Interim report
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FASF MEMBERSHIP Consolidated Financial Results for the Six Months Ended June 30 , 2026 [ IFRS Accounting Standards ] Company name : Kao Corporation August 5 , 2026 Tokyo Stock Exchange in Japan Stock code : 4452 Representative : ( URL : www.kao.com/global/en/investor-relations/library/results/ ) Yoshihiro Hasebe , President and CEO Contact person : Yoshimasa Minegishi , Vice President , Financial Controllers , Global Telephone : + 81-3-3660-7111 Scheduled date to file semi - annual securities report : August 7 , 2026 Scheduled commencement date for dividend payments : September 1 , 2026 Preparation of supplementary material on financial results : Yes Financial results information meeting : Yes ( for institutional investors and analysts ) ( Amounts less than one million yen are rounded ) 1. Consolidated financial results for the six months ended June 30 , 2026 ( from January 1 , 2026 to June 30 , 2026 ) ( 1 ) Consolidated operating results ( Percentages indicate year - on - year changes ) Net sales Operating income Income before income taxes Net income Six months ended Millions of yen % Millions of yen June 30 , 2026 June 30 , 2025 871,934 809,022 7.8 2.7 95,831 69,184 38.5 % Millions of yen 97,319 71,768 35.6 % Millions of yen 66,232 49,465 % 33.9 10.4 Net income attributable to owners of the parent per share Six months ended Millions of yen % Millions of yen % June 30 , 2026 June 30 , 2025 65,662 49,631 32.3 90,606 369.1 14.3 19,316 ( 83.0 ) Notes : Comprehensive income Basic earnings Diluted earnings per share Yen 72.58 53.42 1. Due to early adoption of IFRS 18 " Presentation and Disclosure in Financial Statements " ( hereinafter , " IFRS 18 " ) in the three months ended March 31 , 2026 , operating income and income before income taxes for the six months ended June 30 , 2025 , are presented as retrospectively adjusted figures reflecting the change in accounting policy , and year - on - year changes for the same period are not presented due to this retrospective adjustment . 2. Kao Corporation ( the " Company " ) has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1 , 2026. Basic earnings per share is calculated assuming that this share split had been conducted at the beginning of the previous fiscal year . ( 2 ) Consolidated financial position Yen As of June 30 , 2026 December 31 , 2025 Total assets Total equity Millions of yen 1,898,353 1,875,054 Millions of yen 1,149,540 1,094,700 Equity attributable to owners of the parent Millions of yen 1,119,449 1,064,077 Ratio of equity attributable to owners of the parent to total assets % 59.0 56.7 Equity attributable to owners of the parent per share Yen 1,237.29 1,176.25 Note : The Company has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1 , 2026. Equity attributable to owners of the parent per share is calculated assuming that this share split had been conducted at the beginning of the previous fiscal year . ( Remainder of page intentionally left blank . )
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2. Dividends Annual cash dividends per share 1st quarter end 2nd quarter end 3rd quarter end Fiscal year end Total Yen Yen Yen Yen Yen Fiscal year ended December 31, 2025 － 77.00 － 77.00 154.00 Fiscal year ending December 31, 2026 － 78.00 Fiscal year ending December 31, 2026 (Forecast) － 39.00 － N otes: 1. Revisions to the most recently announced forecast of cash dividends: None 2. The Company has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1, 2026. The second quarter-end dividend per share for the fiscal year ending December 31, 2026, is presented as the actual amount prior to the share split, while the forecast fiscal year-end dividend per share is presented on a post-share split basis. The forecast of total annual cash dividends per share for the fiscal year ending December 31, 2026, has not been presented as the implementation of the share split makes a simple aggregation of the second quarter -end dividend and the year -end dividend impracticable. If the share split were not taken into account, the forecast year -end dividend per share for the fiscal year ending December 31, 2026, would be 78.00 yen, and total annual cash dividends per share would be 156.00 yen. 3. F orecast of consolidated operating results for the fiscal year ending December 31, 2026 (from January 1, 2026 to December 31, 2026) (Percentages indicate year-on-year changes) Net sales Operating income Income before income taxes Net income attributable to owners of the parent Basic earnings per share Fiscal year ending Millions of yen ％ Millions of yen ％ Millions of yen ％ Millions of yen ％ Yen December 31, 2026 1,800,000 6.6 190,000 16.2 193,000 13.6 135,000 12.4 149.21 N otes: 1. Revisions to the most recently announced forecast of consolidated operating results: Yes 2. The Kao Group early adopted IFRS 18 in the three months ended March 31, 2026, and year -on-year changes in operating income and income before income taxes are presented as percentages calculated based on retrospectively adjusted amounts due to the application of this Standard. 3. The Company has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1, 2026. Basic earnings per share in the forecast of consolidated operating results for the fiscal year ending December 31, 2026 takes into account the impact of the share split. If the share split were not taken into account, basic earnings per share would be 298.42 yen. 4. O thers (1) Significant changes in the scope of consolidation during the period: None Newly included: － companies (Company name) － Excluded: － companies (Company name) － (2) Changes in accounting policies and changes in accounting estimates 1) Changes in accounting policies required by IFRS Accounting Standards ： None 2) Changes in accounting policies due to reasons other than 1) ： Yes For details, please refer to page 17, “Changes in Accounting Policies” in “2. Condensed Consolidated Financial Statements and Notes, (6) Notes to Condensed Consolidated Financial Statements. ” 3) Changes in accounting estimates ： None (3) Number of issued shares (ordinary shares) 1) Total number of issued shares at the end of the period (including treasury shares) As of June 30, 2026 907,200,000 shares As of December 31, 2025 907,200,000 shares 2) Number of treasury shares at the end of the period As of June 30, 2026 2,442,006 shares As of December 31, 2025 2,562,888 shares 3) Average number of shares outstanding during the period Six months ended June 30, 2026 904,673,138 shares Six months ended June 30, 2025 928,997,513 shares
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Note: The Company has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1, 2026. Total number of issued shares at the end of the period (including treasury shares), number of treasury shares at the end of the period and average number of shares outstanding during the period are calculated assuming that this share split had been conducted at the beginning of the previous fiscal year. S emi-annual financial results reports are exempt from review conducted by certified public accountants or an audit firm. Explanation regarding the appropriate use of forecast of operating results and other special items (Caution regarding forward-looking statements, etc.) Forward-looking statements such as earnings forecasts and other projections contained in this release are based on information available at the time of disclosure and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may differ materially from expectations due to various factors. Please refer to page 9, “1. Qualitative Information on Financial Results for the Six Months Ended June 30, 2026, (2 ) Description of Information on Outlook, Including Forecasts of Consolidated Results ” for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecasts. ( Remainder of page intentionally left blank.)
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Contents of Attachments 1. Qualitative Information on Financial Results for the Six Months Ended June 30, 2026 ……………… 2 (1) Description of Operating Results ………………………………………………………………………………… 2 (2) Description of Information on Outlook, Including Forecasts of Consolidated Results …………… 9 2. Condensed Consolidated Financial Statements and Notes ………………………………………………… 10 (1) Condensed Consolidated Statement of Financial Position ……………………………………………… 10 (2) Condensed Consolidated Statement of Income …………………………………………………………… 12 (3) Condensed Consolidated Statement of Comprehensive Income ……………………………………… 13 (4) Condensed Consolidated Statement of Changes in Equity ……………………………………………… 14 (5) Condensed Consolidated Statement of Cash Flows ……………………………………………………… 16 (6) Notes to Condensed Consolidated Financial Statements ………………………………………………… 17 (7) Note regarding Assumption of Going Concern ……………………………………………………………… 23 - 1 - Six Months Ended June 30, 2026
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1. Qualitative Information on Financial Results for the Six Months Ended June 30, 20 26 (1) D escription of Operating Results Note: Changes and comparisons are all with the same period a year earlier unless otherwise noted. Like- for-like growth rates below exclude the effect of translation of local currencies into Japanese yen. Growth by volume includes changes due to differences in product mix. Due to early adoption of I FRS 18 “Presentation and Disclosure in Financial Statements” in the three months ended March 31, 2026, operating income and income before income taxes for the six months ended June 30, 2025, are presented as retrospectively adjusted figures reflecting the change in accounting policy. Kao Corporation (the “Company”) has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1, 2026. Basic earnings per share is calculated as if this share split had been conducted at the beginning of the previous fiscal year. (Billions of yen, except operating margin and per share amounts) Six months ended June 30 2026 2025 Growth Net sales 871.9 809.0 7.8% Like-for-like: 3.4% Operating income 95.8 69.2 38.5% Operating margin (%) 11.0 8.6 - Income before income taxes 97.3 71.8 35.6% Net income 66.2 49.5 33.9% Net income attributable to owners of the parent 65.7 49.6 32.3% Basic earnings per share (Yen) 72.58 53.42 35.9% The glo bal economy continues to grow moderately, driven by AI-related investment and demand for semiconductors. At the same time, ongoing tensions in the Middle East have led to higher energy prices and disruptions in global supply chains, while raw material markets remain unstable. The Japanese economy has been supported by sustained wage increases and capital investment. However, personal consumption still lacks strength due to the impact of rising prices. The recovery remains gradual. Household and personal care products and cosmetics in Japan are the Kao Group’s key markets, and during the period from January to June 2026, the household and personal care products market grew compared with the same period a year earlier according to both retail sales performance and consumer purchasing survey data. In the cosmetics market, retail sales performance increased, but consumer purchasing survey data indicate that demand in Japan decreased compared with the same period a year earlier. Under these conditions, the Kao Group has been addressing critical social issues to further enhance the sustainability of its earning power, centered on the Group’s Exclusive Uniqueness, as it works to successfully carry out its Mid-term Plan 2027 (“K27”) and build a foundation for step-change growth thereafter. - 2 - Six Months Ended June 30, 2026
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Net sales incr eased 7.8% compared with the same period a year earlier to 871.9 billion yen. Currency translation accounted for a 4.4% increase and net sales increased 3.4% on a like-for-like basis (breakdown of the increase: 1.3% increase by volume, 2.1% increase by price). Operating income was 95.8 billion yen, an increase of 26.6 billion yen. The increase in operating income was due to continued growth in the Global Consumer Care Business both in and outside Japan, as well as improved profitability in the Chemical Business. In addition, the Kao Group sold land in the first quarter as part of logistics optimization, and recognized a gain on sale of 11.5 billion yen. Income before income taxes was 97.3 billion yen, an increase of 25.6 billion yen, and net income was 66.2 billion yen, an increase of 16.8 billion yen. The main exchange rates used for translating the financial statement items (income and expenses) of foreign consolidated subsidiaries and associates were as shown below. First quarter Jan. – Mar. Second quarter Apr. – Jun. U.S. dollar 156.81 (152.65) 159.40 (144.49) Euro 183.57 (160.48) 185.34 (163.73) Chinese yuan 22.64 (20.98) 23.42 (19.98) Note: Figures in parentheses represent the exchange rates for the same period a year earlier. Summar y of Segment Information Consolidated Results by Segment (Remainder of page intentionally left blank) (Billions of yen) Operating margin (%) (Billions of yen) Operating margin (%) Fabric and Home Care Products 178.2 189.0 6.1 5.1 31.2 17.5 34.7 18.4 3.5 Sanitary Products 79.6 81.7 2.6 (1.3) 4.3 5.4 4.4 5.4 0.1 257.8 270.7 5.0 3.1 35.6 13.8 39.2 14.5 3.6 211.5 228.6 8.1 3.6 18.2 8.6 19.9 8.7 1.7 118.5 131.0 10.5 6.7 0.3 0.3 5.8 4.4 5.4 18.0 19.2 6.4 6.2 0.4 2.3 0.8 4.4 0.4 605.8 649.5 7.2 4.1 54.6 9.0 65.7 10.1 11.1 226.0 247.2 9.4 1.8 14.3 6.3 18.1 7.3 3.7 831.9 896.7 7.8 3.5 68.9 - 83.8 - 14.9 (22.8) (24.8) - - 0.3 - 12.1 - 11.8 809.0 871.9 7.8 3.4 69.2 8.6 95.8 11.0 26.6 Operating income Change (Billions of yen) 2025 (Billions of yen) 2026 (Billions of yen) Growth (%) Like-for- like (%) 2025 2026 Hygiene Living Care Business Elimination and Reconciliation Consolidated Six months ended June 30 Net sales Health Beauty Care Business Cosmetics Business Total Chemical Business Business Connected Business Global Consumer Care Business - 3 - Six Months Ended June 30, 2026
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Consolidated Net Sales Composition Notes: 1. Figures for the Global Consumer Care Business present sales to external customers and figures for the Chemical Business include sales to the Global Consumer Care Business in addition to external customers. Sales by geographic region are classified based on the location of the sales recognized. 2. The percentage of sales outside Japan to total net sales was 45.4% compared with 44.2% in the same period a year earlier. (Billions of yen) Japan Asia Americas Europe Consolidated 2025 156.8 19.9 1.5 - 178.2 2026 167.4 20.1 1.5 - 189.0 Growth (%) 6.8 0.8 3.8 - 6.1 Like-for-like (%) 6.8 (7.1) (12.1) - 5.1 2025 36.0 43.6 - - 79.6 2026 34.2 47.5 - - 81.7 Growth (%) (5.1) 8.9 - - 2.6 Like-for-like (%) (5.1) 1.9 - - (1.3) 2025 192.8 63.5 1.5 - 257.8 2026 201.6 67.6 1.5 - 270.7 Growth (%) 4.6 6.4 3.8 - 5.0 Like-for-like (%) 4.6 (0.9) (12.1) - 3.1 2025 107.4 17.9 55.7 30.6 211.5 2026 113.2 20.3 62.3 32.9 228.6 Growth (%) 5.4 13.4 11.9 7.6 8.1 Like-for-like (%) 5.4 5.9 4.2 (4.9) 3.6 2025 81.4 21.4 3.4 12.3 118.5 2026 86.8 27.2 3.5 13.4 131.0 Growt h (%) 6.7 27.2 2.5 8.9 10.5 Like-for-like (%) 6.7 14.2 (3.6) (2.9) 6.7 2025 17.9 0.1 - - 18.0 2026 18.8 0.4 - - 19.2 Growth (%) 5.1 220.7 - - 6.4 Like-for-like (%) 5.1 186.6 - - 6.2 2025 399.5 102.9 60.6 42.9 605.8 2026 420.4 115.4 67.4 46.3 649.5 Growth (%) 5.2 12.2 11.2 8.0 7.2 Like-for-like (%) 5.2 3.6 3.4 (4.4) 4.1 2025 72.0 59.6 43.8 50.6 226.0 2026 76.8 67.3 47.3 55.8 247.2 Growth (%) 6.8 12.9 7.9 10.3 9.4 Like-for-like (%) 6.8 2.9 (2.1) (3.1) 1.8 2025 (19.7) (1.6) (0.1) (1.5) (22.8) 2026 (21.1) (2.0) (0.1) (1.6) (24.8) 2025 451.8 161.0 104.2 92.1 809.0 2026 476.1 180.7 114.5 100.6 871.9 Growth (%) 5.4 12.2 9.9 9.3 7.8 Like-for-like (%) 5.4 3.2 1.2 (3.6) 3.4 Elimination of intersegment Consolidated Six months ended June 30 Fabric and Home Care Products Sanitary Products Hygiene Living Care Business Health Beauty Care Business Cosmetics Business Business Connected Business Global Consumer Care Business Chemical Business - 4 - Six Months Ended June 30, 2026
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Analysis of Change in Net Sales Compared with the Same Period a Year Earlier Note: Chemical Business sales include intersegment transactions. Global Consumer Care Business Sales increased 7.2% compared with the same period a year earlier to 649.5 billion yen. Currency translation accounted for a 3.1% increase and sales increased 4.1% on a like-for-like basis (breakdown of the increase: 2.7% increase by volume, 1.4% increase by price). Globally, in addition to rising raw material prices and logistics costs, among other impacts from the situation in the Middle East, there was a growing consumer tendency to economize. Market conditions also remained unclear in Japan, with consumers becoming increasingly selective, driven by continually rising prices. Under these circumstances, the Kao Group worked to expand global sales by offering high- value-added products, increasing selling prices in line with that added value, and enhancing marketing capabilities through the use of digital technologies and AI. The Kao Group also worked to ensure stable supply through its flexible procurement and production network. As a result, sales in Japan increased 5.2% to 420.4 billion yen. Sales in Asia increased 12.2% to 115.4 billion yen. On a like-for-like basis, sales increased 3.6%. Sales in the Americas increased 11.2% to 67.4 billion yen. On a like-for-like basis, sales increased 3.4%. Sales in Europe increased 8.0% to 46.3 billion yen. On a like-for-like basis, sales decreased 4.4%. Operating income increased 11.1 billion yen compared with the same period a year earlier to 65.7 billion yen due to the contribution of increased sales volume and improved earning power. Note: The Kao Group’s Global Consumer Care Business consists of the Hygiene Living Care Business, the Health Beauty Care Business, the Cosmetics Business and the Business Connected Business. By Volume (%) By Price (%) Fabric and Home Care Products 6.1 1.0 5.1 1.6 3.5 Sanitary Products 2.6 3.9 (1.3) (0.6) (0.7) 5.0 1.9 3.1 0.9 2.2 8.1 4.5 3.6 3.0 0.6 10.5 3.8 6.7 5.9 0.8 6.4 0.2 6.2 4.2 2.0 7.2 3.1 4.1 2.7 1.4 9.4 7.5 1.8 (1.8) 3.6 7.8 4.4 3.4 1.3 2.1 Global Consumer Care Business Chemical Business Total Change (%) Currency Translation (%) Like-for-Like (%) Hygiene Living Care Business Health Beauty Care Business Cosmetics Business Business Connected Business - 5 - Six Months Ended June 30, 2026
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Hygiene Living Care Business Sales increased 5.0% compared with the same period a year earlier to 270.7 billion yen. Currency translation accounted for a 1.9% increase and sales increased 3.1% on a like-for-like basis (breakdown of the increase: 0.9% increase by volume, 2.2% increase by price). Sales of fabric and home care products increased 6.1% to 189.0 billion yen. Currency translation accounted for a 1.0% increase and sales increased 5.1% on a like-for-like basis (breakdown of the increase: 1.6% increase by volume, 3.5% increase by price). Sales of fabric care products increased. In Japan, laundry detergents contributed to increased sales volume and market share expansion, due in part to market growth as well as the effect of selling price increases for high-value-added products. Sales of home care products increased. Sales in Japan were strong due to the contribution of innovative products that have created new market demand, among other factors. Operating income for fabric and home care products increased 3.5 billion yen to 34.7 billion yen. Sales of sanitary products increased 2.6% to 81.7 billion yen. Currency translation accounted for a 3.9% increase and sales decreased 1.3% on a like-for-like basis (breakdown of the decrease: 0.6% decrease by volume, 0.7% decrease by price). Sales of Laurier sanitary napkins increased. Sales grew in China and other countries, reflecting the success of globally integrated operations and loyalty marketing initiatives. Sales of Merries baby diapers decreased due to the impact of aggressive competition in Japan, among other factors, although signs of a recovery were apparent in Indonesia. Operating income for sanitary products was 4.4 billion yen, an increase of 0.1 billion yen. Operating income for the Hygiene Living Care Business increased 3.6 billion yen compared with the same period a year earlier to 39.2 billion yen. Health Beauty Care Business Sales increased 8.1% compared with the same period a year earlier to 228.6 billion yen. Currency translation accounted for a 4.5% increase and sales increased 3.6% on a like-for-like basis (breakdown of the increase: 3.0% increase by volume, 0.6% increase by price). Sales of skin care products increased. Sales in Japan and Asia increased, driven by UV care and other products from Bioré, which the Kao Group aims to roll out globally. Sales in the Americas also increased, supported by growth in sales of Bioré UV care products, as well as a recovery in sales of Bondi Sands. - 6 - Six Months Ended June 30, 2026
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Sales of hair care products increased. In Japan, premium hair care brand THE ANSWER and a new product from the Cape brand contributed to sales growth. Sales of professional hair care products (formerly products for hair salons) in the Americas and Europe decreased slightly, despite the growth of ORIBE in the Americas due to the expansion of e-commerce sales, as GOLDWELL was impacted by factors including an economic downturn in Europe. Sales of personal health products increased due to strong sales of PureOra oral care products, among other products. Operating income increased 1.7 billion yen compared with the same period a year earlier to 19.9 billion yen. Cosmetics Business Sales increased 10.5% compared with the same period a year earlier to 131.0 billion yen. Currency translation accounted for a 3.8% increase and sales increased 6.7% on a like-for-like basis (breakdown of the increase: 5.9% increase by volume, 0.8% increase by price). Sales in Japan increased substantially, driven by strong performance among the six focus brands. Growth of the Curél derma care brand significantly outpaced the market, driven by the success of new products and a seasonal promotion. For the KATE makeup brand, increased brand awareness resulting from a new product promotion and expanded shelf space secured through initiatives with retailers contributed significantly to increased sales. Sales in Asia increased substantially, led by China, where initiatives to strengthen the earnings base progressed, and Thailand, where efforts focused on nurturing KATE and the KANEBO prestige skincare and makeup brand. In Europe, although the Kao Group stepped up its rollout of Curél, sales decreased due to the impact of a market slowdown. Operating income increased 5.4 billion yen compared with the same period a year earlier to 5.8 billion yen. Business Connected Business Sales increased 6.4% compared with the same period a year earlier to 19.2 billion yen. Currency translation accounted for a 0.2% increase and sales increased 6.2% on a like-for-like basis (breakdown of the increase: 4.2% increase by volume, 2.0% increase by price). Sales of commercial-use hygiene products increased. Higher demand resulted in strong sales of kitchen cleaning agents and cleaning products in the food service and nursing care sectors, as well as guest room amenities in the lodging and leisure sector. Operating income increased 0.4 billion yen compared with the same period a year earlier to 0.8 billion yen. - 7 - Six Months Ended June 30, 2026
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Chemical Business Sales increased 9.4% compared with the same period a year earlier to 247.2 billion yen. Currency translation accounted for a 7.5% increase and sales increased 1.8% on a like-for-like basis (breakdown of the increase: 1.8% decrease by volume, 3.6% increase by price). In oleo chemicals, sales decreased due to the impact of inventory adjustments by customers outside Japan, despite the contribution from selling price adjustments implemented in response to rising prices for fat and oil raw materials. In consumer care chemicals, sales increased due to the substantial contribution from selling price adjustments implemented in response to rising prices for fat and oil raw materials. In performance chemicals, sales increased, supported by demand from key application sectors, as well as the contribution from the effects of selling price adjustments. In information materials, sales grew as a result of steadily capturing firm demand in the semiconductor- related, hard disk and other target sectors. Operating income increased 3.7 billion yen compared with the same period a year earlier to 18.1 billion yen. Despite the impact of a decline in demand in some target sectors and rising raw material prices, income increased due to improved margins mainly for oleo chemicals and expanded sales of high-value- added products in the electronic materials sector, together with the impact of accounting treatment for unrealized gains. (Remainder of page intentionally left blank) - 8 - Six Months Ended June 30, 2026
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(2) Description of Information on Outlook, Including Forecasts of Consolidated Results Revised Forecast of Consolidated Operating Results for the Fiscal Year Ending December 31, 2026 Due to early adoption of IFRS 18 “Presentation and Disclosure in Financial Statements” in the three months ended March 31, 2026, operating income and income before income taxes under “(Reference) Results for the previous fiscal year (ended December 31, 2025)” are presented as retrospectively adjusted figures reflecting the change in accounting policy. The Company has conducted a share split at a ratio of two shares for each ordinary share on the effective date of July 1, 2026. Basic earnings per share is calculated as if this share split had been conducted at the beginning of the previous fiscal year. (Billions of yen, except per share amounts) Net sales Operating income Income before income taxes Net income attributable to owners of the parent Basic earnings per share (Yen) Previously announced forecast (A) * 1,750.0 182.0 185.0 130.0 143.70 Revised forecast (B) 1,800.0 190.0 193.0 135.0 149.21 Change (B-A) 50.0 8.0 8.0 5.0 5.51 Percentage change (%) 2.9 4.4 4.3 3.8 3.8 (Reference) Results for the previous fiscal year (ended December 31, 2025) 1,688.6 163.5 169.9 120.1 130.15 * Forecast of consolidated operating results for the fiscal year ending December 31, 2026, announced on May 12, 2026 The Kao Group is further enhancing the sustainability of its earning power to accelerate its shift toward growth. By ensuring the achievement of its Mid-term Plan 2027 (“K27”) and building a foundation for step-change growth thereafter, the Kao Group has made greater progress than planned during the six months ended June 30, 2026. Under these conditions, ongoing tensions in the Middle East are expected to create an uncertain business environment, reflecting a slowdown in the global economy and rising raw material and international supply chain costs. However, the Kao Group will mitigate the impact by leveraging its global procurement and production network, reducing costs, and implementing selling price pass-through, among other measures. Accordingly, the Kao Group has revised the forecast of consolidated results announced on May 12, 2026 as shown above. The main exchange rates used in the forecast of consolidated results are one U.S. dollar to 157 yen, one euro to 182 yen and one Chinese yuan to 22.8 yen. (Remainder of page intentionally left blank) - 9 - Six Months Ended June 30, 2026
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2. Condensed Consolidated Financial Statements and Notes (1) Condensed Consolidated Statement of Financial Position Kao Corporation and Consolidated Subsidiaries As of June 30, 2026 (Millions of yen) December 31, 2025 June 30, 2026 Change Assets Current assets Cash and cash equivalents 323,282 326,659 3,377 Trade and other receivables 245,286 244,259 (1,027) Inventories 292,366 317,472 25,106 Other financial assets 10,925 10,181 (744) Income tax receivables 5,469 5,936 467 Other current assets 26,906 32,337 5,431 Subtotal 904,234 936,844 32,610 Non-current assets held for sale 1,658 1,781 123 Total current assets 905,892 938,625 32,733 Non-current assets Property, plant and equipment 443,080 435,603 (7,477) Right-of-use assets 113,218 106,253 (6,965) Goodwill 231,071 235,558 4,487 Intangible assets 79,471 77,881 (1,590) Investments accounted for using the equity method 15,616 16,564 948 Other financial assets 29,639 29,632 (7) Deferred tax assets 43,303 43,988 685 Other non-current assets 13,764 14,249 485 Total non-current assets 969,162 959,728 (9,434) Total assets 1,875,054 1,898,353 23,299 - 10 - Six Months Ended June 30, 2026
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(Millions of yen) December 31, 2025 June 30, 2026 Change Liabilities and equity Liabilities Current liabilities Trade and other payables 270,149 272,708 2,559 Bonds and borrowings 26,059 51,738 25,679 Lease liabilities 20,878 20,396 (482) Other financial liabilities 7,623 386 (7,237) Income tax payables 31,824 29,679 (2,145) Provisions 1,362 752 (610) Contract liabilities 43,342 42,833 (509) Other current liabilities 116,958 101,552 (15,406) Total current liabilities 518,195 520,044 1,849 Non-current liabilities Bonds and borrowings 105,599 80,574 (25,025) Lease liabilities 90,606 84,499 (6,107) Other financial liabilities 6,543 6,736 193 Retirement benefit liabilities 36,686 34,472 (2,214) Provisions 6,934 6,960 26 Deferred tax liabilities 10,829 10,903 74 Other non-current liabilities 4,962 4,625 (337) Total non-current liabilities 262,159 228,769 (33,390) Total liabilities 780,354 748,813 (31,541) Equity Share capital 85,424 85,424 － Capital surplus 106,398 106,308 (90) Treasury shares (5,125) (4,704) 421 Other components of equity 160,759 184,890 24,131 Retained earnings 716,621 747,531 30,910 Equity attributable to owners of the parent 1,064,077 1,119,449 55,372 Non-controlling interests 30,623 30,091 (532) Total equity 1,094,700 1,149,540 54,840 Total liabilities and equity 1,875,054 1,898,353 23,299 - 11 - Six Months Ended June 30, 2026
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(2) Condensed Consolidated Statement of Income Kao Corporation and Consolidated Subsidiaries Six months ended June 30, 2026 (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Change Notes Net sales 2 809,022 871,934 62,912 Cost of sales (497,196) (524,724) (27,528) Gross profit 311,826 347,210 35,384 Selling, general and administrative expenses 3 (243,292) (263,972) (20,680) Other operating income 8,810 21,314 12,504 Other operating expenses (8,160) (8,721) (561) Operating income 2 69,184 95,831 26,647 Share of profit in investments accounted for using the equity method 1,784 1,634 (150) Other investment income and expenses (1,373) 2,714 4,087 Income before financing and income taxes 69,595 100,179 30,584 Financial income 3,965 9 (3,956) Financial expenses (1,792) (2,869) (1,077) Income before income taxes 71,768 97,319 25,551 Income taxes (22,303) (31,087) (8,784) Net income 49,465 66,232 16,767 Attributable to: Owners of the parent 49,631 65,662 16,031 Non-controlling interests (166) 570 736 Net income 49,465 66,232 16,767 Earnings per share Basic (Yen) 53.42 72.58 Diluted (Yen) － － - 12 - Six Months Ended June 30, 2026
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(3) Condensed Consolidated Statement of Comprehensive Income Kao Corporation and Consolidated Subsidiaries Six months ended June 30, 2026 (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Change Net income 49,465 66,232 16,767 Other comprehensive income Items that will not be reclassified to profit or loss: Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income 186 (171) (357) Remeasurements of defined benefit plans (28) － 28 Share of other comprehensive income of investments accounted for using the equity method 45 1,747 1,702 Total of items that will not be reclassified to profit or loss 203 1,576 1,373 Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations (29,889) 22,591 52,480 Share of other comprehensive income of investments accounted for using the equity method (463) 207 670 Total of items that may be reclassified subsequently to profit or loss (30,352) 22,798 53,150 Other comprehensive income, net of taxes (30,149) 24,374 54,523 Comprehensive income 19,316 90,606 71,290 Attributable to: Owners of the parent 21,192 89,891 68,699 Non-controlling interests (1,876) 715 2,591 Comprehensive income 19,316 90,606 71,290 - 13 - Six Months Ended June 30, 2026
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(4) Condensed Consolidated Statement of Changes in Equity Kao Corporation and Consolidated Subsidiaries Six months ended June 30, 2025 (Millions of yen) Equity attributable to owners of the parent Share capital Capital surplus Treasury shares Other components of equity Exchange differences on translation of foreign operations Net gain (loss) on derivatives designated as cash flow hedges Net gain (loss) on revaluation of financial assets measured at fair value through other com- prehensive income January 1, 2025 85,424 106,256 (5,924) 124,321 6 7,912 Net income － － － － － － Other comprehensive income － － － (28,646) 3 232 Comprehensive income － － － (28,646) 3 232 Disposal of treasury shares － (320) 363 － － － Purchase of treasury shares － － (6) － － － Share-based payment transactions － 342 － － － － Dividends － － － － － － Changes in the ownership interest in subsidiaries － (122) － － － － Transfer from other components of equity to retained earnings － － － － － (116) Total transactions with the owners － (100) 357 － － (116) June 30, 2025 85,424 106,156 (5,567) 95,675 9 8,028 Equity attributable to owners of the parent Non- controlling interests Total equity Other components of equity Retained earnings Total Remeasure- ments of defined benefit plans Total January 1, 2025 － 132,239 748,781 1,066,776 32,059 1,098,835 Net income － － 49,631 49,631 (166) 49,465 Other comprehensive income (28) (28,439) － (28,439) (1,710) (30,149) Comprehensive income (28) (28,439) 49,631 21,192 (1,876) 19,316 Disposal of treasury shares － － (42) 1 － 1 Purchase of treasury shares － － － (6) － (6) Share-based payment transactions － － － 342 － 342 Dividends － － (35,304) (35,304) (1,655) (36,959) Changes in the ownership interest in subsidiaries － － － (122) (971) (1,093) Transfer from other components of equity to retained earnings 28 (88) 88 － － － Total transactions with the owners 28 (88) (35,258) (35,089) (2,626) (37,715) June 30, 2025 － 103,712 763,154 1,052,879 27,557 1,080,436 - 14 - Six Months Ended June 30, 2026
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Six months ended June 30, 2026 (Millions of yen) Equity attributable to owners of the parent Share capital Capital surplus Treasury shares Other components of equity Exchange differences on translation of foreign operations Net gain (loss) on derivatives designated as cash flow hedges Net gain (loss) on revaluation of financial assets measured at fair value through other com- prehensive income January 1, 2026 85,424 106,398 (5,125) 150,503 6 10,250 Net income － － － － － － Other comprehensive income － － － 22,653 － 1,576 Comprehensive income － － － 22,653 － 1,576 Disposal of treasury shares － (414) 427 － － － Purchase of treasury shares － － (6) － － － Share-based payment transactions － 324 － － － － Dividends － － － － － － Transfer from other components of equity to retained earnings － － － － － (98) Total transactions with the owners － (90) 421 － － (98) June 30, 2026 85,424 106,308 (4,704) 173,156 6 11,728 Equity attributable to owners of the parent Non- controlling interests Total equity Other components of equity Retained earnings Total Remeasure- ments of defined benefit plans Total January 1, 2026 － 160,759 716,621 1,064,077 30,623 1,094,700 Net income － － 65,662 65,662 570 66,232 Other comprehensive income － 24,229 － 24,229 145 24,374 Comprehensive income － 24,229 65,662 89,891 715 90,606 Disposal of treasury shares － － (11) 2 － 2 Purchase of treasury shares － － － (6) － (6) Share-based payment transactions － － － 324 － 324 Dividends － － (34,839) (34,839) (1,247) (36,086) Transfer from other components of equity to retained earnings － (98) 98 － － － Total transactions with the owners － (98) (34,752) (34,519) (1,247) (35,766) June 30, 2026 － 184,890 747,531 1,119,449 30,091 1,149,540 - 15 - Six Months Ended June 30, 2026
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(5) Condensed Consolidated Statement of Cash Flows Kao Corporation and Consolidated Subsidiaries Six months ended June 30, 2026 (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Cash flows from operating activities Operating income 69,184 95,831 Depreciation and amortization 42,724 44,771 (Gains) losses on sale and disposal of property, plant and equipment, and intangible assets 1,400 (9,994) (Increase) decrease in trade and other receivables 8,911 6,319 (Increase) decrease in inventories (19,257) (20,760) Increase (decrease) in trade and other payables (5,543) 7,829 Increase (decrease) in retirement benefit liabilities (1,868) (2,283) Increase (decrease) in provisions (1,903) (651) Other (28,555) (31,520) Cash flows from operating activities before income taxes 65,093 89,542 Income taxes paid (22,241) (34,292) Net cash flows from operating activities 42,852 55,250 Cash flows from investing activities Payments into time deposits (3,665) (10,932) Proceeds from withdrawal of time deposits 9,519 11,566 Purchase of property, plant and equipment (28,763) (28,648) Proceeds from sale of property, plant and equipment 62 14,285 Purchase of intangible assets (4,730) (3,453) Interest received 1,795 1,505 Dividends received 3,103 3,586 Other 332 61 Net cash flows from investing activities (22,347) (12,030) Cash flows from financing activities Increase (decrease) in short-term borrowings 40 658 Proceeds from long-term borrowings 10,000 － Repayments of long-term borrowings (10,011) (12) Repayments of lease liabilities (10,973) (11,683) Interest paid (1,241) (1,652) Dividends paid to owners of the parent (35,345) (34,873) Dividends paid to non-controlling interests (947) (1,244) Other (953) 166 Net cash flows from financing activities (49,430) (48,640) Net increase (decrease) in cash and cash equivalents (28,925) (5,420) Cash and cash equivalents at the beginning of the period 357,713 323,282 Effect of exchange rate changes on cash and cash equivalents (7,208) 8,797 Cash and cash equivalents at the end of the period 321,580 326,659 Note: “Other” under cash flows from operating activities for the six months ended June 30, 2025, and the six months ended June 30, 2026, includes no items of material significance. - 16 - Six Months Ended June 30, 2026
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(6) Notes to Condensed Consolidated Financial Statements Changes in Accounting Policies Early Adoption of IFRS 18 “Presentation and Disclosure in Financial Statements” The Kao Group early adopted IFRS 18 “Presentation and Disclosure in Financial Statements” (issued in April 2024; hereinafter, “IFRS 18”) in the six months ended June 30, 2026. The Kao Group has applied the Standard retrospectively in accordance with the transitional provisions, and has also restated the comparative information in accordance with IFRS 18. In the first year of applying IFRS 18, entities are required to disclose a reconciliation for each line item in the consolidated statement of income for the immediately preceding comparative period, showing the restated amounts presented applying this Standard and the amounts previously presented applying IAS 1, “Presentation of Financial Statements” (hereinafter, “IAS 1”). The reconciliation of each line item in the condensed consolidated statement of income for the six months ended June 30, 2025 is as follows. Six months ended June 30, 2025 (Millions of yen) IAS 1 Reclassi- fication IFRS 18 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 Net income 49,465 － 49,465 Net income - 17 - Six Months Ended June 30, 2026
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Notes on the Reconciliation of Income and Expenses for the First Six Months of the Previous Fiscal Year (January 1, 2025 to June 30, 2025) (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. Foreign exchange differences arising from intragroup loans are classified in the same category in which the income and expenses arising from those loans would have been classified before their elimination on consolidation. (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. - 18 - Six Months Ended June 30, 2026
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1. Management-defined Performance Measures The Kao Group uses net operating profit after tax (hereinafter, “NOPAT”) as a management-defined performance measure. This measure presents management’s view of one aspect of overall financial performance. It is not defined by IFRS Accounting Standards and may not be comparable to similar measures used by other companies. The Kao Group uses Economic Value Added (hereinafter, “EVA®”) and Return on Invested Capital (hereinafter, “ROIC”), management indicators that take capital cost and capital efficiency into account, as its main performance measures and works to enhance its corporate value by improving EVA and ROIC. EVA is a registered trademark of Stern Stewart & Co. ROIC is a ratio metric obtained by dividing NOPAT by invested capital. NOPAT is calculated by adjusting net income for interest expenses after tax. The Kao Group’s management believes that NOPAT, as a performance measure used in the calculation of ROIC, provides useful information for understanding the Kao Group’s performance from the perspectives of capital cost and capital efficiency. The reconciliation between net income and NOPAT under IFRS Accounting Standards is as follows. Six months ended June 30, 2025 (Millions of yen) Income taxes2 Net income attributable to non- controlling interests Net income 49,465 Interest expenses1 285 (87) 1 Income taxes2 (87) － － NOPAT 49,663 Notes: 1. The adjustment to interest expenses is primarily attributable to bonds and borrowings and excludes interest expense on lease liabilities. Interest expenses are included in financial expenses in the consolidated statement of income. 2. The amount of income taxes is calculated primarily based on the statutory tax rate applicable in the tax jurisdiction where the relevant transaction occurs. Six months ended June 30, 2026 (Millions of yen) Income taxes2 Net income attributable to non- controlling interests Net income 66,232 Interest expenses1 567 (174) 7 Income taxes2 (174) － － NOPAT 66,625 Notes: 1. The adjustment to interest expenses is primarily attributable to bonds and borrowings and excludes interest expense on lease liabilities. Interest expenses are included in financial expenses in the consolidated statement of income. 2. The amount of income taxes is calculated primarily based on the statutory tax rate applicable in the tax jurisdiction where the relevant transaction occurs. - 19 - Six Months Ended June 30, 2026
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2. Segment Information (1) Summary of Reportable Segments The Kao Group’s reportable segments are the components of the Kao Group for which discrete financial information is available and are regularly reviewed by the Board of Directors in deciding how to allocate resources and in assessing their performance. Net sales and operating income are the key measures used by the Board of Directors to evaluate the performance of each segment. The Kao Group is organized on the basis of five businesses: the four business areas that constitute the Global Consumer Care Business (the Hygiene Living Care Business, the Health Beauty Care Business, the Cosmetics Business, and the Business Connected Business) and the Chemical Business. In each business, the Kao Group plans comprehensive business strategies and carries out business activities on a global basis. Accordingly, the Kao Group has five reportable segments: the Hygiene Living Care Business, the Health Beauty Care Business, the Cosmetics Business, the Business Connected Business, and the Chemical Business. The Kao Group early adopted IFRS 18 in the six months ended June 30, 2026. The Kao Group has applied the Standard retrospectively in accordance with the transitional provisions, and has also restated the comparative information in accordance with IFRS 18. Major products by reportable segment are as follows: Reportable segments Major products Global Consumer Care Business Hygiene Living Care Business Fabric care products Laundry detergents, fabric treatments Home care products Kitchen cleaning products, house cleaning products, paper cleaning products Sanitary products Sanitary napkins, baby diapers Health Beauty Care Business Skin care products Soaps, facial cleansers, body cleansers, UV care products Hair care products Shampoos, conditioners, hair styling agents, hair coloring agents, men’s products Personal health products Bath additives, oral care products, thermo products Cosmetics Business Cosmetics Counseling cosmetics, self-selection cosmetics Business Connected Business Commercial-use hygiene products, life care products Commercial-use hygiene products, life care products Chemical Business Oleo chemicals Oleochemicals, fat and oil derivatives Consumer care chemicals Surfactants and blending products, fragrances Performance chemicals Water-reducing admixture for concrete, casting sand binders, plastics additives, process chemicals for various industries Information materials Toners/Toner binders, inkjet ink colorants, ink, fine polishing agents and cleaner for hard disk, materials and process chemicals for semiconductor - 20 - Six Months Ended June 30, 2026
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(2) Sales and Results of Reportable Segments Six months ended June 30, 2025 (Millions of yen) Reportable segments Reconciliation1 Consolidated Global Consumer Care Business Chemical Business Total Hygiene Living Care Business Health Beauty Care Business Cosmetics Business Business Connected Business Subtotal Net sales Sales to customers 257,809 211,477 118,532 18,002 605,820 203,202 809,022 － 809,022 Intersegment sales and transfers2 － － － － － 22,847 22,847 (22,847) － Total net sales 257,809 211,477 118,532 18,002 605,820 226,049 831,869 (22,847) 809,022 Operating income 35,565 18,249 338 418 54,570 14,317 68,887 297 69,184 Share of profit in investments accounted for using the equity method 1,784 Other investment income and expenses (1,373) Income before financing and income taxes 69,595 Financial income 3,965 Financial expenses (1,792) Income before income taxes 71,768 Notes: 1. The operating income reconciliation of 297 million yen includes income and corporate expenses not allocated to reportable segments, as well as elimination of intersegment inventory transactions. 2. Intersegment sales and transfers are mainly calculated based on market price and manufacturing cost. - 21 - Six Months Ended June 30, 2026
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Six months ended June 30, 2026 (Millions of yen) Reportable segments Reconciliation1 Consolidated Global Consumer Care Business Chemical Business Total Hygiene Living Care Business Health Beauty Care Business Cosmetics Business Business Connected Business Subtotal Net sales Sales to customers 270,715 228,642 130,982 19,156 649,495 222,439 871,934 － 871,934 Intersegment sales and transfers2 － － － － － 24,809 24,809 (24,809) － Total net sales 270,715 228,642 130,982 19,156 649,495 247,248 896,743 (24,809) 871,934 Operating income 39,171 19,938 5,758 841 65,708 18,066 83,774 12,057 95,831 Share of profit in investments accounted for using the equity method 1,634 Other investment income and expenses 2,714 Income before financing and income taxes 100,179 Financial income 9 Financial expenses (2,869) Income before income taxes 97,319 Notes: 1. The operating income reconciliation of 12,057 million yen includes income and corporate expenses not allocated to reportable segments, as well as elimination of intersegment inventory transactions. 2. Intersegment sales and transfers are mainly calculated based on market price and manufacturing cost. - 22 - Six Months Ended June 30, 2026
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3. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of the following: (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Selling expenses Advertising 40,756 46,005 Sales promotion 26,183 29,518 Employee benefits 55,008 58,896 Depreciation 2,976 3,017 Amortization 1,508 1,669 Other selling expenses 16,864 19,504 Total selling expenses 143,295 158,609 General and administrative expenses Employee benefits1 32,950 35,444 Depreciation1 4,673 5,133 Amortization1 4,251 4,684 Research and development1 31,439 31,281 Other general and administrative expenses 26,684 28,821 Total general and administrative expenses 99,997 105,363 Total 243,292 263,972 Note: 1. Employee benefits, depreciation, and amortization related to research and development activities are included in research and development. (7) Note regarding Assumption of Going Concern None applicable. - 23 - Six Months Ended June 30, 2026