Kao (4452) investor relations material

Executive summary

• R&D strategy centers on leveraging unique technologies in markets with strong social demand, aiming to become essential to consumers and society.

• Operating income for H1 2026 reached a record high of ¥95.8 billion, or ¥84.3 billion excluding a gain on land sale, the highest since FY2019.

• Net sales grew 7.8% year-over-year to ¥871.9 billion, with like-for-like growth of 3.4% driven by volume and price increases.

• Gross margin improved to 39.8%, surpassing FY2019 levels, driven by high-value-added products and cost reduction initiatives.

• Four strategic pillars: global sharp-top businesses, human capital, capital efficiency, and co-creation with partners, with R&D playing a key role in global expansion and margin improvement.

Financial highlights

• H1 net income rose 33.9% year-over-year to ¥66.2 billion.

• EBITDA increased 25.6% to ¥140.6 billion.

• Basic EPS grew 35.9% to ¥72.58.

• Gross profit increased by ¥35.4 billion to ¥347.2 billion; operating margin improved to 11.0% from 8.6%.

• Cash flows from operating activities were ¥55.3 billion, up from ¥42.9 billion year-over-year.

Outlook and guidance

• FY2026 net sales forecast revised upward to ¥1,800.0 billion (+6.6% YoY), operating income to ¥190.0 billion (+16.2%), and net income attributable to owners to ¥135.0 billion (+12.4%).

• Operating margin expected at 10.6%; EBITDA forecast at ¥278.0 billion (+11.1%).

• Basic EPS forecast at ¥149.21, reflecting the share split.

• R&D investments will be concentrated in areas where uniqueness and social significance intersect, particularly dermacosmetics and semiconductors.

• Management expects continued global economic uncertainty due to geopolitical tensions and supply chain costs but plans to mitigate impacts through procurement, cost reduction, and price adjustments.