Slides
Page 1
као Kirei - Making Life Beautiful Consolidated Financial Results for the Six Months Ended June 30 , 2026 Kao Corporation August 5 , 2026 足球 财团 法人 臺 HAN FASF
Page 2
2 Disclaimer Forward-looking statements such as earnings forecasts and other projections contained in this release are based on information available at this time and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may differ materially from those expectations due to various factors. Notes: 1. Numbers in parentheses are negative. 2. YoY: Abbreviation for year on year 3. ¥bn: Abbreviation for Japanese yen in billions 4. Year on year growth rates for net sales are all like-for-like, excluding the effect of translation of local currencies into Japanese yen. Growth by volume includes changes due to differences in product mix. 5. Changes and comparisons are all with the same period a year earlier unless otherwise noted. 6. Household & personal care (H&PC): Global consumer care products excluding cosmetics 7. GC: Abbreviation for Global Consumer Care 8. Core income: Income excluding impacts of structural reforms for FY2023. Changes in Accounting Policy: Due to early adoption of IFRS 18 “Presentation and Disclosure in Financial Statements” (hereafter, “IFRS 18”) in Q1 FY2026, operating income, income before income taxes, and EBITDA for FY2025 and in the initial FY2026 forecast presented in these presentation materials are retrospectively adjusted figures reflecting the change in accounting policy. Change in EBITDA Calculation Method: In H1 FY2026, the EBITDA calculation method was revised to include impairment losses. Accordingly, EBITDA for FY2025 presented in these presentation materials has been retrospectively restated to reflect this change.
Page 3
Contents 01 Key Highlights 02 Financial Results for the Six Months Ended June 30, 2026 03 FY2026 Forecast 04 Kao’s Value Creation Model: Recent Progress and Next Steps 05 Appendix
Page 4
4 Key Highlights ✓ Reforms to earning power have taken root for a shift to a profitable growth stage. (Gross margin for the GC Business surpassed the FY2019 level.) ✓ H1 operating income reached a record-high of 95.8 billion yen. (Even excluding gain on the sale of land, operating income was 84.3 billion yen, the highest level since FY2019.) ✓ The full-year operating income forecast for FY2026 has been revised upward to 190.0 billion yen. ✓ Future Growth Drivers: Semiconductor and Cosmetics Businesses 90.8 86.4 74.5 70.6 53.7 34.5 57.9 69.2 84.3 2018 2019 2020 2021 2022 2023 2024 2025 2026 95.8 Record high Operating income FY2023 is core operating income H1 Operating income Trend （FY） （Billion yen）
Page 5
02 Financial Results for the Six Months Ended June 30, 2026
Page 6
6 Highlights of Consolidated Financial Results 1. Due to early adoption of IFRS 18, operating Income, income before income taxes, and EBITDA for H1 FY2025 are presented on a retrospectively adjusted basis. (For details, please refer to page 53.) 2. Due to change in the calculation method, the H1 FY2025 figure is presented on a retrospectively adjusted basis. Changes 1 and 2 also apply to the subsequent pages. 3. Amounts are presented after reflecting the impact of a share split at a ratio of two shares for each ordinary share conducted on the effective date on July 1, 2026. 4. Exchange rates: 158.11 yen/USD, 184.46 yen/Euro, 23.03 yen/Yuan Billion yen FY2025 H1*1 FY2026 H1 Growth Change Net sales 809.0 871.9 +7.8% +4.4% +3.4% +62.9 +35.5 +27.4 Gross profit Gross margin(%) 311.8 38.5% 347.2 39.8% +11.3% - +35.4 +1.3pts Operating income Operating margin(%) 69.2 8.6% 95.8 11.0% +38.5% - +26.6 +2.4pts Income before income taxes 71.8 97.3 +35.6% +25.6 Net income 49.5 66.2 +33.9% +16.8 Net income attributable to owners of the parent 49.6 65.7 +32.3% +16.0 EBITDA*2 (Operating income + Depr. & Amort.+ Impairment losses) 112.0 140.6 +25.6% +28.7 Basic earnings per share (yen)*3 53.42 72.58 +35.9% +19.16 Cash dividends per share (yen) 77.00 78.00 - +1.00 Effect of currency translation*4 Like-for-like growth
Page 7
7 1. Amounts are presented after reflecting the impact of a share split at a ratio of two shares for each ordinary share conducted on the effective date of July 1, 2026. 2. Exchange rates: 159.40 yen/USD, 185.34 yen/Euro, 23.42 yen/Yuan Highlights of Q2 Consolidated Financial Results (April-June) Billion yen FY2025 Q2 FY2026 Q2 Growth Change Net sales 419.2 458.7 +9.4% +5.3% +4.2% +39.5 +22.0 +17.5 Gross profit Gross margin(%) 163.8 39.1% 188.5 41.1% +15.1% - +24.7 +2.0pts Operating income Operating margin(%) 38.3 9.1% 50.9 11.1% +33.0% - +12.6 +2.0pts Income before income taxes 40.2 51.3 +27.7% +11.1 Net income 26.5 34.9 +32.0% +8.5 Net income attributable to owners of the parent 26.8 34.7 +29.4% +7.9 EBITDA (Operating income + Depr. & Amort.+ Impairment losses) 59.5 73.4 +23.3% +13.9 Basic earnings per share (yen)*1 28.83 38.31 +32.9% +9.48 Effect of currency translation*2 Like-for-like growth
Page 8
8 Further strengthening our sustainable earning power and accelerating the shift to growth. Ensuring the success of Mid-term Plan 2027 (“K27”) and building a foundation for step-change growth thereafter. Strategic role of FY2026 FY2026 H1 Results ✓ In the GC Business outside Japan, growth was driven by increased sales in Asia of Cosmetics (+14%) and Health Beauty Care (+6%). ✓ The Chemical Business offset the decline in Q1 and achieved profit growth by capturing demand and implementing selling price adjustments. ✓ ROIC improved to 10.5% as capital efficiency reforms progressed steadily. ✓ The Kao Group achieved both sales volume growth and improved profitability, driving sustainable profit growth. ✓ The Kao Group will seek to expand profits by accelerating growth in focus businesses while implementing transformations to drive growth in businesses facing challenges outside Japan. ✓ The Kao Group will address the higher raw material prices that are expected to materialize from Q3 onward through price pass- through in addition to promotion of high-value-added products and Total Cost Reduction (TCR) initiatives. → Based on the above, the full-year forecast of results has been revised upward. Initiatives and Outlook for Q3 and Beyond Net sales 871.9 ¥bn +3.4% on a like-for-like basis Operating income 95.8 ¥bn (+26.6 ¥bn; +38.5%); margin 11.0% 84.3 ¥bn excluding gain on sale of land: +15.1 ¥bn ROIC 10.5% +2.5 pts YoY Key Points of Results and Future Initiatives
Page 9
9 Outside Japan ConsolidatedJapan Asia Americas Europe Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Fabric & Home Care 167.4 6.8% 20.1 (7.1)% 1.5 (12.1)% - - 21.6 (7.4)% 189.0 5.1% Sanitary 34.2 (5.1)% 47.5 1.9% - - - - 47.5 1.9% 81.7 (1.3)% Hygiene Living Care Business 201.6 4.6% 67.6 (0.9)% 1.5 (12.1)％ - - 69.1 (1.2)% 270.7 3.1% Health Beauty Care Business 113.2 5.4% 20.3 5.9% 62.3 4.2％ 32.9 (4.9)% 115.5 1.8% 228.6 3.6% Cosmetics Business 86.8 6.7% 27.2 14.2% 3.5 (3.6)% 13.4 (2.9)% 44.1 6.9% 131.0 6.7% Business Connected Business 18.8 5.1% 0.4 186.6% - - - - 0.4 186.6% 19.2 6.2% GC Business 420.4 5.2% 115.4 3.6% 67.4 3.4% 46.3 (4.4)% 229.1 1.9% 649.5 4.1% Chemical Business* 76.8 6.8% 67.3 2.9% 47.3 (2.1)% 55.8 (3.1)% 170.4 (0.5)% 247.2 1.8% Consolidated 476.1 5.4% 180.7 3.2% 114.5 1.2% 100.6 (3.6)% 395.8 0.8% 871.9 3.4% Consolidated Net Sales by Segment/Geographic Region in H1 • The GC Business sales increased 4.1%, driven by strong performance in Japan. Sales outside Japan also increased 1.9%. The focus businesses, Cosmetics and Health Beauty Care, performed well in Asia. Transformations aimed at growth were underway in some businesses facing challenges. • The Chemical Business returned to sales growth, driven by progress in selling price adjustments for the oleo chemicals and strong sales of electronic materials in Japan and Asia. * Net sales of the Chemical Business include intersegment transactions • Sales by geographic region are classified based on the location of the sales recognized.
Page 10
10 • GC Business: Operating income increased across all segments, driven by stronger earning power and progress in promoting high-value-added products. Operating margin +1.1 pts. • Chemical Business: Recovered from its Q1 profit decline and achieved profit growth by capturing demand, adjusting selling prices, and implementing other initiatives. Net sales Operating income OverviewH1 (Billion yen) H1 (Billion yen) Change Operating margin Like- for-like By Volume By Price Fabric & Home Care 189.0 5.1% 1.6% 3.5% 34.7 3.5 18.4% Maintained a high operating margin by advancing the shift toward higher- value-added products and effectively capturing increased demand resulting from the situation in the Middle East. Sanitary 81.7 (1.3)% (0.6)% (0.7)% 4.4 0.1 5.4% Promoted profitability-focused management. Operating income increased due to strong performance by Laurier in Asia. Hygiene Living Care Business 270.7 3.1% 0.9% 2.2% 39.2 3.6 14.5% ー Health Beauty Care Business 228.6 3.6% 3.0% 0.6% 19.9 1.7 8.7% Profits were driven by skin care in the Americas and Asia, offsetting weak performance in Europe. Cosmetics Business 131.0 6.7% 5.9% 0.8% 5.8 5.4 4.4% Growth outside Japan and structural reforms drove profitable growth, with particularly substantial results for Curél, KATE, and SENSAI. Business Connected Business 19.2 6.2% 4.2% 2.0% 0.8 0.4 4.4% In addition to kitchen cleaning agents for the food service sector and products for the nursing care sector, guest room amenities for the lodging and leisure sector also performed well. GC Business 649.5 4.1% 2.7% 1.4% 65.7 11.1 10.1% ー Chemical Business 247.2 1.8% (1.8)% 3.6% 18.1 3.7 7.3% Sales of both electronic materials (information materials) and performance chemicals grew. Selling price adjustments and increased sales volume for consumer care chemicals also contributed, along with the impact of unrealized gains. Consolidated 871.9 3.4% 1.3% 2.1% 95.8* 26.6 11.0% • Includes an 11.5 ￥bn gain on sale of land (Not allocated to any business segment) Consolidated Results by Segment in H1 Net sales of the Chemical Business include intersegment transactions • Growth by volume includes changes due to differences in product mix. • Sales by geographic region are classified based on the location of the sales recognized.
Page 11
11 Outside Japan ConsolidatedJapan Asia Americas Europe Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Billion yen Like-for-like Fabric & Home Care 89.4 6.3% 10.5 3.2% 0.8 (6.1)% - - 11.3 2.5% 100.7 5.9% Sanitary 17.6 (8.2)% 23.5 6.0% - - - - 23.5 6.0% 41.0 (0.9)% Hygiene Living Care Business 107.0 3.6% 34.0 5.1% 0.8 (6.1)％ - - 34.8 4.8% 141.7 3.9% Health Beauty Care Business 62.4 3.7% 10.6 10.0% 32.0 0.5％ 17.1 (4.5)% 59.8 0.6% 122.2 2.2% Cosmetics Business 45.2 8.3% 14.6 17.9% 1.7 (5.1)% 6.6 (3.9)% 22.9 8.6% 68.1 8.4% Business Connected Business 10.5 8.1% 0.2 125.2% - - - - 0.2 125.2% 10.7 8.9% GC Business 225.0 4.8% 59.4 8.9% 34.5 0.1% 23.8 (4.3)% 117.7 3.4% 342.7 4.3% Chemical Business* 40.6 9.0% 33.8 1.8% 25.5 0.1% 29.0 3.3% 88.4 1.8% 129.0 4.2% Consolidated 254.7 5.4% 92.0 5.8% 60.0 0.2% 52.0 (0.3)% 204.1 2.6% 458.7 4.2% Q2 Consolidated Net Sales by Segment/Geographic Region (April-June) * Net sales of the Chemical Business include intersegment transactions • Sales by geographic region are classified based on the location of the sales recognized. • GC Business sales increased 4.3%, driven by strong performance in Japan. Sales increased in all businesses in Asia. • Chemical Business sales increased in all regions. In the Americas and Europe, sales returned to growth as progress in selling price adjustments caught up following the delay in Q1.
Page 12
12 Net sales Operating income Billion yen Billion yen Change Operating margin Like-for- like By Volume By Price Fabric & Home Care 100.7 5.9% 2.2% 3.7% 17.8 1.0 17.6% Sanitary 41.0 (0.9)% (0.9)% (0.0)% 1.9 (0.3) 4.5% Hygiene Living Care Business 141.7 3.9% 1.3% 2.6% 19.6 0.8 13.8% Health Beauty Care Business 122.2 2.2% 1.2% 1.0% 12.0 0.5 9.8% Cosmetics Business 68.1 8.4% 7.8% 0.7% 3.7 2.8 5.4% Business Connected Business 10.7 8.9% 5.3% 3.7% 0.7 0.2 7.0% GC Business 342.7 4.3% 2.6% 1.7% 36.1 4.3 10.5% Chemical Business* 129.0 4.2% (3.1)% 7.3% 14.5 8.2 11.2% Consolidated 458.7 4.2% 0.9% 3.3% 50.9 12.6 11.1% Q2 Consolidated Results by Segment (April-June) * Net sales of the Chemical Business include intersegment transactions • Growth by volume includes changes due to differences in product mix. • Sales by geographic region are classified based on the location of the sales recognized. • In the Cosmetics Business, steady growth outside Japan, the strengthening of focus brands, and profit structure reforms progressed steadily, resulting in increases in operating income for six consecutive quarters. • The Chemical Business substantially increased operating income by capturing demand and adjusting selling prices, among other initiatives, as well as the YoY impact of unrealized gains.
Page 13
13 • Excluding the gain on the sale of land, operating income reached 84.3 billion yen, the highest level since FY2019. • The GC Business effectively captured increased demand resulting from the situation in the Middle East, with both selling price and sales volume performing strongly. • The Chemical Business recovered from its Q1 profit decline and achieved profit growth by capturing demand, adjusting selling prices, and implementing other initiatives. +26.6 8.5 10.0 2.0 3.0 (11.5) 15.2 69.2 (0.5) 95.8（Billion yen） Global Consumer Care Business H&PC (0.5) ＋7.5 ＋5.5 Cosmetics 0.0 ＋1.0 +4.5 TCR Change in product mix Increase in logistics costs Human capital Investment Marketing investment FY2025H1 Operating Income Analysis of Change in Operating Income in H1 (YoY Change) FY2026 H1 Operating Income Raw material prices SG&A expenses Impact of currency translation, other income and expenses Selling price Volume Gross profit in Chemical Other cost of sales Gain on sale of land 11.5 ¥bn 84.3 ¥bn Excluding gain on sale of land 84.3 ¥bn (Excluding gain on sale of land: +15.1 ¥bn) Approx. 10.0 ¥bn Earning power
Page 14
14 40.4 35.4 37.3 39.2 39.6 35.2 38.5 38.5 39.8 31.0 33.0 35.0 37.0 39.0 41.0 43.0 2021 2022 2023 2024 2025 2026 Full year H1 (YoY) +1.3 pts (％) (FY) （2026/H1） （2023/H1） （2024/H1） （2025/H1） 100.0 99.6 98.4 94.7 93.6 97.5 98.7 100.2 85 90 95 100 105 2019 2020 2021 2022 2023 2024 2025 2026 Full year H1 (YoY) +1.5 pts ＞ （2026/H1） (FY) FY2019 H1＝100.0 (Index) Further Improvement of Earning Power • Mechanisms to drive gross profit growth, including the launch of high-value-added products, Total Cost Reduction (TCR) initiatives, and product mix improvements, have become firmly established, further improving earning power. • Gross margin in the GC Business exceeded the FY2019 level. Gross margin for FY2023 represents "core gross margin." Consolidated Gross Margin(%) GC Business Gross Margin(Index) Target improvement rate +1.0 pts/year
Page 15
15 ＋27％ ＋13％ ＋4％ ＋14％ Further Reinforcing the GC Business in Japan: FY2026 H1 Results Premium Price Segment Creating new value Stable earnings base Mass-market Price Segment H&PC Cosmetics Six Focus Brands Market Share of Jan.-Jun. 2026（％） YoY change（pts） Representative Brands Laundry detergents Sunscreens Facial cleansers In-bath hair care Sales growth (Market: (1)%) • A consistent brand concept and high-value-added products strengthened brand loyalty, while cross-category sales expansion drove sustainable profit growth. No.1: INTAGE, Inc. SRI+, Jul. 2025-Jun. 2026, Sales value From July 2023, 12 consecutive quarters of YoY growth 47％ ＋1.0 pts 35％ ＋1.8 pts 33％ ＋5.0 pts 15％ ＋1.4 pts Kao’s market share 25.0% +0.4 pts YoY
Page 16
16 Strengthening Focus Businesses outside Japan: H1 Results • Achieved steady growth centered on key brands and strategic areas. + 8% + 7% JERGENS Base (Skin care) Skin protection (UV care, Self tanning) Laurier (Sanitary products) Cosmetics + 4% etc. + 10% + 18% Electronic materials (Chemicals) YoY sales growth Asia Europe Americas Asia Europe Americas Asia Americas Asia Europe Americas Asia Strengthened global collaboration to drive the “three strategic expansion models” Strong demand for generative AI and data centers drove rapid global growth, particularly in Asia. Despite a drop in Q2 in comparison to the new product sell-in in Q1, new products and digital initiatives in FY2026 drove awareness growth among younger consumers, supporting sales growth. Globally integrated value creation and loyalty marketing drove more than 20% growth in China and secured upper-single-digit growth in Indonesia in Q2. KATE: Ramped up new product rollouts in tandem with Japan, starting in Thailand Curél: Began rollouts in Brazil and the Netherlands Bioré UV (Americas): Sell-out increased at key strategic retail chains in North America (Asia): Expanded rollout and increased sales in ASEAN, using new products as a hook Bondi Sands: Expanded distribution and outpaced market growth in North America
Page 17
17 Oleo chemicals ✓ Fatty alcohols ✓ Tertiary amines ✓ Emulsifiers for food 香粧品 情報材料 情報材料 Situation up to H1 Selling price adjustments and increased sales volume contributed to profit growth. Consumer care chemicals Performance chemicals Initiatives in H2 Continue to flexibly adjust selling prices in response to fluctuations in the fats and oils market. Strengthen sales expansion of high-value-added products for use in premium-priced products. Main Products Chemical Business ✓ Surfactants and formulated products ✓ Fragrances ✓ Water-reducing admixtures for concrete ✓ Plastic additives ✓ Casting sand binders ✓ Cleaning agents for steel ✓ Toners, Toner binders ✓ Inkjet ink colorants and inks ✓ Semiconductor chemicals ✓ Hard disk chemicals Increased sales volume by maintaining stable supply despite the situation in the Middle East. Strong sales of electronic materials (chemicals for semiconductors and hard disks) in Japan and Asia. • In H1, selling price adjustments and procurement measures were promptly implemented to counter significant external headwinds, minimizing the impact on profits. The Kao Group promoted stable operations and strengthened its sustainable earnings structure. • In H2, the Kao Group will drive profit growth through selling price adjustments in response to market fluctuations, expansion of high-value-added areas, and increased sales. Profits improved due to the effect of selling price adjustments in Q2. Capture construction demand for information infrastructure (data centers, etc.) and continue sales expansion in related sectors. Accelerate customer adoption and sales expansion, primarily in semiconductor-related fields. - FY2026 H1 Results Information materials
Page 18
18 Stable Earnings Growth Driver Business Transformation Total Sales Growth Rate (%) +4.6 +4.0 +0.6 +3.4 Improvement in Operating Income (Billion yen） +3.6 +11.6 (0.4) +26.6 Improvement in ROIC*1 (pts) +1.5 +1.5 (0.4) +2.5 • ROIC improved steadily in both the growth driver and stable earnings business areas. • In the business transformation area, ROIC decreased for hair care, but improved for sanitary products. Rebuilding of businesses facing challenges proceeded according to plan. H1 Improvement Results for Capital Efficiency and Profitability by Business Area (vs. FY2025 H1 Results) 1. Business-area ROIC is an internal indicator for strengthening management in each business. Focused on improvement rates, it is calculated using operating assets, such as inventory and fixed assets, as invested capital in the denominator. Consolidated ROIC is positioned as a major KPI for the Kao Group as a whole. It is calculated using invested capital based on the Consolidated Statement of Financial Position in the Annual Securities Report as the denominator. 2. Certain expenses are treated as corporate expenses. • Skin Care • Cosmetics • Business Connected (Commercial-use hygiene products) • Chemicals • Sanitary • Hair Care (Including professional hair care) • Fabric and Home care • Personal health (vs. FY2025 H1) *2
Page 19
03 FY2026 Forecast
Page 20
20 Billion yen FY2025*1 FY2026 Growth Revised Forecast Growth Change Initial Forecast Change form Initial Net sales 1,688.6 +3.7% (0.0)% +3.7% 1,800.0 +6.6% +2.8% +3.8% +111.4 +47.9 +63.5 1,750.0 +50.0 +40.1 +9.9 Operating income Operating margin(%) 163.5 9.7% - - 190.0 10.6% +16.2% - +26.5 +0.9pts 182.0 10.4% +8.0 +0.2pts Income before income taxes 169.9 - 193.0 +13.6% +23.1 185.0 +8.0 Net income attributable to owners of the parent 120.1 +11.4% 135.0 +12.4% +14.9 130.0 +5.0 EBITDA (Operating income + Depr. & Amort.+ Impairment losses) 250.2 - 278.0 +11.1% +27.8 270.0 +8.0 ROE (%) 11.3% - 12.3% - +1.0pts 12.0% +0.3pts Basic earnings per share (yen)*2 130.15 +12.2% 149.21 +14.6% +19.06 143.70 +5.51 Cash dividends per share (yen)*3 154.00 - 156.00 - +2.00 156.00 - FY2026 Forecast Effect of currency translation*4 Like-for-like growth 1. Due to early adoption of IFRS 18, operating income, income before income taxes, and EBITDA for FY2025, are presented on a retrospectively restated basis. Accordingly, YoY percentage changes for these items are notpresented because they are not comparable. 2. Amounts are presented after reflecting the impact of a share split at a ratio of two shares for each ordinary share conducted on the effective date of July 1, 2026. YoY percentage changes for FY2025 are calculated on a pre-share-split basis. 3. Amounts are presented before reflecting the impact of a share split at a ratio of two shares for each ordinary share conducted on the effective date of July 1, 2026. 4. Exchange rate assumptions: 157 yen/USD, 182 yen/Euro, 22.8 yen/Yuan
Page 21
21 Billion yen Japan Outside Japan Consolidated Overview of Initiatives from Q3 Onwards Like-for-like Like-for-like Like-for-like Hygiene Living Care Business 434.0 3.9% 140.0 1.0% 574.0 3.2% In Japan, offset the impact of rising raw material prices through price increases and aim to expand sales through high-value-added offerings and other initiatives. In Asia, regain momentum through value-added offerings and other measures. Health Beauty Care Business 233.0 3.5% 226.0 2.6% 459.0 3.0% In Japan, ensure profitability by increasing selling prices to counter rising raw material prices. In the Americas and Europe, accelerate growth by restaging brands and launching new products. Cosmetics Business 187.0 5.6% 96.0 6.6% 283.0 5.9% In Japan, drive further profit growth by launching new products in category shelves in open-sell channels. In addition, accelerate the global expansion of focus brands. Business Connected Business 40.0 3.1% 1.0 68.9% 41.0 5.4% Aim for growth by increasing selling prices in response to rising raw material prices, acquiring new customers in the core food service sector, and offering high-value-added solutions. GC Business 894.0 4.1% 463.0 2.9% 1,357.0 3.7% ー Chemical Business* 154.0 6.5% 340.0 3.3% 494.0 4.3% Reinforce the profit base through flexible selling price adjustments in response to market fluctuations, expand sales in growth markets, and ramp up new businesses. Concurrently, address regional market disparities and changes in the competitive landscape. Consolidated 1,000.0 3.8% 800.0 3.8% 1,800.0 3.8% ー 《GC Business sales outside Japan》 Asia 230.0 3.7% Americas 132.0 3.6% Europe 101.0 0.3% Key Points of FY2026 Sales Forecast by Segment * Net sales of the Chemical Business include intersegment transactions Sales by geographic region are classified based on the location of the sales recognized. • Cosmetics Business: Achieve substantial growth outside Japan by strengthening global collaboration and advancing the “three strategic expansion models" growth strategy. • Chemical Business: Drive the expansion of high-value-added areas and sales while advancing selling price adjustments in response to market fluctuations.
Page 22
22 Analysis of Change in Operating Income in FY2026 (vs. Initial Forecast) • H1 operating income exceeded the initial forecast, even excluding gain on sale of land. • The full-year operating income forecast has been revised upward to 190.0 billion yen, after factoring in the H2 risks from the situation in the Middle East and transformation expenses in businesses facing challenges outside Japan. ¥bn (Billion yen) 182.0 FY2026 Initial Forecast 190.0 FY2026 Revised Forecast Performance above H1 plan Rising raw Material prices Transformation expenses in businesses facing challenges outside Japan Gain on sale of land Others Note: Except for gain on sale of land, the size of each shape does not indicate the relative magnitude of the corresponding factor’s actual contribution. Price pass- through H1 Results +8.0 H2 Outlook ＋11.5 High-value-added products, etc.
Page 23
23 Impact of Raw Material Prices: Profit & Losses Impact to Become Apparent from Q3 Onward • Raw material market prices are currently showing signs of rising, creating uncertainty. • Changes in procurement prices affect profit and losses with a lag of 2-3 months as inventory passes through production and sales. 2–3 months lag in impact of change in procurement prices on profit and losses 0 0 Q1 Result Q2 Result Q3 Forecast Q4 Forecast Naphtha and Dubai crude oil market prices trend Imported Naphtha Dubai crude oil Fats and oils market prices trend Jan.2025 Jan.2026 Jul. Change in Procurement Prices (YoY) Impact on Profit & Losses (YoY) Raw materials Packaging YoY - YoY + FY2026 Quarterly Results and Forecast Jan.2025 Jan.2026 Jul. YoY - YoY + Q1 Result Q2 Result Q3 Forecast Q4 Forecast Dubai crude oil($/bbl) Naphtha($/MT)Fats and oils ($/MT) Jun. 700 1,700 80
Page 24
24 Forecast of Factors in Operating Income in FY2026 (vs. FY2025 Results) 29.0 16.5 6.5 5.0 (27.0) 12.0 163.5 (15.5) 190.0 Raw material prices （Billion yen） Selling price Volume Other cost of sales SG&A expenses Impact of currency translation, other income and expenses Gross profit in Chemical H&PC (15.0) +27.0 +7.0 Cosmetics (0.5) +2.0 +9.5 More than 20.0 ¥bn FY2025 Operating Income FY2026 Operating Income TCR Change in product mix Increase in logistics costs Human capital investment Marketing investment Earning power • Aiming for a 26.5 billion yen increase in operating income by using increased earning power and sales volume to offset rising raw material prices and higher SG&A expenses. Global Consumer Care Business Gain on sale of land 11.5 ¥bn Transformation expenses in businesses facing challenges outside Japan ¥bn (Excluding gain on sale of land: +15.1 ¥bn)+26.5
Page 25
25 K27 Progress FY2023 Results ROIC 4.1% EVA 14.9 Operating Income 114.7 Sales outside Japan*1 655.8 FY2024 Results 9.2% 33.2 146.6 705.5 • Making steady progress toward achieving the targets of K27. Full-year earnings forecast for FY2026 revised upward. *2 FY2026 Revised Forecast 10.5% 50.0 190.0 800.0 FY2025 Results 9.7% 41.1 163.5 725.2 (Billion yen) FY2027 Target 11.0% or more 70.0 or more Record-high operating income (FY2019 211.7 billion yen) 800.0 or more (Sales CAGR+4.3％) 1. Sales outside Japan are based on the location where the sales were recognized. 2. Core operating income 3. Announced on February 6, 2026 FY2026 Initial Forecast 10.5% 51.0 182.0 760.0 *3
Page 26
26 K27 Progress 110.1 146.6 114.7 163.5 100.0 150.0 200.0 2022 2023 2024 2025 2026 2027 (FY) Operating Income 7.8% 9.2% 9.7% 14.7 14.9 33.2 41.1 0 70 0% 11% 2022 2023 2024 2025 2026 2027 EVA ROIC and EVA ROIC （%） 4.1% Record-high operating income 211.7 billion yen or more Revised forecast 190.0 billion yen Forecast Revised forecast 10.5% ROIC EVA （Billion yen） Operating income （Billion yen） 70.0 billion yen or more 11% or more * Income for FY2023 represents “core income” (FY) Revised Forecast 50.0 billion yen * Target Forecast Target
Page 27
27 04 Kao’s Value Creation Model: Recent Progress and Next Steps 1. Kao’s Value Creation Model 2. Path to Further Growth – Cosmetics, Chemicals (Electronic Materials) 3. New Initiatives – Logistics Reform, New Marketing 4. Shareholder Benefits
Page 28
28 Kao’s Circular Growth Model Diversification and personalization Environmental constraints New hygiene needs Aging population Business and brand cycle Business Functions Fundamental research Development R&D and technology cycle Knowledge and data cycle People/talent cycleGoal-oriented execution Scrum Activities Matrix organization to maximize synergies Social significance Exclusive uniqueness Consumer Care Chemicals Raw materials synergies Technology synergies Knowledge synergies Social issues Kao addresses
Page 29
29 Value Creation Model Built on Core Science and Technology Global Consumer Care Business Cosmetics Skin Care & Hair Care Personal Health Fabric & Home Care Sanitary (napkins and diapers) Chemical Business Electronic Materials (semiconductors and HDDs) Printing (inkjet inks and toner) Performance Chemicals (infrastructure and automotive) Oleo & Derivatives (catalysts) Precision interface control technology 10⁻⁹ 10⁻¹⁰ Å nm 10⁻⁶ μm 10⁻¹² pm Atoms Intermolecular interactions Nanocapsules Fibers, hair Leaf surfaces, roots RNA Proteins Agrochemicals (adjuvants) Chemical reactions Water Fine silica particles Pigments CO2 Emulsions Plastics, glasses, metals Blood vessels, nerves Minerals, rubber Core Science & Technology Exclusive uniqueness Social significance Scale indicating the level of precision Product & Brand Sustainable Value Diversification and personalization Environmental constraints New hygiene needsAging population Perform regardless of change Resilient Technology Adapt to change Adaptive Technology
Page 30
30 Expanding into New Areas of Skin Care (Technologies focused on water molecules and RNA) 04-01 Cosmetics Business
Page 31
31 Sofina Enters the Self-Selection Skin Care Segment Two Essential Care Formulations for the Skin <Sofina proprietary technology> Auto-Hydration Technology <Sofina proprietary technology> High-penetration Ceramide Care Technology Moisture Turbo EmulsionMoisture Turbo Lotion Protein Care Ceramide Care Formulated with a protein-based moisture retaining ingredient Formulated with Ceramide Care Ingredient e Formulated with Ceramide Care Ingredient Hydration Accelerator Transform Moisture. Deep into Every Skin Cell. August 8, 2026 Launch in Japan Formulated with Ceramide Care Ingredient e Formulated with Ceramide Care Ingredient
Page 32
32 Increased Skin Hydration with Water Capturing Skin Technology Moisture level of the stratum corneum Immediately after application Goal: Retain moisture applied to the skin Experimental conditions: 21°C ± 1°C, 40% RH N=3 (±SD) [Experimental Method] An aqueous solution containing au to-hydration technology was applied to the forearm area (2 × 3 cm), Apply 12.5 μL each of comparative formulations A and B Moisture content of tape -stripped stratum corneum cells Water content ratio: (water + polyol / protein) measured by FT -IR Reduces transepidermal water loss Absorbs moisture from the air Elapsed time (h) Relative water content (immediately after application = 100%) Comparison Formulation A Comparison Formulation B Conventional Formulation A Conventional Formulation B Technology-Enabled Formulation ** **
Page 33
33 Increase in Water Content of Stratum Corneum Cells Microscopic ATR-IR Analysis
Page 34
34 Sofina: Strategic Rationale for Entering a New Market Segment Self-selection market 956.0 billion yen Drugstore products priced at ¥1,000 to ¥2,000 account for Approx. 80% of unit sales Scale advantage Broad-based recognition of product performance (Mass appeal) Maximized performance through personalization Strategic significance: High growth market segment × Outstanding perceived quality × High profitability → By 2030, aim to increase global sales by 50% and the user base in Japan by 70% 1) Market scale advantage Broad consumer reach through the ¥956.0 billion self-selection market and the drugstore channel, which accounts for approximately 40% of sales. 2) Engine for building trust Build trust in Sofina skin science through first-hand product experience, creating a path to higher-performance products. 3) Deepening loyalty Build awareness through self-selection, then deepen personalization and drive premiumization. Strategic entry New mid-price segment ¥ 1,000 to under ¥ 2,000 Premiumization By 2030, aim to become the leading brand in self-selection skin care Premium price segment: ¥ 5,000 and above Mid-price segment: ¥ 2,000 and above Sofina BASIC+ Sofina Premium
Page 35
35 The Pinnacle of Sofina: est (essence of Sofina technology) Genoluxe Cream 50 g 14,300 yen (tax included) NEW Sep.4, 2026 Sebum RNA × Fine Fiber (FF) Rewrite the Future of Your Skin. A New Anti-Aging Cream. A new fiber that forms a skin-like film simply upon application “Dispersible Microfibers” “Genoluxer” A new ingredient that boosts effectiveness A new technology that forms a skin-like layer on the surface of the skin “Dispersible FF Genoluxe Technology” New Discovery Why does the degree of improvement vary? 164 aging-related RNAs across five functional groups Aging-related RNAs identified for the first time New Technology Integrating technology with Asahi Kasei Corporation Barrier function Skin formation Innate immunity Phosphorylation Splicing
Page 36
36 Sofina: An Integrated Portfolio Strategy for a New Era Advanced skin care powered by deep-layer skin science and interface control technology A prestige brand powered by Kao’s latest advances in skin science Bringing out the beauty within each individual Essence of Sofina Technology A new mid-price market*1 penetration by Sofina Brand PortfolioNew Online EC Counseling Self-selection Current New High-price Segment High-price Segment Mid-price Segment Low-price Segment Low-price Segment Mid-price Segment New mid-price Segment*1 ¥1,000 to under ¥2,000 Under ¥1,000 ¥2,000 to under ¥5,000 ¥2,000 to under ¥5,000 Over ¥5,000 Over ¥5,000 Under ¥2,000 *1 Drugstores, supermarkets, and other general retail channels, excluding department stores; ¥1,000 to under ¥2,000
Page 37
37 Strategic Direction for the Six Global Focus Brands Covering a broad range of price points, consumer needs, and geographic markets Luxury Prestige Premium Premium Mass GEOGRAPHIC EXPANSION MODEL JAPAN-LED ASIA-FOCUSED EXPANSION Luxury skincare Luxury fragrance / lifestyle Prestige beauty Skin science Sensitive skin care Makeup / self-expression Note: Positions and areas are illustrative. PRICE / PRESTIGE TIER JAPAN-LED GLOBAL EXPANSION EUROPE-LED GLOBAL EXPANSION
Page 38
38 Six Focus Brands on a Growth Trajectory ■ Sales of the six focus brands The world map image provided by PIXTA Forecast 0 500 1,000 1,500 2,000 2022 2023 2024 2025 2026 K27 Billion yen 200 150 100 50
Page 39
39 Electronic Materials: Progress and Targets Ångström-scale (10⁻¹⁰ m) precision etching technology 04-02 Chemical Business
Page 40
40 Kao Chemicals Enabling AI and Data Center Infrastructure Reference material: https://www.fuji-keizai.co.jp/report/detail.html?code=112504831 Selective Extraction of Rare Metals Semiconductor Front-End Process Materials (26 items surveyed) Semiconductor Back-End Process Materials (8 items surveyed) Hard disk-related Process chemicals Market size 0.5 - 1.5 trillion yen 6.1 trillion yen 1.6 trillion yen 0.08–0.1 trillion yen CAGR 5 - 8% 6 - 7% 6 - 7% 3 - 4% Kao’s business areas Selective extraction of rare metals; chemicals for separation and purification Etching agents, precision cleaning agents, CMP slurries, additives and others Precision cleaning agents, stripping agents, and others Precision polishing agents, cleaning agents Kao’s market position Not disclosed Top share Chemicals for specific NAND manufacturing processes 60% share Package substrate cleaning agents 50% share Polishing slurries for specific processes Resource and raw material procurement Electronic devices and units Data Centers Selective extraction of rare metals Rare metals / froth flotation Semiconductors Front-end process Etchants, precision cleaning agents, CMP slurries and additives Cleaning Back-end process Substrate fabrication Chip assembly Molding Substrate cleaning and stripping Precision cleaning agents, stripping agents Hard disks Precision polishing slurries, cleaning agents Dispersants for ceramics Coolant additives and others Other electronic devices Wafers, Thin-film deposition, Photolithography, Etching, Cleaning, CMP
Page 41
41 Strengths of Kao Process Chemicals for Semiconductors Deliver uniform performance even to the finest features within complex structures Provide high material selectivity without damaging device structures or substrates Enable high processing precision and process stability Contribute to improved device performance and higher yield
Page 42
42 Kao: Business Plan for Semiconductor-Related Markets Business targets: CAGR > 30%, Operating margin > 40% • Precision cleaning agents • Stripping agents, and others Logic Advanced processes CPUs, GPUs, Application Processors DRAM Volatile memory AI-HBM, PCs, smartphones NAND Non-volatile memory Data center servers, PCs, smartphones Power semiconductors Power control and conversion Automotive and energy applications Legacy semiconductors General-purpose semiconductors using simpler processes Home appliances, industrial equipment, analog ICs Back-end process (packaging) Protection and interconnection of semiconductor chips Chemicals for advanced semiconductors • High-purity chemicals • Etching agents • Precision cleaning agents and others • Precision cleaning agents • Stripping agents, and others Focus Areas and Process Chemicals (Sales) 0 100 200 300 400 500 600 700 800 0 50 100 150 200 250 300 350 400 450 (Index) Advanced semiconductor market ■Conventional Market ■Advanced Market ■Sales of Existing Semiconductors ■Sales of new semiconductors
Page 43
43 Logistics and Marketing (Logistics reform and new marketing) 04-03 H1 Awards Highlights
Page 44
44 Kao’s Leading Role in Logistics Transformation • Received the Grand Prize, the highest honor at Nikkei Business’s “CLO of the Year 2026” awards • Since January 2026, Kao has operated a more autonomous Logistics Division under a newly appointed Chief Logistics Officer (CLO). The award recognized company-wide reforms that position logistics as a key management priority, including site reorganization and a cross-industry collaborative delivery consortium. Launched “CODE,” a joint delivery consortium comprising nine shipper companies across the food, daily necessities, pharmaceutical and publishing industries. Dai Kimura, Deputy Vice-Minister for Policy Coordination, Ministry of Land, Infrastructure, Transport and Tourism, responsible for the Logistics and Road Transport Bureau (left) Shinsuke Mori, Executive Officer; Senior Vice President, Logistics, Global; Chief Logistics Officer, Kao Corporation (right) Photo: Masato Tsuzuki “CLO of the Year 2026” hosted by Nikkei Business Lead companies: Kao Corporation, Mitsubishi Shokuhin Co., Ltd., Participating companies: Asahi Shokuhin Co., Ltd., Arata Corporation, Tohan Corporation, Nippon Shuppan Hanbai Inc., PALTAC Corporation, Mitsui & Co. Retail Group Ltd., Mediceo Corporation Consolidating delivery data from participating companies on a shared data platform Delivery Data Shared data platform Data Sharing Route Matching Delivery Data Improving delivery efficiency through route matching Combining delivery routes across companies to increase vehicle utilization Company A Delivery Hub Company C Delivery Hub Company C Delivery Hub
Page 45
45 Recognition with a Prestigious Global Marketing Award Total number of views for gameplay videos Approx. 5 million views Rapid social media reach from launch A full-scale horror game built around cleaning + Organic reach amplified by gameplay videos Reinforced Kao’s positioning as the go-to brand for cleaning among consumers in their 20s and 30s Sell-out sales increased after launch +10 pts*1 Approx.1.5 times*2 Recognized at CANNES LIONS 2026 as a New Model for Marketing Kao’s First-Ever Cannes Lions Award! *1 Kao survey, August 2025. Percentage of respondents associating Kao with cleaning, comparing 32 respondents aware of the “Silent Cleaning” campaign with 187 respondents not aware of it. *2 INTAGE SRI+: Bath Cleaner Magiclean EX Power Water Stain Spray. Comparison of sales value before launch (May 5–August 3, 2025) and after launch (August 4–November 2, 2025). Home Care “Silent Cleaning Campaign”: a fresh perspective and bold new challenge Content that built brand engagement, delivered business results, and earned global recognition
Page 46
46 04-04 Shareholder Benefits Expand Shareholder Benefits Following the Share Split
Page 47
47 Dividends at the Core: Enhancing Corporate Value through Long-Term Shareholder Support • Build a broader base of long-term shareholders by strengthening shareholder loyalty through the shareholder benefits program. • Aim to enhance corporate value together with shareholders who value our products and support our approach. A shareholder benefits program for those who share the values of “Yoki-Monozukuri*” and support the company over the long term 01 | FOUNDATION Fundamental return policy Dividends at the core Maintain stable and continuous dividends as the foundation of shareholder returns, while conducting share buybacks flexibly. 02 | NEW TOUCHPOINT Trust built through products Shareholder benefits Experience Yoki-Monozukuri and the commitment behind it 03 | OUTCOME Stable shareholder base Long-term support Broaden the shareholder base through increased shareholder loyalty Applicable to shareholders as of the end of December 2026 EXPERIENCE RETURN RELATIONSHIP * In Japanese, “yoki” means good or excellent, and “monozukuri” means making or craftsmanship. For us, Yoki-Monozukuri means an excellent creation process that is good for everyone involved and enriches the lives of consumers and customers.
Page 48
48 September 17 (Thursday) Briefing on Research and Development Strategy FY2026 Main Upcoming Events (Scheduled)
Page 49
05 Appendix
Page 50
50 90 100 110 120 Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. 90 100 110 120 Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr May Jun. vs. previous year Apr. May Jun. Q2 H&PC total 106 109 96 104 Laundry detergents 113 115 97 108 Fabric softeners 105 108 95 102 Bath cleaning products 105 102 94 100 Sanitary napkins 107 106 98 104 Baby diapers 96 99 97 97 Sunscreens 101 132 76 102 Hand soaps 107 106 97 103 Hand sanitizers 96 100 93 96 Bath additives 98 100 99 99 Growth of H&PC Market （％） 25 Q4 103 26 Q1 105 25 Q4 99 26 Q1 98 26 Q2 99 25 Q3 99 25 Q3 103 2025 2025 vs. previous year Apr. May Jun. Q2 Cosmetics total 99 102 97 99 Skin care products 98 101 97 99 Facial cleansers/ Makeup removers 102 102 103 102 Lotions/emulsions/creams 99 102 100 100 Serums 96 98 83 91 Makeup products 101 98 101 100 Makeup bases 98 98 100 99 Point makeup products 104 97 104 101 Other 106 119 92 105 Sunscreens 102 126 91 106 Consumer Products Market in Japan Growth of Cosmetics Market Market Growth Rates of Major Categories Market Growth Rates of Major Categories （％） 26 categories, New SLI2 Market growth rate in value terms 87 categories, SRI+1 Market growth rate in value terms 1. SRI+: Estimates based on POS data from approx. 6,000 retail outlets in Japan 2. New SLI: Estimates based on a panel survey of approx. 40,000 consumers in Japan (Source: INTAGE Inc. ) 2026 2026 26 Q2 104
Page 51
51 Market growth rate in value terms (% vs. previous year) China (including e-commerce) Indonesia Thailand 25 Q3 25 Q4 26 Q1 26 Q2 25 Q3 25 Q4 26 Q1 26 Q2 25 Q3 25 Q4 26 Q1 26 Q2 Baby diapers - - - - 95 97 96 92 78 82 76 77 Sanitary napkins and panty liners 103 96 94 97 103 105 108 107 100 103 102 103 Laundry detergents - - - - 102 102 103 108 100 104 102 110 Sunscreens - - - - - - - - 97 96 99 106 House cleaning products - - - - - - - - 95 100 97 99 Market growth rate in value terms (% vs. previous year) U.S. U.K. Germany 25 Q3 25 Q4 26 Q1 26 Q2 25 Q3 25 Q4 26 Q1 26 Q2 25 Q3 25 Q4 26 Q1 26 Q2 Hair care 105 105 107 109 106 105 105 105 106 109 107 103 Facial care products 107 106 105 107 - - - - - - - - Sunscreens 105 105 121 103 114 120 95 113 99 108 105 108 Self tanning 107 116 107 107 98 101 97 100 103 143 116 130 Hand and body lotions 106 109 105 110 - - - - - - - - Kao’s Main Markets outside Japan Asia Americas and Europe Source: NielsenIQ Source: Circana
Page 52
52 H1 Global Consumer Care Business: Results by Geographic Region Net sales Operating income Operating margin Billion yen FY2025 H1 FY2026 H1 Growth Like-for- like FY2025 H1 FY2026 H1 Change FY2025 H1 FY2026 H1 Change Japan 399.5 420.4 5.2% 5.2% 41.6 46.7 5.1 10.4% 11.1% 0.7pts Asia 102.9 115.4 12.2% 3.6% 10.7 15.6 4.9 10.4% 13.5% 3.1pts Americas 60.6 67.4 11.2% 3.4% 3.0 5.8 2.8 4.9% 8.6% 3.7pts Europe 42.9 46.3 8.0% (4.4)% (0.8) (2.4) (1.6) (1.7)% (5.2)% (3.4)pts Outside Japan 206.4 229.1 11.0% 1.9% 12.9 19.0 6.0 6.3% 8.3% 2.0pts GC Business 605.8 649.5 7.2% 4.1% 54.6 65.7 11.1 9.0% 10.1% 1.1pts Sales by geographic region are classified based on the location of the sales recognized. Net sales growth rates of major companies (Like-for-like %) Kao China: 9.5% Kao Taiwan: (1.2)% Kao Vietnam: 14.0% Kao Indonesia: 4.3% Kao Thailand: (8.3)% Kao Hong Kong: 4.1%
Page 53
53 Six months ended June 30, 2025 (Millions of yen) Reclassification Accounts Amounts Amounts Notes Accounts Net sales 809,022 ‐ 809,022 Net sales Cost of sales (497,196) ‐ (497,196) Cost of sales Gross profit 311,826 ‐ 311,826 Gross profit Selling, general and administrative expenses (243,292) ‐ (243,292) Selling, general and administrative expenses Other operating income 8,810 ‐ 8,810 Other operating income Other operating expenses (7,875) (285) (8,160) 1 Other operating expenses Operating income 69,469 (285) 69,184 Operating income 1,784 1,784 2 Share of profit in investments accounted for using the equity method (1,373) (1,373) 1,3 Other investment income and expenses 126 69,595 Income before financing and income taxes Financial income 2,305 1,660 3,965 1,3 Financial income Financial expenses (1,792) ‐ (1,792) Financial expenses Share of profit in investments accounted for using the equity method 1,784 (1,784) ‐ 2 Income before income taxes 71,766 2 71,768 Income before income taxes Income taxes (22,301) (2) (22,303) 1 Income taxes Income taxes Net income 49,465 ‐ 49,465 Net income Financing IFRS 18IAS 1 Investing Operating IFRS 18 “Presentation and Disclosure in Financial Statements” • IFRS 18 was early adopted from Q1 FY2026. Due to the reclassification of categories, a portion of foreign exchange gains and losses is reflected in operating income. 1. Reclassification of foreign exchange differences：Under IAS 1, foreign exchange differences were presented within financial income. Under IFRS 18, they are classified and presented within the operating, investing, financing, or income taxes categories. 2. Reclassification of share of profit in investments accounted for using the equity method：Under IFRS 18, the share of profit in investments accounted for using the equity method is presented within the investing category. 3. Reclassification of other investment income and expenses：Under IAS 1, interest and dividend income was presented within financial income. Under IFRS 18, it is presented as other investment income and expenses. Foreign exchange gains and losses