Kao (4452) Q3 2025 earnings summary

Executive summary

• Fiscal 2025 focused on enhancing earning power, global sales expansion, and profitability, with strong recovery in the Cosmetics Business and high-value-added products driving growth.

• Strategic initiatives and reforms are shifting growth from quantity to quality, emphasizing capital efficiency and profit quality.

• Operating margin reached 9.3% (+0.8 pts YoY), ROIC 9.3% (+0.9 pts), and EPS 182.64 yen (+19.5%).

• Market share in the H&PC segment grew YoY for 27 consecutive months.

• Progress on the Mid-term Plan K27 continued, focusing on global sales expansion and improved earning power.

Financial highlights

• Net sales for the nine months ended September 30, 2025, reached ¥1,232.0 billion, up 3.5% year-on-year; like-for-like growth was 4.1%.

• Gross profit rose 4.8% to ¥481.3 billion; gross margin improved to 39.1% (+0.5 pts YoY).

• Operating income was ¥114.9 billion, up 13.8 billion year-on-year; operating margin rose to 9.3%.

• Net income attributable to owners was ¥84.7 billion, up 19.3% year-on-year; EPS grew 19.5% to ¥182.64.

• EBITDA reached ¥178.9 billion (+6.8% YoY).

Outlook and guidance

• Confident in achieving the full-year forecast for fiscal 2025, with strong revenue base and Cosmetics recovery.

• Full-year 2025 net sales forecast at ¥1,690.0 billion, up 3.8% year-on-year; operating income projected at ¥165.0 billion (+12.5%).

• Key Q4 initiatives include market share expansion in Japan, brand restaging in the U.S., and reforms in challenged areas.

• Raw material cost impact is trending down, with a full-year deterioration of ¥8.5 billion expected, but offset by selling price increases.

• U.S. tariffs expected to have a direct negative impact of less than ¥1.5 billion.