources and the strong balance sheet provide near-term flexibility, but routine reliance on cash balances or asset-sale proceeds would not be a sustainable basis for shareholder distributions. The announced FY2026 forecast EPS is ¥143.70, while the company disclosed an annual dividend equivalent of ¥156.00 per share before giving effect to the two-for-one stock split. This implies a forecast dividend payout ratio of approximately 109%, above the 100% warning threshold. Treasury-share purchases were immaterial at ¥0.03bn, so the capital-return assessment is principally a dividend issue rather than a buyback-driven total-return issue. The stock split changes per-share presentation but not the underlying aggregate cash-distribution commitment. Dividend sustainability will depend on stronger cash conversion in subsequent quarters, the absence of recurring large working-capital outflows, and operating earnings sufficient to replace the Q1 disposal-related gain.

Risk Assessment

Business risks include High priority — Chemicals: revenue increased 5.4% but segment operating income fell 55.3% to ¥3.6bn, reducing margin from 8.0% to 3.4%. This exposes the group to industrial-demand, feedstock-cost, product-mix, and pricing risks., High priority — Inventory intensity: annualized DIO of 108 days is above both the 90-day warning level and 60-day efficiency benchmark. For a consumer-products and chemical manufacturer, prolonged inventory holding raises obsolescence, discounting, demand-forecasting, and cash-lock-up risks., Medium priority — Consumer-care execution: the cosmetics business returned from a ¥0.6bn loss to a ¥2.1bn profit, but its 3.3% margin remains substantially below Hygiene & Living Care's 15.2%, leaving turnaround execution risk., Medium priority — Raw-material, energy, and packaging-cost exposure: Kao's hygiene, beauty, and chemical products remain exposed to volatility in petrochemical derivatives, oleochemicals, packaging inputs, and energy costs., Medium priority — Foreign-exchange and overseas-market exposure: ¥12.3bn of positive foreign-currency translation OCI supported Q1 comprehensive income, demonstrating the sensitivity of equity and reported overseas assets to currency moves..

Financial risks include High priority — Cash conversion: OCF/net income of negative 0.54x is below the 0.8x quality threshold. Taxes paid of ¥31.1bn and negative working-capital movements caused operating cash outflow despite ¥31.3bn of net income., High priority — Dividend funding: ¥34.3bn of dividends exceeded both owner-attributable Q1 profit and negative free cash flow; the forecast dividend payout ratio is approximately 109% based on the disclosed pre-split annual dividend equivalent., Medium priority — Earnings normalization: ¥11.2bn of disposal gains and a ¥12.2bn year-on-year increase in other operating income supported reported operating profit, creating a risk that future operating-margin comparisons normalize lower., Low priority — Borrowing maturity mix: current bonds and borrowings rose to ¥51.6bn while non-current borrowings fell to ¥80.6bn. Liquidity coverage is strong because cash is ¥274.8bn, but refinancing composition should be monitored..

Key concerns include The EARNINGS_QUALITY alert is material: negative operating cash flow against positive net income indicates weak Q1 cash realization, even though the 2.6% accruals ratio remains favorable., Both HIGH_INVENTORY_DAYS alerts are material: 108 days is elevated against the 90-day warning threshold and the stricter 60-day manufacturing benchmark, increasing working-capital and inventory-valuation risk., Reported profit growth should not be viewed as fully recurring because the rise in other operating income and disposal gains was considerably larger than the increase in segment operating profit., The dividend profile requires monitoring because cash distributions currently exceed quarterly earnings and free cash flow..

Investment Implications

Key takeaways include Revenue growth was broad-based and consumer-care margins improved, with Hygiene & Living Care remaining the core earnings contributor., Cosmetics returned to profitability, but Chemicals experienced severe margin compression and offset part of the consumer-care improvement., The 45.3% reported operating-profit increase contains a significant non-recurring component from other operating income and asset-sale gains., Annualized ROE of 11.2% is solid and is driven mainly by a 7.5% net margin, rather than excessive financial leverage., Liquidity and capitalization are strong, but negative operating cash flow, elevated inventory days, and dividend coverage are the key financial issues..

Metrics to watch include Chemical segment operating margin and operating income recovery, Consumer-care segment margins, particularly cosmetics profitability, Other operating income and gains on disposal versus recurring operating profit, Operating cash flow/net income ratio and cash taxes paid, Inventory balance and annualized DIO relative to 108 days, Free cash flow coverage of dividends, Progress against FY2026 operating-income guidance of ¥182.0bn.

Regarding relative positioning, Kao exhibits the financial resilience expected of a large branded consumer-products group, with a 58.6% equity ratio, 1.76x current ratio, moderate reported 0.66x debt-to-equity ratio, and annualized ROE of 11.2%. Its Q1 margin profile is good by the supplied benchmarks, but underlying earnings quality is weaker than the headline growth rate suggests because asset-sale-related income, negative cash conversion, and elevated inventory days dilute the otherwise constructive consumer-care recovery.