KAO Corporation Overview
Kao Corporation is Japan's largest household and personal-care manufacturer and a vertically integrated oleochemical producer. Its 139-year heritage in interface science underpins both its consumer brands and its industrial chemicals.
The group generated ¥1,688.6bn of net sales and ¥164.1bn of operating income in FY2025. About 57% of sales come from Japan, where Kao holds category-leading positions in laundry (Attack), dishwashing (Kyukyutto), sanitary products (Laurier, Merries), skin care (Bioré, Curél) and prestige cosmetics (Kanebo, Sofina, SENSAI, KATE).
Outside Japan, Kao competes in Asia, the Americas and EMEA through acquired Western brands (Jergens, John Frieda, Goldwell, Molton Brown, Oribe, Bondi Sands) and through a ¥405bn chemicals franchise. That chemicals business supplies fatty alcohols, surfactants, semiconductor and HDD process chemicals, and inkjet colourants.
Under the "K27" mid-term plan, Kao is recovering from its 2023 profit trough. It is targeting record operating income (above ¥211.7bn), ROIC of at least 11% and ¥800bn of overseas sales by 2027. Execution has been credible, while governance and supply-chain scrutiny from activist Oasis Management remains active.
What the company does
Kao manufactures and markets branded consumer products and industrial chemicals. Since the FY2025 re-segmentation it reports two business groups and five segments.
Global Consumer Care (GCC) — ¥1,283.0bn of sales in FY2025 (76.0% of the group). It has four segments:
Hygiene & Living Care: fabric care, home care and sanitary products.
Health & Beauty Care: skin care, hair care and related products.
Cosmetics: prestige and masstige make-up and skin care.
Business Connected: professional-use hygiene and co-created B2B solutions; formerly the core of the "Life Care" segment.
Chemical Business — ¥405.7bn of sales in FY2025 (24.0%). It covers oleochemicals, performance chemicals, specialty and information materials, and aroma chemicals.
Company's own description
Kao describes itself as a comprehensive consumer products and chemicals manufacturer. It says it is pursuing a "Global Sharp Top" strategy: becoming "a unique presence indispensable to someone in the world" by concentrating on businesses with high unmet needs, high profitability and global scalability (Kao Integrated Report 2025; K27 materials).
Kao frames its portfolio in three strategic layers:
Stable Earnings: Hygiene & Living Care, largely in Japan.
Growth Drivers: skin protection, focus cosmetics brands, premium hair care and high-value chemicals.
Business Transformation: under-performing or restructuring businesses.
Revenue model
| Revenue type | Share (FY2025, est. from segment mix) | Comment |
|---|---|---|
| Branded consumer product sales (B2C via retail) | ~73–74% | Drugstores, GMS/supermarkets, e-commerce and department stores (cosmetics) in Japan. Modern trade and e-commerce in Asia. Mass and specialty retail in the US/EU |
| Professional / B2B consumer-adjacent products | ~2.3% | Business Connected: hygiene for hospitals, restaurants and facilities |
| Salon / professional hair care | Within HBC | Goldwell, KMS and Oribe, sold through salons and distributors in the Americas and EMEA |
| Industrial chemical sales (B2B) | ~24% | Contract and spot sales to industrial customers. Partly priced off raw-material indices (palm kernel oil, coconut oil, petrochemicals) with lagged pass-through |
| Subscription / licensing | Not material | No disclosed licensing or subscription revenue lines |
Value-chain position
Kao is unusual among global FMCG peers in being backward-integrated into oleochemicals. It operates fatty-alcohol and fatty-acid production in Malaysia (Fatty Chemical (Malaysia) Sdn. Bhd.), the Philippines (Pilipinas Kao), Indonesia and Spain. These units feed its own surfactant needs and also sell externally.
This integration gives Kao cost and technology advantages in surfactants.
Customer types and end markets
| Customer type | End market | Representative brands / products |
|---|---|---|
| Households (mass) | Laundry, dishwashing, cleaning, diapers, feminine care | Attack, Humming, Kyukyutto, Magiclean, Quickle, Merries, Laurier |
| Individual consumers (beauty / personal care) | Skin care, sun care, hair care, body care, oral, bath | Bioré, Curél, Jergens, Bondi Sands, Segreta, Essential, Merit, Liese, melt, THE ANSWER, John Frieda, Guhl, bub, Ban |
| Prestige beauty consumers | Cosmetics, luxury skin care, fragrance | Kanebo, SENSAI, Sofina iP, KATE, Molton Brown, est, RMK, SUQQU, freeplus |
| Salons / stylists | Professional hair colour and care | Goldwell, KMS, Oribe |
| Hospitals, food service, institutions | Professional hygiene | Kao Professional Services products |
| Industrial customers | Personal-care and detergent manufacturers, plastics, construction, printing, electronics/semiconductors, HDD makers, fragrance | Fatty alcohols and amines, surfactants, concrete admixtures, asphalt modifiers, toner binders, inkjet colourants, semiconductor cleaning agents, HDD substrate polishing agents, aroma chemicals |
Independent characterisation
Kao is best understood as a Japan-centric household-products cash engine bolted to two option-value businesses: a turnaround-stage global cosmetics portfolio and a cyclical but technologically differentiated oleo/specialty-chemicals arm.
The stable core (Hygiene & Living Care, 14.8% operating margin in FY2025) funds reinvestment. The investment case therefore depends on whether cosmetics and overseas consumer care can scale to K27 targets without diluting returns.
Its ROIC-led capital discipline, introduced in August 2023, has been effective. Group operating margin has recovered from 3.9% (FY2023) to 9.7% (FY2025) and ~11% on a TTM basis by mid-2026.
Strategy
Stated strategy (K27, revised August 2023)
Vision: "Protecting Future Lives — Sustainability as the only path."
Basic policies: - become an essential company in a sustainable world;
-
transform to build robust business through investment;
-
maximise the power and potential of employees.
Four strategies: 1. Build "Global Sharp Top" businesses.
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Global Sharp Top human capital and organisational management, including agile scrum-team organisation.
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Improve capital efficiency and profitability through ROIC-based portfolio management.
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Build businesses through co-creation with partners.
K27 financial targets (FY2027) vs. progress
| Metric | FY2027 target | FY2025 actual | FY2026 guidance (Aug 2026) |
|---|---|---|---|
| ROIC (Kao definition) | ≥ 11.0% | — | — |
| EVA | ≥ ¥70.0bn | — | — |
| Operating income | Record high, i.e. > FY2019's ¥211.7bn | ¥164.1bn | ¥190.0bn |
| Sales outside Japan | ≥ ¥800bn (CAGR +2.4%) | ≈ ¥724bn (42.9% of sales) | — |
Kao uses a WACC of 5% for EVA (Kao EVA/ROIC disclosure, 8 May 2025).
Initiatives announced in the last 24 months
| Date | Initiative | Detail |
|---|---|---|
| Jul 2024 | Cosmetics brand-group reorganisation | Global Leading, Prestige and Masstige groups |
| 2,024 | Premium hair care launches | melt; THE ANSWER (Nov 2024) |
| Dec 2024 | Molton Brown Indonesia | Asian luxury fragrance expansion |
| 2,025 | Laurier integrated global operations / new brand communication in Asia | Sanitary turnaround in China |
| May 2025 | EVA/ROIC transparency release | Response to AGM questions |
| Aug 2025 | ¥80bn buyback | Up to 15m shares, Aug 2025–Jan 2026; completed (¥80.1bn in FY2025 cash flow) |
| Sep 2025 | Cosmetics strategy revamp | ¥400bn / 15% ambition; Japan-Origin (Curél), Europe-Origin (SENSAI, Molton Brown) and Asia (Sofina, Kanebo, KATE) models |
| Sep 2025 | ¥25bn 1.33% five-year bond | Refinancing |
| 2,025 | Future Origins NALO fatty-alcohol multi-year purchase agreement | Sustainable (non-palm) fatty-alcohol supply |
| 2,025 | New US tertiary-amine plant (reported) | Chemical capacity in the Americas |
| Feb 2026 | 2-for-1 stock split | Effective 1 Jul 2026 |
| Feb 2026 | GCC organisational integration across Japan, Asia, Americas and Europe; DX marketing; manufacturing step-up | Per Cosmetics Business coverage of FY2025 results |
| Q1 2026 | Logistics optimisation | Base reorganisation and land sales (¥11.5bn gain) |
| Aug 2026 | First-ever shareholder benefit programme | From the 31 Dec 2026 record date. 100–399 shares: lottery; 400+ shares: product set worth ¥6,000–10,000; lottery for on-site events |
| Aug 2026 | Curél Nordic expansion | Europe build-out |
| Ongoing | Kirei Lifestyle Plan decarbonisation | Carbon zero 2040, carbon negative 2050; internal carbon pricing |
Guidance
| Item | FY2026 guidance |
|---|---|
| Net sales | ¥1,800.0bn (+6.6%) |
| Operating income | ¥190.0bn (+16.2%; margin 10.6%) |
| Net income attributable | ¥135.0bn (+12.4%) |
| Basic EPS | ¥149.21 (post-split) |
| DPS | ¥78 post-split (≡ ¥156 pre-split); interim ¥39 |
FY2026 guidance as revised on 5 Aug 2026:
The original February 2026 guidance was net sales ¥1,750bn, operating income ¥182bn and net income ¥130bn (EPS ¥143.70).
Products & Services
Pricing models are not disclosed at brand level; Kao sells through wholesale and retail channels at suggested or open prices. Launch years are the original launch unless noted.
Hygiene & Living Care
| Brand / product | Description & capabilities | Target customer | Launch / latest | Flagship notes |
|---|---|---|---|---|
| Attack (incl. Attack ZERO, Attack Antibacterial EX) | Compact and liquid laundry detergents. ZERO uses Kao's Bio IOS surfactant technology | Japanese and Asian households | 1987; ZERO 2019; Antibacterial EX renewed 2024–25 | Japan's leading detergent; drove FY2025 share gains with ~3.4% effective price increase |
| Attack ZERO Perfect Stick | Pre-dosed laundry stick in low-plastic pouch (~64% less plastic vs. conventional packaging, per Kao) | Japanese households | 2,023 | Sustainability-led premiumisation |
| Humming / Humming Fine | Fabric softeners | Households | 1966 (Humming) | — |
| Emal | Delicate-wash detergent | Households | 1,964 | — |
| Kyukyutto | Dishwashing detergents (incl. Clear Foam spray) | Japanese households | 1995; spray formats 2019+ | Strong FY2025 and Q1 2026 growth |
| Magiclean / Bath Magiclean | Household cleaners | Households | 1990s | — |
| Quickle (incl. Quickle Wash Basin Cleaner) | Floor-cleaning wipes and basin cleaners | Households | 1994; basin cleaner sales resumed Nov 2025 | — |
| Laurier | Feminine care | Women in Japan and Asia (esp. China, ASEAN) | 1,978 | Integrated global operations launched in Asia (2025); China growth |
| Merries | Baby diapers | Parents in Japan, China, Indonesia, Russia | 1,983 | Under competitive pressure in Asia (Q1 2026 Asia real −6.1%) |
| Relief | Adult incontinence products | Elderly/caregivers in Japan | 1980s | Silver-economy exposure |
Health & Beauty Care
| Brand / product | Description | Target customer | Launch / latest | Notes |
|---|---|---|---|---|
| Bioré (incl. Bioré UV Aqua Rich) | Facial cleansers, pore care, sun care, body wash | Mass skin-care consumers in Japan, Asia, US, Europe | 1980; Bioré UV expanded to Europe 2023 | Global skin-protection pillar; UV care sales +9% in Q1 2025 |
| Jergens | Hand and body lotions, self-tan | US/UK mass market | Acquired 1988 | — |
| Bondi Sands | Self-tan, SPF and skin care | Australia, UK, US, Europe | Acquired 2023 | Strengthens global skin protection |
| Curél (partly managed by Cosmetics) | Ceramide-care dermo-cosmetic for sensitive skin | Sensitive-skin consumers in Japan, China, Europe | 1999; Europe rollout 2024–25; Nordic expansion Aug 2026 | Target: 50% of brand sales outside Japan by 2027 |
| Segreta, Essential, Merit, Liese, Success | Mass hair care and styling | Japanese and Asian consumers | Various (Merit 1970) | — |
| melt | Premium hair care | Japanese premium segment | 2,024 | Drove FY2025 Japan hair-care growth |
| THE ANSWER | Premium hair care (second premium launch) | Japanese premium segment | Nov 2024 | — |
| John Frieda | Hair care (Frizz Ease, Sheer Blonde) | US/UK/EU | Acquired 2002 | New products well received in 2024 |
| Guhl | Hair care | German-speaking Europe | Acquired via Goldwell era | — |
| Goldwell | Professional hair colour and care | Salons globally | Acquired 1989 | Weak US/EU salon sentiment in 2025 |
| KMS | Professional styling | Salons | Acquired (via Goldwell) | — |
| Oribe | Luxury salon hair care | Premium salons, specialty retail, e-commerce | Acquired 2018 | Strong 2025 growth via e-commerce |
| bub | Bath additives (carbonated tablets) | Japanese households | 1,983 | — |
| Clear Clean | Oral care | Japan | 1990s | — |
| Ban | Antiperspirant (Americas) | US | Held via Kao USA | — |
| Healthya | Functional beverages (catechins) | Health-conscious adults | 2,003 | Japan only |
Cosmetics (focus six brands per the September 2025 strategy, plus others)
| Brand | Positioning | Target / markets | Strategic model (Sep 2025) |
|---|---|---|---|
| SENSAI | Luxury skin care (silk-based) | Europe, Asia, travel retail | Europe-Origin model; target +150% Asia (incl. Japan) sales by 2027 vs 2024 |
| Molton Brown | Luxury fragrance, bath and body; hotel amenities | UK, EU, US, Asia (Malaysia 2024, Indonesia Dec 2024) | Europe-Origin; target +100% Asia sales by 2027 vs 2024. Own factory in Elsenham, UK |
| Kanebo | Prestige skin care and make-up | Japan, China, Thailand | Asia model; KANEBO/KATE Thailand target +150% |
| Sofina / Sofina iP | Science-based skin care | Japan, Asia | Asia model; Sofina Asia (ex-Japan) +~50% by 2027 |
| Curél | Dermo-cosmetic sensitive skin | Japan, China, UK/EU | Japan-Origin model; UK sales +70% YoY in H1 2025; 6× EU store presence |
| KATE | Masstige make-up | Japan, China, Thailand | Asia model |
| est, RMK, SUQQU, freeplus, Lissage, Allie | Prestige/masstige skin care, make-up and sun care | Japan, Asia | Non-focus; streamlining under brand consolidation |
Ambition: ¥400bn cosmetics sales and a 15% operating margin "at the earliest feasible timing after 2030" (Kao release, 19 Sep 2025). FY2025 actuals were ¥261.6bn of sales at a 4.0% margin.
Business Connected
| Offering | Description | Customer |
|---|---|---|
| Kao Professional Services hygiene solutions | Sanitisers, detergents, infection-control systems and hygiene consulting | Hospitals, care facilities, restaurants, food factories, hotels |
| Co-created B2B solutions | Joint development with partners using Kao technologies | Institutional partners |
Chemical Business
| Product line | Description / applications | Customers | Notes |
|---|---|---|---|
| Oleochemicals (fatty alcohols, fatty acids, glycerin, fatty amines/tertiary amines) | Raw materials for surfactants, cosmetics and lubricants | Global HPC manufacturers | Plants in Malaysia, Philippines, Indonesia and Spain. New US tertiary-amine capacity reported. Multi-year NALO fatty-alcohol purchase agreement with Future Origins (2025) |
| Surfactants & performance chemicals | Emulsifiers, dispersants and plastic additives | Consumer and industrial formulators | Bio IOS proprietary surfactant |
| Concrete admixtures (Mighty series) | Superplasticisers | Construction | — |
| Asphalt modifiers | Road durability (incl. recycled-PET-based modifier) | Road construction | — |
| Toner & toner binders | Imaging materials | Printer OEMs | — |
| Inkjet colourants and inks (incl. Collins Inkjet, acquired 2016) | Water/UV/solvent inks | Printhead and printing companies | — |
| Semiconductor process chemicals | Post-CMP and wafer cleaning agents | Semiconductor fabs | "AI-related" demand cited in 2024–26 |
| HDD substrate polishing agents | Polishing slurries for hard-disk substrates | HDD media makers | Solid demand in Q1 2026 |
| Aroma chemicals / fragrances | Fragrance ingredients and compounds | HPC and fine-fragrance makers | — |
| Textile/laundry chemicals (Washing Systems, acquired 2018) | Industrial laundry chemistry | Textile rental and laundries | — |
Financial Detail
Segment Overview
| Segment | Contents | Key products / brands |
|---|---|---|
Hygiene & Living Care | Fabric care (detergents, softeners), home care (dishwashing, cleaners, paper cleaning), sanitary (feminine care, baby diapers) | Attack, Attack ZERO, Humming, Emal, Kyukyutto, Magiclean, Quickle, Bath Magiclean, Laurier, Merries, Relief (adult care) |
Health & Beauty Care | Skin care, sun care, body care, hair care, oral/bath, men's, salon hair care | Bioré, Bioré UV, Jergens, Bondi Sands, Curél (some reporting), Segreta, Essential, Merit, Liese, melt, THE ANSWER, John Frieda, Guhl, bub, Clear Clean, Success, Goldwell, KMS, Oribe |
Cosmetics | Prestige and masstige cosmetics, skin care, fragrance | Kanebo, SENSAI, Sofina / Sofina iP, KATE, Curél (cosmetics-managed), Molton Brown, est, RMK, SUQQU, freeplus, Lissage, Allie |
Business Connected | Professional hygiene and co-created B2B solutions (formerly within Life Care) | Kao Professional Services sanitation and hygiene systems |
Chemical | Oleochemicals, performance chemicals, information materials, aroma chemicals | Fatty alcohols and amines, surfactants, Mighty concrete admixtures, asphalt modifiers, toner/binders, inkjet colourants, semiconductor and HDD process chemicals, fragrances |
Segment net sales (JPY Bn)
| Segment net sales (JPY Bn) | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Hygiene & Living Care (JPY Bn) | 522.5 | — | 549.3 |
Health & Beauty Care (JPY Bn) | 392.9 | 424.0 | 432.9 |
Cosmetics (JPY Bn) | 238.6 | 244.1 | 261.6 |
Life Care / Business Connected (JPY Bn) | 56.3 | — | 39.2 |
Global Consumer Care total (JPY Bn) | 1,210.3 | — | 1,283.0 |
Chemical (JPY Bn) | 366.1 | — | 405.7 |
Group net sales (JPY Bn) | 1,532.6 | 1,628.4 | 1,688.6 |
Segment operating income (JPY Bn)
| Segment operating income (JPY Bn) | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Hygiene & Living Care OI (JPY Bn) | — | — | 81.3 |
Health & Beauty Care OI (JPY Bn) | 40.4 | 34.4 | 39.1 |
Cosmetics OI (JPY Bn) | -5.4 | -3.7 | 10.4 |
Business Connected OI (JPY Bn) | — | — | 2.3 |
Global Consumer Care OI (JPY Bn) | — | — | 133.1 |
Chemical OI (JPY Bn) | — | — | 30.2 |
Group operating income (JPY Bn) | 60.0 | 146.6 | 164.1 |
Segment operating margin (%)
| Segment operating margin (%) | FY2025 |
|---|---|
Hygiene & Living Care (%) | 14.8 |
Health & Beauty Care (%) | 9.0 |
Cosmetics (%) | 4.0 |
Business Connected (%) | 5.8 |
Global Consumer Care (%) | 10.4 |
Chemical (%) | 7.4 |
Group (%) | 9.7 |
FY2025 contribution to sales to customers (%) | Share |
Hygiene & Living Care | 32.5 |
Health & Beauty Care | 25.7 |
Cosmetics | 15.5 |
Business Connected | 2.3 |
Chemical | 24.0 |
Segment Margins & Growth (%)
| Segment | Q1 FY2026 sales (JPY Bn) | Q1 FY2025 sales (JPY Bn) | Q1 FY2026 OI (JPY Bn) | Q1 FY2025 OI (JPY Bn) | Comment |
|---|---|---|---|---|---|
Hygiene & Living Care | 129.0 | 124.5 | 19.6 | 16.7 | Margin 15.2% vs 13.4%. Japan fabric care pricing (+3.2pt price contribution) |
Cosmetics | — | — | 2.1 | -0.6 | Q1 profitability established; Asia +10.6% real |
Chemical | — | — | 3.6 | 8.1 | -55% on oleo price-pass-through lag and weak Europe |
GCC margin | — | — | 9.7% | 7.9% | — |
Income Statement and Margin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Net sales (JPY Bn) | 1,418.8 | 1,551.1 | 1,532.6 | 1,628.4 | 1,688.6 |
Net sales growth (%) | 2.7 | 9.3 | -1.2 | 6.3 | 3.7 |
Gross profit (JPY Bn) | 573.2 | 548.3 | 560.4 | 638.4 | 668.2 |
SG&A (JPY Bn) | 427.0 | 440.9 | 466.8 | 498.1 | 505.1 |
Operating income (JPY Bn) | 143.5 | 110.1 | 60.0 | 146.6 | 164.1 |
EBITDA (JPY Bn) | 230.9 | 199.8 | 149.6 | 235.1 | 249.9 |
Pre-tax income (JPY Bn) | 150.0 | 115.8 | 63.8 | 151.0 | 169.8 |
Income taxes (JPY Bn) | 38.6 | 28.1 | 17.7 | 40.7 | 49.3 |
Net income attributable to owners (JPY Bn) | 109.6 | 86.0 | 43.9 | 107.8 | 120.1 |
Basic EPS as reported pre-split (JPY) | 230.59 | 183.28 | 94.37 | 231.94 | 260.30 |
Basic EPS split-adjusted (JPY) | 115.29 | 91.64 | 47.19 | 115.97 | 130.15 |
Diluted EPS split-adjusted (JPY) | 115.28 | 91.64 | 47.19 | 115.97 | 130.15 |
DPS as reported pre-split (JPY) | 144 | 148 | 150 | 152 | 154 |
DPS split-adjusted (JPY) | 72 | 74 | 75 | 76 | 77 |
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View Subscription PlansMargin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Gross margin (%) | 40.4 | 35.4 | 36.6 | 39.2 | 39.6 |
Operating margin (%) | 10.1 | 7.1 | 3.9 | 9.0 | 9.7 |
EBITDA margin (%) | 16.3 | 12.9 | 9.8 | 14.4 | 14.8 |
Net margin (%) | 7.7 | 5.5 | 2.9 | 6.6 | 7.1 |
Effective tax rate (%) | 25.7 | 24.3 | 27.7 | 26.9 | 29.0 |
Payout ratio (%) | 62.4 | 80.8 | 159.0 | 65.5 | 59.2 |
Balance Sheet
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total assets (JPY Bn) | 1,704.0 | 1,726.4 | 1,769.7 | 1,867.2 | 1,875.1 |
Cash & equivalents (JPY Bn) | 336.1 | 268.2 | 291.7 | 357.7 | 323.3 |
Short-term debt incl. current LTD and leases (JPY Bn) | 26.1 | 85.1 | 33.1 | 55.9 | 46.9 |
Long-term debt incl. leases (JPY Bn) | 242.6 | 177.8 | 228.0 | 189.4 | 196.2 |
Total debt incl. leases (JPY Bn) | 268.7 | 262.9 | 261.1 | 245.3 | 243.1 |
Net debt, negative = net cash (JPY Bn) | -67.4 | -5.4 | -30.6 | -112.4 | -80.1 |
Total equity (JPY Bn) | 983.9 | 995.4 | 1,012.0 | 1,098.8 | 1,094.7 |
Equity attributable to owners (JPY Bn) | 965.1 | 972.1 | 983.7 | 1,066.8 | 1,064.1 |
Goodwill (JPY Bn) | 183.5 | 191.9 | 218.9 | 228.4 | 231.1 |
Other intangibles (JPY Bn) | 52.6 | 60.2 | 81.8 | 81.9 | 79.5 |
Goodwill and intangibles (JPY Bn) | 236.1 | 252.0 | 300.6 | 310.4 | 310.5 |
Inventories (JPY Bn) | 228.1 | 278.4 | 263.8 | 274.6 | 292.4 |
Working capital (JPY Bn) | 387.9 | 320.6 | 357.2 | 404.4 | 387.7 |
Cash Flow
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Operating cash flow (JPY Bn) | 175.5 | 130.9 | 202.5 | 201.6 | 199.7 |
Capex PP&E (JPY Bn) | 60.0 | 65.5 | 54.2 | 57.4 | 61.2 |
Intangible asset purchases (JPY Bn) | 11.6 | 11.7 | 12.3 | 10.1 | 9.6 |
Free cash flow OCF minus PP&E capex (JPY Bn) | 115.6 | 65.4 | 148.3 | 144.2 | 138.5 |
Dividends paid (JPY Bn) | 67.9 | 68.9 | 69.3 | 70.2 | 71.1 |
Share buybacks (JPY Bn) | 51.8 | 50.0 | 0.0 | 2.8 | 80.1 |
Total shareholder returns (JPY Bn) | 119.7 | 118.9 | 69.3 | 73.0 | 151.2 |
Net debt issued or repaid (JPY Bn) | -0.7 | -0.3 | 9.6 | -30.3 | -21.7 |
Returns & Leverage Ratios (%) and Financial Ratios (x)
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
ROE on owners' equity (%) | 11.6 | 8.9 | 4.5 | 10.5 | 11.3 |
ROA (%) | 6.4 | 5.0 | 2.5 | 5.8 | 6.4 |
ROIC analyst-computed (%) | 11.6 | 8.4 | 4.4 | 10.9 | 11.5 |
Current ratio (x) | 1.92 | 1.66 | 1.78 | 1.79 | 1.75 |
Debt to equity incl. leases (x) | 0.27 | 0.26 | 0.26 | 0.22 | 0.22 |
Net debt to EBITDA (x) | -0.29 | -0.03 | -0.20 | -0.48 | -0.32 |
Interest coverage OI over cash interest (x) | 70.3 | 57.6 | 23.1 | 56.0 | 62.2 |
Asset turnover year-end basis (x) | 0.83 | 0.90 | 0.87 | 0.87 | 0.90 |
Days sales outstanding (days) | 55.6 | 54.3 | 53.8 | 51.8 | 51.3 |
Days inventory outstanding (days) | 98.5 | 101.3 | 99.0 | 101.2 | 104.6 |
Days payables outstanding (days) | 98.9 | 88.7 | 88.4 | 63.7 | 61.9 |
Cash conversion cycle (days) | 55.2 | 66.9 | 64.4 | 89.3 | 94.0 |
Revenue by Region (%)
| Metric | FY2024 | FY2025 |
|---|---|---|
Overseas share of net sales (%) | 43.3 | 42.9 |
Japan share of net sales (%) | 56.7 | 57.1 |
GCC / Consumer Products net sales by region (JPY Bn)
| GCC / Consumer Products net sales by region (JPY Bn) | FY2023 | FY2024 |
|---|---|---|
Japan (JPY Bn) | 781.7 | 823.2 |
Asia (JPY Bn) | 222.6 | 212.5 |
Americas (JPY Bn) | 126.6 | 139.1 |
Europe (JPY Bn) | 79.4 | 93.5 |
Total consumer (JPY Bn) | 1,210.3 | 1,268.3 |
GCC / Consumer net sales growth by region (%)
| GCC / Consumer net sales growth by region (%) | FY2024 | FY2025 |
|---|---|---|
Japan (%) | 5.3 | 4.3 |
Asia (%) | -4.6 | -0.8 |
Americas (%) | 9.9 | -3.2 |
Europe (%) | 17.7 | 0.6 |
Segment (FY2023, JPY Bn) Overview
| Segment (FY2023, JPY Bn) | Japan | Asia | Americas | Europe | Total |
|---|---|---|---|---|---|
Fabric & Home Care | 300.3 | 45.1 | 3.8 | 0.0 | 349.1 |
Sanitary | 80.4 | 92.9 | 0.1 | 0.0 | 173.4 |
Hygiene & Living Care | 380.7 | 138.0 | 3.8 | 0.0 | 522.5 |
Health & Beauty Care | 205.3 | 34.5 | 101.2 | 51.9 | 392.9 |
Life Care | 42.1 | 0.1 | 13.9 | 0.1 | 56.3 |
Cosmetics | 153.5 | 50.0 | 7.7 | 27.4 | 238.6 |
Consumer Products total | 781.7 | 222.6 | 126.6 | 79.4 | 1,210.3 |
Chemical (incl. inter-segment) | 133.9 | 86.7 | 61.1 | 84.4 | 366.1 |
Point Details
| Point | Price (JPY) | Source |
|---|---|---|
18 Sep 2026 | 3,478 | MarketScreener |
28 Aug 2026 | 3,635 | StockAnalysis |
6 Aug 2026 (post-H1) | ~3,515–3,555 (+10–11% on day) | StockAnalysis / Parqet |
5 Aug 2026 close | 3,188 | LIMO |
24 Jul 2026 | 3,223 | StockAnalysis |
5 Feb 2026 (pre-split ¥6,530) | ~3,265 split-adjusted | Parqet / investing.com |
Performance | Value | Note |
YTD 2026 | +11.1% (to 18 Sep) | MarketScreener |
1-year | +8.7% (52 weeks to 28 Aug 2026) | StockAnalysis |
Beta (5Y) | 0.18 | Defensive |
Valuation Multiples
| Multiple | Kao |
|---|---|
P/E (TTM) | 24.3x |
P/E (forward) | 22.9x |
EV/EBITDA | 12.6x |
EV/Sales | 1.84x |
P/B | 2.86x |
P/FCF | 22.3x |
Dividend yield | 2.19% |
Shareholder yield (dividend + buyback) | 4.19% |
Income Statement and Per-Share Data
| Consensus estimates (MarketScreener, Sep 2026) | FY2026E | FY2027E | FY2028E |
|---|---|---|---|
Net sales (JPY Bn) | 1,806.4 | 1,873.7 | 1,937.9 |
EBIT (JPY Bn) | 191.7 | 205.3 | 222.9 |
Net income (JPY Bn) | 138.5 | 147.9 | 159.6 |
EPS split-adjusted (JPY) | 154.8 | 166.4 | 180.6 |
DPS split-adjusted (JPY) | 78.1 | 79.5 | 81.0 |
Dividend metric
| Dividend metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|---|
DPS split-adjusted (JPY) | 72 | 74 | 75 | 76 | 77 | 78 |
DPS as reported pre-split (JPY) | 144 | 148 | 150 | 152 | 154 | 156 |
Dividends paid (JPY Bn) | 67.9 | 68.9 | 69.3 | 70.2 | 71.1 | — |
Capital Programmes
| Programme | Size | Period | Status |
|---|---|---|---|
FY2021 | ¥51.8bn executed | 2021 | Completed |
FY2022 | ¥50.0bn executed | 2022 | Completed |
Aug 2025 authorisation | Up to ¥80bn / 15m shares (pre-split) | Aug 2025–Jan 2026 | Completed (¥80.1bn in FY2025) |
Current authorisation | None identified (as of Oct 2026) | — | — |
Credit Ratings
| Agency | Rating | Outlook |
|---|---|---|
R&I | AA (long-term) | Not stated on IR site |
Moody's / S&P / Fitch | Not listed by Kao | — |
Debt maturity (31 Dec 2025) | Amount (¥bn) | — |
Current portion of LTD (2026) | 25.2 | — |
Short-term borrowings | 0.8 | — |
SLB due Jun 2028 (0.35%) | 25.0 | — |
Bond due Sep 2030 (1.33%) | 24.9 | — |
Other long-term borrowings (balance of ¥105.6bn LTD) | ~55.7 | — |
Lease liabilities (current + non-current) | 111.5 | — |
Analyst Conclusions
Guidance and consensus
Management's FY2026 guidance (raised 5 Aug 2026) is:
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net sales ¥1,800bn (+6.6%);
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operating income ¥190bn (+16.2%; 10.6% margin);
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net income ¥135bn;
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EPS ¥149.21;
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DPS ¥78 (post-split).
Consensus (Sep 2026) sits slightly above guidance at ¥191.7bn EBIT for FY2026 and ¥205.3bn for FY2027. That FY2027 level is still below the K27 "record" threshold of ¥211.7bn, so consensus implies Kao narrowly misses its headline K27 profit target unless FY2027 upside materialises. Consensus three-year revenue growth is ~4.4% p.a.
Bull case
-
Margin runway in cosmetics and HBC. Cosmetics moved from a −¥3.7bn loss to ¥10.4bn profit in one year at only a 4.0% margin. Each 1pt of cosmetics margin on ~¥280bn of sales is ~¥2.8bn of OI, and the 15% ambition implies ¥40bn+ potential.
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Japan pricing power plus premiumisation. H&LC margin of 15.2% in Q1 2026 and premium hair launches show Kao can grow price/mix in an inflationary Japan with share gains, the stable earnings engine for K27.
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Capital returns and re-rating catalysts. Net cash ¥80bn, FCF ~¥140–150bn a year, a 37th consecutive dividend increase, the split and shareholder benefits broadening the retail base, and scope for renewed buybacks. ROIC of 10.5% is approaching the 11% target.
Bear case
-
Quality of earnings and FX. H1 2026 included an ¥11.5bn one-off land gain, and Q1 real growth was only 2.5% with FX contributing 3.5pt. A yen rebound or absence of one-offs could stall progress toward the ¥211.7bn record.
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Structural overseas deficit. Asia consumer sales have declined three years running, the Americas fell in FY2025, and the overseas ratio dropped to 42.9%. The ¥800bn overseas target requires ~5% annual growth from ~¥724bn, which is not yet evident.
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ESG/governance overhang and chemical cyclicality. Palm supply-chain allegations, ISS support for an investigation and possible EUDR/US enforcement create reputational and regulatory tail risk. Chemical earnings can swing by half in a quarter.
Catalysts and monitorables (next 12 months)
| Timing | Catalyst / monitorable |
|---|---|
| Early Nov 2026 | Q3 FY2026 results: tracking vs ¥190bn OI; Chemical recovery; cosmetics Q3 profitability |
| 31 Dec 2026 | First shareholder-benefit record date; retail shareholder count |
| Feb 2027 | FY2026 results and FY2027 guidance: whether management guides to a K27 record (> ¥211.7bn); possible new buyback; DPS (38th increase) |
| Mar 2027 | 121st AGM: potential renewed Oasis proposals; vote support for directors |
| 2,027 | Post-K27 plan formulation (K30-type targets); cosmetics milestones (Curél 50% overseas; SENSAI/Molton Brown Asia growth) |
| Ongoing | Palm sourcing disclosures (RSPO %, grievance coverage); EUDR compliance; yen/euro rates; palm kernel oil prices; US tariff developments; China sell-through for Merries and Kanebo |
Analyst verdict
Kao has credibly executed the first half of its K27 turnaround. Operating income has risen 2.7x from the FY2023 trough of ¥60.0bn to a guided ¥190bn in FY2026. Gross margin is back above FY2019 levels, and cosmetics has moved from structural loss-maker to modest contributor.
The engine of this recovery is unglamorous but durable. Kao combines pricing and premiumisation in its dominant Japanese household franchise with ROIC-driven pruning and cost discipline. A net-cash, AA-rated balance sheet and a 36-year dividend-growth record make Kao one of the lowest-risk compounders in Japanese consumer staples, as its 0.18 beta confirms.
The harder half of K27 is still ahead. Kao must grow outside Japan, where three consecutive years of Asian decline and a slipping overseas ratio contradict the ¥800bn ambition. It must also lift cosmetics margins from 4% toward double digits, where global peers already operate.
Consensus FY2027 EBIT of ~¥205bn sits just short of the ¥211.7bn record, so the plan's headline success is genuinely in the balance. At ~23x forward earnings and ~12.6x EV/EBITDA, the shares already discount steady progress. The August 2026 re-rating on guidance upgrades and retail-oriented measures leaves limited valuation cushion if FX reverses or one-off gains fade.
The palm supply-chain controversy is the key non-financial risk. Management won the EGM, but proxy-adviser support for an independent probe signals that institutional patience is conditional. Transparent, verifiable sourcing improvements over the next 12 months would neutralise the issue; further allegations could become a valuation discount.
Verdict: a high-quality, defensively positioned franchise mid-way through a credible self-help story. On balance this is a Hold-to-Accumulate stance for long-term, income-oriented investors; upside requires evidence of overseas volume growth and a clean K27 record-profit outcome in FY2027. Investors should weight execution on cosmetics and Asia, and ESG remediation, above near-term earnings beats.
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View Subscription PlansExecutive Leadership
Board of Directors
| Name | Title | Status | Background (as available) |
|---|---|---|---|
Eriko Sakurai | Chairperson of the Board | Outside Director (independent) | Former President of Dow Corning Toray / Dow Japan |
Yoshihiro Hasebe | Representative Director, President & CEO | Executive | R&D-career Kao executive; CEO since Jan 2021 |
Masakazu Negoro | Representative Director, Senior Managing Executive Officer | Executive | Responsible for Management Finance Unit (CFO function) |
Toru Nishiguchi | Representative Director, Senior Managing Executive Officer | Executive | Responsible for Global Consumer Care Business |
Lisa MacCallum | Director | Non-executive (also Corporate Executive Fellow, Corporate Branding) | Founder & President, Inspired Companies; NED, Adani Energy Solutions; ex-Nike |
Takaaki Nishii | Outside Director | Independent | Former President & CEO, Ajinomoto Co. |
Makoto Takashima | Outside Director | Independent | Former President, Sumitomo Mitsui Banking Corporation |
Sarah L. Casanova | Outside Director | Independent | Former CEO, McDonald's Holdings Japan |
Shinji Okuyama | Outside Director | Independent | — |
Executive Leadership Team
| Name | Title / responsibility |
|---|---|
Yoshihiro Hasebe | President & CEO |
Masakazu Negoro | SMEO, Management Finance |
Toru Nishiguchi | SMEO, Global Consumer Care |
Toshiteru Komatsu | MEO, SVP Manufacturing & Engineering; TCR Promotion |
Natsumi Hotta | MEO, SVP Human Capital Strategy; Chair, Kao America |
Daisuke Hamada | MEO, SVP Research & Development |
Hideki Mamiya | SEO, SVP Corporate Planning |
Yoshio Nakao | SEO, President GCC Japan; President, Kao Group Customer Marketing |
Motomitsu Hasumi | SEO, SVP Product Quality Management |
Hiromitsu Hoshikawa | SEO, President, Chemical Business |
Tomoko Uchiyama | SEO, President, Cosmetics Business; President, Kanebo Cosmetics |
Takatoshi Hatase | SEO, President, Health & Beauty Care Business |
Rie Haraoka | SEO, President, Hygiene & Living Care Business |
Masaru Takeyasu | EO, President GCC East Asia; Chair/President Kao (China) Holding |
Hideo Makino | EO, SVP Accounting & Finance; President, Kao America |
Joe Workman | EO, President GCC Americas & EMEA; Chair & President, Kao USA |
Mitsunori Saka | EO, President, Business Connected |
Hirofumi Kuwahara | EO, SVP Digital Strategy |
Junko Ohtani | EO, SVP ESG |
Akiko Hasegawa | EO, SVP Legal |
Shinsuke Mori | EO, SVP Logistics; Chief Logistics Officer |
Major Shareholders
| Holder type (31 Dec 2025) | % of shares |
|---|---|
Foreign companies and individuals | 41.51 |
Financial institutions | 33.86 |
Individuals and others | 14.36 |
Securities companies | 5.57 |
Other Japanese companies | 4.69 |
Treasury stock | 0.00 |
Major Shareholders by Top Holders
| Top holders | Stake | Source / note |
|---|---|---|
Oasis Management (Oasis Japan Strategic Fund et al.) | ~6.6% (Jan 2026); 4th-largest shareholder | Reuters, 5 Mar 2026 |
Competitive Landscape
Competitors by Segment
| Segment | Key competitors |
|---|---|
Hygiene & Living Care (Japan/Asia) | Procter & Gamble (Ariel, Bold, Joy, Pampers), Lion Corporation (Top, Charmy), Unicharm (Moony, Sofy), Unilever (Asia), Kimberly-Clark (Huggies), Chinese domestic diaper/sanitary brands |
Health & Beauty Care | Unilever (Dove, Vaseline), Beiersdorf (Nivea), Kenvue (Neutrogena, Aveeno), L'Oréal (Garnier, La Roche-Posay), Shiseido (Senka, Anessa), Rohto (Hada Labo, Skin Aqua), Henkel (Schwarzkopf), Edgewell (Banana Boat) |
Salon hair care | L'Oréal Professional Products, Henkel Schwarzkopf Professional, Wella (KKR), Coty |
Cosmetics | Shiseido, Kosé, L'Oréal (Lancôme, Shu Uemura), Estée Lauder, Pola Orbis, LVMH (Guerlain), Amorepacific, Chinese C-beauty brands |
Chemical | BASF, Evonik, Croda, Clariant, Wilmar/KLK Oleo, Sasol, Emery, Nippon Shokubai, Fujimi (polishing), Entegris/CMC Materials (semiconductor cleaning) |
Peer Comparison FY2024
| Company | FY2024 revenue (approx.) | Op. margin (approx.) | R&D % sales (approx.) | Note |
|---|---|---|---|---|
Kao | ¥1,628bn (verified) | 9.0% (verified) | ~3.6% (FY2025) | — |
Procter & Gamble (FY Jun-2024) | ~US$84bn | ~22% | ~2.4% | Global leader; scale advantage |
Unilever (FY2024) | ~€61bn | ~18% (underlying) | ~1.5% | Ice cream demerged 2025 |
L'Oréal (FY2024) | ~€43.5bn | ~20% | ~3% | Beauty leader |
Shiseido (FY2024) | ~¥970bn | Low-single-digit core margin | ~2–3% | China/travel-retail restructuring |
Unicharm (FY2024) | ~¥990bn | ~14–15% (core) | ~1% | Sanitary leader in Asia |
Lion Corp. (FY2024) | ~¥410bn | ~6% | ~2.5% | Japan home/oral care |
Kosé (FY2024) | ~¥320bn | ~6% | ~2% | Japan prestige cosmetics |
Beiersdorf (FY2024) | ~€9.9bn | ~13–14% | ~2.5% | Nivea/Eucerin |
Henkel (FY2024) | ~€21.6bn | ~14% (adj.) | ~3% | Laundry & hair + adhesives |
