Kao : Financial Results (kao results fy2025 en)

February 5, 2026

Company name: Kao Corporation Tokyo Stock Exchange in Japan Stock code: 4452 (URL: https://www.kao.com/global/en/investor-relations/library/results/) Representative: Yoshihiro Hasebe, President and CEO

Contact person: Yoshimasa Minegishi, Vice President, Financial Controllers, Global

Telephone: +81-3-3660-7111

Scheduled date of the Annual General Meeting of Shareholders: March 26, 2026 Scheduled commencement date for dividend payments: March 27, 2026

Scheduled date to file annual securities report: March 25, 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 fiscal year ended December 31, 2025 (from January 1, 2025 to December 31, 2025)
   1. Consolidated operating results (Percentages indicate year-on-year changes)

      	Net sales		Operating income		Income before income taxes		Net income
      Fiscal year ended	Millions of yen	％	Millions of yen	％	Millions of yen	％	Millions of yen	％
      December 31, 2025 December 31, 2024	1,688,633 1,628,448	3.7 6.3	164,069 146,644	11.9 144.3	169,846 151,024	12.5 136.6	120,586 110,374	9.3 139.1

      	Net income attributable to owners of the parent		Comprehensive income		Basic earnings per share	Diluted earnings per share
      Fiscal year ended	Millions of yen	％	Millions of yen	％	Yen	Yen
      December 31, 2025 December 31, 2024	120,081 107,767	11.4 145.7	148,786 160,377	(7.2) 89.9	260.30 231.94	- -

      	Ratio of net income to equity attributable to owners of the parent	Ratio of income before income taxes to total assets	Ratio of operating income to net sales
      Fiscal year ended	％	％	％
      December 31, 2025 December 31, 2024	11.3 10.5	9.1 8.3	9.7 9.0

      (Reference) Share of profit in investments accounted for using the equity method For the fiscal year ended December 31, 2025 : 3,406 million yen For the fiscal year ended December 31, 2024 : 3,482 million yen

   2. Consolidated financial position

      	Total assets	Total equity	Equity attributable to owners of the parent	Ratio of equity attributable to owners of the parent to total assets	Equity attributable to owners of the parent per share
      As of December 31, 2025	Millions of yen 1,875,054	Millions of yen 1,094,700	Millions of yen 1,064,077	％ 56.7	Yen 2,352.49
      December 31, 2024	1,867,237	1,098,835	1,066,776	57.1	2,296.69

   3. Consolidated cash flows

      	Net cash flows from operating activities	Net cash flows from investing activities	Net cash flows from financing activities	Cash and cash equivalents at the end of the year
      Fiscal year ended December 31, 2025	Millions of yen 199,680	Millions of yen (69,767)	Millions of yen (175,134)	Millions of yen 323,282
      December 31, 2024	201,585	(45,902)	(104,578)	357,713

2. Dividends

   	Annual cash dividends per share					Total dividend payment amount	Payout ratio (Consolidated)	Ratio of dividends to equity attributable to owners of the parent (Consolidated)
   	1st quarter -end	2nd quarter -end	3rd quarter -end	Fiscal year -end	Total
   	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
   Fiscal year ended December 31, 2024	-	76.00	-	76.00	152.00	70,803	65.5	6.9
   Fiscal year ended December 31, 2025	-	77.00	-	77.00	154.00	70,794	59.2	6.6
   Fiscal year ending December 31, 2026 (Forecast)	-	78.00	-	39.00	-		-

   Note: At a meeting of the Board of Directors held on February 5, 2026, Kao Corporation (the "Company") resolved to conduct a share split at a ratio of two shares for each share of ordinary share, with June 30, 2026, as the record date and July 1, 2026, as the effective date. The forecast year-end dividend per share for the fiscal year ending December 31, 2026, shown above 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. Forecast 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 December 31, 2026	Millions of yen 1,750,000	％ 3.6	Millions of yen 182,000	％ 10.9	Millions of yen 185,000	％ 8.9	Millions of yen 130,000	％ 8.3	Yen 143.70

   Note: Basic earnings per share shown above are presented on a post-share split basis, as described in "2. Dividends." If the share split were not taken into account, basic earnings per share would be 287.41 yen.

   (Remainder of page intentionally left blank.)

4. Others

   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 ： None

      2. Changes in accounting policies due to reasons other than 1) ： None

      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 December 31, 2025	453,600,000 shares
         As of December 31, 2024	465,900,000 shares

      2. Number of treasury shares at the end of the period

         As of December 31, 2025	1,281,444 shares
         As of December 31, 2024	1,415,333 shares

      3. Average number of shares outstanding during the period

         Fiscal year ended December 31, 2025	461,315,152 shares
         Fiscal year ended December 31, 2024	464,625,236 shares

         Financial results reports are exempt from audit 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 2 to 15 "1. Summary of Operating Results and Financial Position" for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecasts.

         (Remainder of page intentionally left blank.)

         Contents of Attachments

         1. Summary of Operating Results and Financial Position 2

            1. Summary of Operating Results 2

            2. Summary of Financial Position 13

            3. Basic Policies regarding Distribution of Profits and Dividends for the Fiscal Years Ended December 31, 2025 and Ending December 31, 2026 15

         2. Basic Approach to Selection of Accounting Standards 15

         3. Consolidated Financial Statements and Notes 16

            1. Consolidated Statement of Financial Position 16

            2. Consolidated Statement of Income 18

            3. Consolidated Statement of Comprehensive Income 19

            4. Consolidated Statement of Changes in Equity 20

            5. Consolidated Statement of Cash Flows 22

            6. Notes to Consolidated Financial Statements 23

            7. Note regarding Assumption of Going Concern 28

1. Summary of Operating Results and Financial Position
   1. Summary of Operating Results

      Note: Changes and comparisons are all with the previous year 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.

      Operating Results for the Fiscal Year Ended December 31, 2025

      1. Trends in Overall Results for the Fiscal Year Ended December 31, 2025

         (Billions of yen, except operating margin and per share amounts)

         	2025	2024	Growth
         Net sales	1,688.6	1,628.4	3.7% Like-for-like:
         			3.7%
         Operating income	164.1	146.6	11.9%
         Operating margin (%)	9.7	9.0	-
         Income before income taxes	169.8	151.0	12.5%
         Net income	120.6	110.4	9.3%
         Net income attributable to owners of the parent	120.1	107.8	11.4%
         Basic earnings per share (Yen)	260.30	231.94	12.2%

         In the global economy during fiscal 2025, as conditions remained uncertain due to international supply chain disruptions and rising procurement costs following changes in tariff policies, as well as protracted geopolitical risks, mainly in Europe and the Middle East, lifestyle-related consumption remained resilient despite rising prices in all regions. In the Japanese economy, despite signs of wage growth, the impact of high prices has restrained consumer sentiment, and domestic demand trended toward a gradual recovery.

         According to retail sales and consumer purchasing survey data, the Kao Group's key markets of household and personal care products and cosmetics in Japan grew compared with the previous fiscal year.

         In this operating environment, the Kao Group worked to build a foundation for expanding global sales while improving its earning power to achieve profitable growth and successfully carry out its Mid-term Plan 2027 ("K27").

         Net sales increased 3.7% compared with the previous fiscal year to 1,688.6 billion yen. Currency translation accounted for a 0.0% increase and net sales increased 3.7% on a like-for-like basis (breakdown of the increase: 0.5% increase by volume, 3.2% increase by price). Operating income was

         164.1 billion yen, an increase of 17.4 billion yen compared with the previous fiscal year, and the operating margin was 9.7%. Income before income taxes was 169.8 billion yen, an increase of 18.8 billion yen, and net income was 120.6 billion yen, an increase of 10.2 billion yen.

         Basic earnings per share were 260.30 yen, an increase of 28.36 yen, or 12.2%, from 231.94 yen in the previous fiscal year.

         Return on invested capital (ROIC), which the Kao Group uses as a management metric, was 9.7% and Economic Value Added (EVA*) increased 7.9 billion yen compared with the previous fiscal year to 41.1

         billion yen as net operating profit after tax (NOPAT) increased substantially.

         * EVA is a registered trademark of Stern Stewart & Co.

         To improve capital efficiency and further enhance shareholder returns, Kao Corporation (the "Company") resolved at a meeting of its Board of Directors held on August 6, 2025, to repurchase its own shares, and subsequently repurchased shares for a total of 80.0 billion yen. The Company retired 12,300,000 treasury shares on December 26, 2025.

         The main exchange rates used for translating the financial statement items (income and expenses) of foreign subsidiaries and associates were as shown below.

         	First quarter	Second quarter	Third quarter	Fourth quarter
         	Jan. - Mar.	Apr. - Jun.	Jul. - Sep.	Oct. - Dec.
         U.S. dollar	152.65 (148.22)	144.49 (155.72)	147.41 (149.44)	154.04 (152.30)
         Euro	160.48 (160.99)	163.73 (167.68)	172.30 (164.04)	179.33 (162.55)
         Chinese yuan	20.98 (20.63)	19.98 (21.51)	20.59 (20.84)	21.73 (21.19)

         Note: Figures in parentheses represent the exchange rates for the previous fiscal year.

      2. Trends by Segment during the Fiscal Year Summary of Segment Information

      A summary of the changes to reportable segments implemented during the three months ended March 31, 2025, is as follows. (Reference: 3. Consolidated Financial Statements and Notes, (6) Notes to Consolidated Financial Statements, 1. Segment Information on page 23.)

      1. The "Consumer Products Business," "Hygiene and Living Care Business," and "Health and Beauty Care Business" have been renamed the "Global Consumer Care Business," "Hygiene Living Care Business," and "Health Beauty Care Business," respectively.

      2. The Business Connected Business has been newly established within the Global Consumer Care Business. This business consists of commercial-use hygiene products (excluding Washing Systems, LLC), life care products, and other products.

      3. Washing Systems, LLC has been included in the Chemical Business.

      4. Net sales and operating income for the previous fiscal year have been reclassified and restated to reflect the reorganization of segments outlined in items 1 to 3 above.

         (Remainder of page intentionally left blank.)

         Consolidated Results by Segment

         Fiscal year ended December 31

         			Net sales				Operating income
         			2024 (Billions of yen)	2025 (Billions of yen)	Growth (%)	Like-for-like (%)	2024		2025		Change (Billions of yen)
         							(Billions of yen)	Operating margin (%)	(Billions of yen)	Operating margin (%)
         		Fabric and Home Care Products	375.7	389.1	3.6	3.4	68.4	18.2	74.1	19.1	5.7
         		Sanitary Products	168.6	160.2	(5.0)	(4.0)	7.3	4.4	7.1	4.5	(0.2)
         	Hygiene Living Care Business		544.3	549.3	0.9	1.1	75.8	13.9	81.3	14.8	5.5
         	Health Beauty Care Business		424.0	432.9	2.1	2.2	34.4	8.1	39.1	9.0	4.7
         	Cosmetics Business		244.1	261.6	7.2	6.9	(3.7)	(1.5)	10.4	4.0	14.1
         	Business Connected Business		40.5	39.2	(3.2)	(3.2)	5.2	12.9	2.3	5.8	(3.0)
         Global Consumer Care Business			1,252.8	1,283.0	2.4	2.5	111.7	8.9	133.1	10.4	21.3
         Chemical Business			421.3	451.5	7.2	6.9	35.7	8.5	30.2	6.7	(5.5)
         Total			1,674.1	1,734.5	3.6	3.6	147.5	-	163.3	-	15.8
         Elimination and Reconciliation			(45.7)	(45.8)	-	-	(0.8)	-	0.8	-	1.6
         Consolidated			1,628.4	1,688.6	3.7	3.7	146.6	9.0	164.1	9.7	17.4

         (Remainder of page intentionally left blank.)

         Consolidated Net Sales Composition

         (Billions of yen)

         Fiscal year ended December 31				Japan	Asia	Americas	Europe	Consolidated
         		Fabric and Home Care Products	2024 2025	327.9 346.0	44.3 40.1	3.5 3.0	- -	375.7 389.1
         			Growth (%)	5.5	(9.5)	(12.4)	-	3.6
         			Like-for-like (%)	5.5	(11.3)	(9.3)	-	3.4
         		Sanitary Products	2024 2025	76.5 71.6	92.1 88.6	- -	- -	168.6 160.2
         			Growth (%)	(6.3)	(3.8)	-	-	(5.0)
         			Like-for-like (%)	(6.3)	(2.1)	-	-	(4.0)
         	Hygiene Living Care Business		2024 2025	404.4 417.6	136.4 128.6	3.5 3.0	- -	544.3 549.3
         			Growth (%)	3.3	(5.7)	(12.4)	-	0.9
         			Like-for-like (%)	3.3	(5.1)	(9.3)	-	1.1
         	Health Beauty Care Business		2024 2025	212.1 225.0	36.7 36.5	112.5 109.1	62.7 62.3	424.0 432.9
         			Growth (%)	6.1	(0.6)	(3.1)	(0.6)	2.1
         			Like-for-like (%)	6.1	(0.1)	(1.4)	(3.4)	2.2
         	Cosmetics Business		2024 2025	166.5 177.0	39.1 45.3	7.9 7.7	30.6 31.5	244.1 261.6
         			Growth (%)	6.3	15.8	(1.9)	2.9	7.2
         			Like-for-like (%)	6.3	16.2	(1.0)	(0.0)	6.9
         	Business Connected Business		2024 2025	40.2 38.8	0.2 0.4	- -	- -	40.5 39.2
         			Growth (%)	(3.5)	47.4	-	-	(3.2)
         			Like-for-like (%)	(3.5)	47.7	-	-	(3.2)
         Global Consumer Care Business			2024 2025	823.2 858.5	212.5 210.8	123.9 119.9	93.3 93.8	1,252.8 1,283.0
         			Growth (%)	4.3	(0.8)	(3.2)	0.6	2.4
         			Like-for-like (%)	4.3	(0.2)	(1.6)	(2.3)	2.5
         Chemical Business			2024 2025	138.4 144.6	105.0 120.8	83.6 86.9	94.4 99.3	421.3 451.5
         			Growth (%)	4.5	15.1	3.9	5.2	7.2
         			Like-for-like (%)	4.5	14.2	6.7	2.3	6.9
         Elimination of intersegment			2024 2025	(38.6) (39.7)	(3.7) (3.2)	(0.1) (0.2)	(3.2) (2.7)	(45.7) (45.8)
         Consolidated			2024 2025	923.0 963.4	313.7 328.3	207.3 206.5	184.5 190.4	1,628.4 1,688.6
         			Growth (%)	4.4	4.7	(0.4)	3.2	3.7
         			Like-for-like (%)	4.4	4.8	1.7	0.3	3.7

         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 42.9% compared with 43.3% in the previous fiscal year. Starting from the three months ended March 31, 2025, this percentage is disclosed based on the location where the sales were recognized. Figures for the previous fiscal year were recalculated using the same method.

      Analysis of Change in Net Sales Compared with the Previous Fiscal Year

      			Change (%)	Currency Translation (%)	Like-for-Like
      					(%)	By Volume (%)	By Price (%)
      		Fabric and Home Care Products	3.6	0.2	3.4	1.4	2.0
      		Sanitary Products	(5.0)	(1.0)	(4.0)	(3.0)	(1.1)
      	Hygiene Living Care Business		0.9	(0.2)	1.1	0.1	1.0
      	Health Beauty Care Business		2.1	(0.1)	2.2	2.0	0.2
      	Cosmetics Business		7.2	0.3	6.9	5.9	1.0
      	Business Connected Business		(3.2)	(0.0)	(3.2)	(4.6)	1.4
      Global Consumer Care Business			2.4	(0.0)	2.5	1.7	0.8
      Chemical Business			7.2	0.3	6.9	(3.2)	10.1
      Total			3.7	0.0	3.7	0.5	3.2

      Note: Chemical Business sales include intersegment transactions.

      Global Consumer Care Business

      Sales increased 2.4% compared with the previous fiscal year to 1,283.0 billion yen. Currency translation accounted for a 0.0% decrease and sales increased 2.5% on a like-for-like basis (breakdown of the increase: 1.7% increase by volume, 0.8% increase by price).

      Globally, while an ongoing consumer orientation toward low prices was apparent, demand for products that offer practicality and high added value remained firm. Similarly, amid growing polarization in consumer behavior in Japan, the impact of rising prices continued, despite signs of a moderate upturn in personal consumption, which had been declining. Under these circumstances, the Kao Group continued working to build a foundation for expanding global sales while improving its earning power to achieve profitable growth by offering high-value-added products and increasing selling prices to reflect that added value, among other measures.

      As a result, sales in Japan increased 4.3% to 858.5 billion yen.

      In Asia, sales decreased 0.8% to 210.8 billion yen. On a like-for-like basis, sales decreased 0.2%.

      In the Americas, sales decreased 3.2% to 119.9 billion yen. On a like-for-like basis, sales decreased 1.6%. In Europe, sales increased 0.6% to 93.8 billion yen. On a like-for-like basis, sales decreased 2.3%.

      Operating income was 133.1 billion yen, an increase of 21.3 billion yen compared with the previous fiscal year, due to increased sales volume and improvement in earning power amid the impact of rising raw material prices.

      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.

      Hygiene Living Care Business

      Sales increased 0.9% compared with the previous fiscal year to 549.3 billion yen. Currency translation accounted for a 0.2% decrease and sales increased 1.1% on a like-for-like basis (breakdown of the increase: 0.1% increase by volume, 1.0% increase by price). However, if the impact of the transfer of the pet care business conducted in June 2024 is also excluded, sales increased 1.6% on a like-for-like basis.

      Sales of fabric and home care products increased 3.6% to 389.1 billion yen. Currency translation accounted for a 0.2% increase and sales increased 3.4% on a like-for-like basis (breakdown of the increase: 1.4% increase by volume, 2.0% increase by price).

      Sales of fabric care products increased. In Japan, improved products in the Attack Antibacterial EX series of laundry detergents, among other products, contributed to increased sales and market share expansion, due in part to market growth and the effect of price increases along with the promotion of high-value-added products. Fabric softeners performed as planned.

      Sales of home care products increased. In Japan, dishwashing detergents, kitchen cleaning products, and other products sold strongly, with steady performance by Quickle Wash Basin Cleaner, sales of which resumed in November 2025.

      Operating income for fabric and home care products increased 5.7 billion yen to 74.1 billion yen.

      Sales of sanitary products decreased 5.0% to 160.2 billion yen. Currency translation accounted for a 1.0% decrease and sales decreased 4.0% on a like-for-like basis (breakdown of the decrease: 3.0% decrease by volume, 1.1% decrease by price). However, if the impact of the transfer of the pet care business conducted in June 2024 is also excluded, sales decreased 2.4% on a like-for-like basis. Sales of Laurier sanitary napkins increased. In China, loyalty marketing initiatives proved effective, resulting in strong sales performance for Super Slim Guard and other products. Sales of Merries baby diapers decreased due to aggressive competition in Asia and other factors.

      Operating income for sanitary products was 7.1 billion yen, a decrease of 0.2 billion yen. However, excluding the impact of the transfer of the pet care business conducted in June 2024, operating income increased 4.1 billion yen.

      Operating income for the Hygiene Living Care Business was 81.3 billion yen, an increase of 5.5 billion yen from the previous fiscal year. However, if the impact of the transfer of the pet care business conducted in June 2024 is also excluded, operating income increased 9.8 billion yen.

      Health Beauty Care Business

      Sales increased 2.1% compared with the previous fiscal year to 432.9 billion yen. Currency translation accounted for a 0.1% decrease and sales increased 2.2% on a like-for-like basis (breakdown of the increase: 2.0% increase by volume, 0.2% increase by price).

      Sales of skin care products increased. In Japan, sales increased due to strong performance by UV care products and seasonal sheet-type products. In the Americas, sales decreased. Despite a ramped-up rollout of Bioré UV Aqua Rich and strong performance by new JERGENS products, sales were impacted by aggressive competition.

      Sales of hair care products increased substantially. In Japan, high premium hair care brands melt and THE ANSWER, which were launched in 2024, contributed significantly to increased sales. Sales of products for hair salons in the Americas and Europe decreased. Although the ORIBE brand for high-end hair salons sold strongly, primarily through e-commerce, the GOLDWELL brand was impacted by factors including worsening business sentiment in the United States and Europe.

      Sales of personal health products increased. Sales of PureOra Carbonic Acid Toothpaste remained strong in Japan and sales of improved MegRhythm eye masks grew in Japan and China.

      Operating income increased 4.7 billion yen compared with the previous fiscal year to 39.1 billion yen. However, excluding the impact of structural reform expenses at subsidiaries in the Americas and Europe in the previous fiscal year, operating income increased 1.3 billion yen.

      Cosmetics Business

      Sales increased 7.2% compared with the previous fiscal year to 261.6 billion yen. Currency translation accounted for a 0.3% increase and sales increased 6.9% on a like-for-like basis (breakdown of the increase: 5.9% increase by volume, 1.0% increase by price).

      Sales in Japan increased. Contributors to increased sales among the Kao Group's six focus brands included Curél derma care and KANEBO prestige skin care and makeup, which continued to perform well, SOFINA skin care, which benefitted from the substantial contribution of SOFINA iP and other new products, and the SENSAI luxury brand, which captured inbound demand. Other brands also sold steadily. Sales in Asia increased substantially. In China, sales increased substantially, driven by expanded local production and enhanced competitiveness resulting from effective communication of product value, as well as the absence of the restrictions on shipments implemented by the Kao Group in the previous fiscal year to optimize distribution inventory. In Thailand, where the Kao Group is focusing its efforts, the progress of KANEBO and the KATE makeup brand exceeded the plan. In Europe, SENSAI sold strongly, and the Kao Group stepped up its rollout of Curél.

      Operating income was 10.4 billion yen, an increase of 14.1 billion yen compared with the previous fiscal year due to the substantial contribution to improved profits from concentrated investment in the six focus brands, enhanced earning power, and business streamlining.

      Business Connected Business

      Sales decreased 3.2% compared with the previous fiscal year to 39.2 billion yen. Currency translation accounted for a 0.0% decrease and sales decreased 3.2% on a like-for-like basis (breakdown of the decrease: 4.6% decrease by volume, 1.4% increase by price.) However, if the impact of the

      transfer of the beverage business conducted in August 2024 is also excluded, sales increased 1.5% on a like-for-like basis.

      Sales of commercial-use hygiene products increased. Although growth of products for the medical and nursing sectors remained unchanged from the previous fiscal year due to the impact of price competition, demand continued to rise for kitchen cleaning agents and guest room amenities in the food service, lodging, and leisure sectors due to firm market conditions.

      Operating income decreased 3.0 billion yen compared with the previous fiscal year to 2.3 billion yen. However, excluding the impact of the transfer of the beverage business conducted in August 2024, operating income increased 3.4 billion yen.

      Chemical Business

      Sales increased 7.2% compared with the previous fiscal year to 451.5 billion yen. Currency translation accounted for a 0.3% increase and sales increased 6.9% on a like-for-like basis (breakdown of the increase: 3.2% decrease by volume, 10.1% increase by price).

      In oleo chemicals, although differences in demand emerged in each region, 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, despite a slump in the automobile-related sector and other target markets, sales were on par with the previous fiscal year, due in part to the contribution from the effects of selling price adjustments.

      In information materials, sales grew as a result of steadily capturing ongoing firm demand in the semiconductor-related, hard disk, and other target sectors.

      Operating income decreased 5.5 billion yen compared with the previous fiscal year to 30.2 billion yen due to the impact of fluctuations in raw material prices, among other factors, in addition to a decline in demand in some target sectors.

      (Remainder of page intentionally left blank.)

      Forecast for the Fiscal Year Ending December 31, 2026

      (Billions of yen, except operating margin and per share amounts)

      	2026	2025	Growth
      Net sales	1,750.0	1,688.6	3.6%
      Like-for-like: 3.2%
      Operating income	182.0	164.1	10.9%
      Operating margin (%)	10.4	9.7	-
      Income before income taxes	185.0	169.8	8.9%
      Net income attributable to owners of the parent	130.0	120.1	8.3%
      Basic earnings per share (Yen)	143.70	260.30	-

      Note: In this table and hereafter, like-for-like growth rates exclude changes due to the effect of currency translation of local currencies into Japanese yen. The forecast of basic earnings per share for the fiscal year ending December 31, 2026, is presented after taking a share split* into account. If the share split were not taken into account, basic earnings per share would be 287.41 yen.

      * At a meeting of the Board of Directors held on February 5, 2026, the Company resolved to conduct a share split at a ratio of two shares for each share of ordinary share, with June 30, 2026, as the record date and July 1, 2026, as the effective date.

      1. Forecast of Overall Business Results for the Fiscal Year Ending December 31, 2026

         In the global economy, the business environment is expected to remain uncertain due to the impact of currency translation and tariffs, ongoing geopolitical risks, and factors such as the difficulty in forecasting household purchasing power, consumer sentiment, and the demand outlook amid changing price trends in each country.

         Working toward the steady achievement of its Mid-term Plan 2027 ("K27"), the Kao Group will further strengthen its earning power from the perspective of return on invested capital (ROIC) and accelerate the deployment of its Global Sharp Top Strategy, expanding priority businesses and steadily addressing businesses facing challenges, with the aim of profitable growth.

         In light of these circumstances, the Kao Group forecasts the following business results for the fiscal year ending December 31, 2026.

         The Kao Group forecasts a 3.6% year-on-year increase in net sales to 1,750.0 billion yen (a 3.2% increase on a like-for-like basis), a 10.9% increase in operating income to 182.0 billion yen, an operating margin of 10.4%, an 8.9% increase in income before income taxes to 185.0 billion yen, an 8.3% increase in net income attributable to owners of the parent to 130.0 billion yen, and basic earnings per share of

         143.70 yen. If the share split were not taken into account, basic earnings per share would be 287.41 yen.

         The Kao Group expects to improve ROIC from the 9.7% it achieved in fiscal 2025 to 10.5%. It intends to increase Economic Value Added (EVA) from the 41.1 billion yen it achieved in fiscal 2025 to 51.0 billion yen by making full use of its assets to manage invested capital more efficiently, together with an increase in net operating profit after tax (NOPAT).

      2. Forecast by Segment for the Fiscal Year Ending December 31, 2026

         The Hygiene Living Care Business provides fabric care, home care, and sanitary products that support people's daily lives and society and help make lifestyles more comfortable.

         By reducing the burden of housework, fabric and home care products create living spaces where everyone can live with peace of mind. In tune with each stage of life, sanitary products and services help people lead their daily lives in their own unique style and in comfort.

         This business will establish a more stable revenue structure by enhancing its brand power through high-added-value product offerings and increased customer loyalty, as well as by reforming costs and promoting co-creation with external parties from the perspective of ROIC.

         As a result of the above measures, the Kao Group forecasts that sales in this business will increase 1.1% year on year on a like-for-like basis to 557.0 billion yen.

         The Health Beauty Care Business provides skin care, hair care, and personal health products offering value unique to Kao with a comprehensive understanding of the entire human body, under the theme of contributing to health, beauty, cleanliness, and hygiene. This business will accelerate growth by promoting high-value-added products and by making concentrated investments in strategic brands.

         By transitioning to an organizational structure that integrates operations in Japan, Asia, the Americas, and Europe, the business will step up manufacturing to strengthen its global rollout and marketing innovations through digital transformation (DX), with the aim of expanding business globally.

         As a result of the above measures, the Kao Group forecasts that sales in this business will increase 6.3% year on year on a like-for-like basis to 461.5 billion yen.

         The Cosmetics Business contributes to a lifestyle and culture of joy and the realization of a society in which people around the world can shine by providing "hope" and "Kirei"* to consumers through solid science and abundant sensitivity attuned to each person's beauty and individuality.

         * The Japanese word Kirei describes something that is clean, well-ordered, and beautiful all at once. For Kao, this concept of Kirei not only describes appearance, but also attitude-a desire to create beauty for oneself, for other people, and for the natural world around us. At Kao, Kirei is the value we want to bring to everyday life through our brands, products, technologies, solutions, and services-now and in the future.

         By fully leveraging its in-depth, wide-ranging fundamental research and proprietary technologies development capabilities, this business will roll out its six focus brands in each country, while enhancing profitability through a strategy of using its technological assets across categories and the full application of digital technologies to better ensure its sustainable growth.

         As a result of the above measures, the Kao Group forecasts that sales in this business will increase 3.9% year on year on a like-for-like basis to 271.5 billion yen.

         The Business Connected Business will work to improve the productivity of global business activities by utilizing the Kao Group's marketing platform to foster lateral coordination among its businesses, sales, and related functions, primarily in the field of consumer care. It also works to strengthen external collaboration to create new businesses that meet market and consumer needs.

         Commercial-use hygiene products will support people's cleanliness, safety, and comfort by providing products that utilize cleaning, antibacterial, disinfecting, deodorizing, and other technologies, as well as services that deploy Kao's comprehensive capabilities, to meet the needs of business operators and users in the food service, lodging, leisure, and nursing-related sectors.

         As a result of the above measures, the Kao Group forecasts that sales in this business will increase 3.7% year on year on a like-for-like basis to 40.5 billion yen.

         The Chemical Business will work to resolve environmental and social issues through co-creation that brings together Kao's diverse strengths with those of its customers and partners to generate new value for industry and positive social impact. The business will also contribute to decarbonization among customers, industry, and society, and the transition to a circular economy, by committing more deeply to sustainable materials and offering new eco-solutions, while pursuing a transformation into a high value-added enterprise based on its proprietary technologies for semiconductor chemicals, inkjet inks, asphalt additives, and other products.

         As a result of the above measures, the Kao Group forecasts that sales in this business will increase 2.2% year on year on a like-for-like basis to 466.0 billion yen.

      3. Underlying Assumptions of the Forecast for the Fiscal Year Ending December 31, 2026

      The above forecast was made assuming translation rates of one U.S. dollar to 150 yen, one euro to 175 yen, and one Chinese yuan to 21.0 yen.

      Please note that there is potential for volatility in prices of natural fats and oils and petrochemicals. Assumptions for prices are based on information currently available to the Kao Group.

      (Remainder of page intentionally left blank.)

   2. Summary of Financial Position
      1. Summary of Assets, Liabilities, Equity and Cash Flows for the Fiscal Year Ended December 31, 2025

         Note: Negative numbers are shown in parentheses.

         Consolidated Financial Position (Billions of yen, except per share amounts)

         December 31,		December 31, Incr./(Dcr.)
         	2024	2025
         Total assets	1,867.2	1,875.1	7.8
         Total liabilities	768.4	780.4	12.0
         Total equity	1,098.8	1,094.7	(4.1)

         57.1%	56.7%	-
         2,296.69	2,352.49	55.80

         Ratio of equity attributable to owners of the parent to total assets

         Equity attributable to owners of the parent per share (Yen)

         Bonds and borrowings 131.1 131.7 0.6

         Total assets increased 7.8 billion yen from December 31, 2024, to 1,875.1 billion yen as of December 31, 2025. The principal increases in assets were a 19.8 billion yen increase in property, plant and equipment and a 17.7 billion yen increase in inventories. The principal decrease in assets was a 34.4 billion yen decrease in cash and cash equivalents.

         Total liabilities increased 12.0 billion yen from December 31, 2024, to 780.4 billion yen. The principal increases in liabilities were a 12.1 billion yen increase in trade and other payables and a 10.8 billion yen increase in income tax payables.

         Total equity decreased 4.1 billion yen from December 31, 2024, to 1,094.7 billion yen. The principal increases in equity were net income totaling 120.6 billion yen and exchange differences on translation of foreign operations totaling 26.5 billion yen. The principal decreases in equity were purchases of treasury shares for a total of 80.0 billion yen pursuant to a resolution of the Board of Directors at a meeting held on August 6, 2025, and dividends totaling 72.7 billion yen. In addition, the Company retired 12,300,000 treasury shares on December 26, 2025.

         The ratio of equity attributable to owners of the parent to total assets was 56.7% compared with 57.1% at December 31, 2024. Return on equity (ROE) was 11.3%.

         Consolidated Cash Flows (Billions of yen)

         	2024	2025	Incr./(Dcr.)
         Net cash flows from operating activities	201.6	199.7	(1.9)
         Net cash flows from investing activities	(45.9)	(69.8)	(23.9)
         Free cash flows	155.7	129.9	(25.8)
         Net cash flows from financing activities	(104.6)	(175.1)	(70.6)

         Net cash flows from operating activities totaled 199.7 billion yen. The principal increases in net cash were income before income taxes of 169.8 billion yen and depreciation and amortization of 85.8 billion yen.

         The principal decreases in net cash were 31.0 billion yen in income taxes paid and a 10.1 billion yen increase in inventories.

         Net cash flows from investing activities totaled negative 69.8 billion yen. This mainly consisted of 61.2

         billion yen for purchase of property, plant and equipment.

         Free cash flow, which is the total of net cash flows from operating activities and net cash flows from investing activities, was 129.9 billion yen.

         Net cash flows from financing activities totaled negative 175.1 billion yen. The Company emphasizes steady and continuous dividends and flexibly repurchases and retires treasury shares to improve capital efficiency from the perspective of EVA and ROIC. During fiscal 2025, this primarily consisted of purchases of treasury shares for a total of 80.0 billion yen pursuant to a resolution of the Board of Directors at a meeting held on August 6, 2025, 72.8 billion yen for dividends paid to owners of the parent and non-controlling interests, and 22.3 billion yen in repayments of lease liabilities.

         The balance of cash and cash equivalents at December 31, 2025 decreased 34.4 billion yen compared with December 31, 2024 to 323.3 billion yen, including the effect of exchange rate changes.

      2. Forecast of Assets, Liabilities, Equity and Cash Flows for the Fiscal Year Ending December 31, 2026

      Net cash flows from operating activities are forecast to be approximately 230.0 billion yen, due in part to an increase in income.

      Net cash flows from investing activities are forecast to be approximately 70.0 billion yen due to scheduled investments for further growth encompassing enhancement and rationalization of production capacity, greater distribution efficiency, and other purposes.

      In net cash flows from financing activities, the Kao Group expects to pay cash dividends, among other expenditures.

      As a result of the above, the balance of cash and cash equivalents as of December 31, 2026 is forecast to be approximately 370.0 billion yen, an increase of approximately 50.0 billion yen from a year earlier.

      (Remainder of page intentionally left blank.)

   3. Basic Policies regarding Distribution of Profits and Dividends for the Fiscal Years Ended December 31, 2025 and Ending December 31, 2026

      The Kao Group uses Economic Value Added (EVA) and return on invested capital (ROIC) as its principal management metrics and clearly determines the uses of its steadily generated cash flow as shown below from that viewpoint. Shareholder returns are one such use, and they are implemented after considering future demand for funds and the situation in financial markets.

      Use of cash flow:

      • Capital expenditures for future growth1

      • Strategic investments2 including M&A (also including share repurchases)

      • Steady and continuous dividend increases

        1. Investments that contribute to enhancing future competitiveness, such as investments for maintaining and strengthening the business foundation (including maintenance capital expenditures), capacity expansion, and DX. Includes expenditures for repayment of lease liabilities.

        2. Measures aimed at strengthening and transforming the business portfolio as well as capturing discontinuous growth opportunities.

           In accordance with these policies, the Company plans to pay a year-end dividend for fiscal 2025 of 77.00 yen per share, an increase of 1 yen per share compared with the previous fiscal year. Consequently, annual cash dividends will increase 2 yen per share compared with the previous fiscal year, resulting in a total of 154 yen per share. The consolidated payout ratio will be 59.2%.

           For fiscal 2026, in accordance with its basic policies regarding distribution of profits, the Company plans to pay a second quarter-end dividend of 78 yen per share and a year-end dividend of 39 yen per share (on a post-share split basis3). On a pre-share split basis, total cash dividends for the year would be 156 yen per share (a 54.3% payout ratio), an increase of 2 yen per share compared with the previous fiscal year. As a result, the Company is aiming for its 37th consecutive fiscal year of increases in dividends.

        3. The Company resolved at a meeting of its Board of Directors held on February 5, 2026, to conduct a share split at a ratio of two shares for each ordinary share, with June 30, 2026, as the record date and July 1, 2026, as the effective date.

2. Basic Approach to Selection of Accounting Standards

   Having decided that unifying accounting standards within the Kao Group will contribute to improving the quality of its business management, the Kao Group voluntarily adopted International Financial Reporting Standards (IFRS) from fiscal 2016. This enables management based on standardized procedures and information for each Group company and business, and the Kao Group intends to reinforce its management foundation in order to enhance its corporate value as a global company. The Kao Group also believes that the application of IFRS facilitates the international comparability of its financial statements in capital markets.

3. Consolidated Financial Statements and Notes

Kao Corporation and Consolidated Subsidiaries As of December 31, 2025

(Millions of yen)

2024 2025 Change

Assets

Current assets

Non-current assets

(Millions of yen)

2024 2025 Change

Liabilities and equity Liabilities

Earnings per share

Remeasurements of defined benefit plans

Share of other comprehensive income of investments accounted for using the equity method

Total of items that will not be reclassified to profit or loss

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translation of

foreign operations

Share of other comprehensive income of investments accounted for using the equity method

Total of items that may be reclassified subsequently to profit or loss

taxes

Other comprehensive income, net of

1. Consolidated Statement of Changes in Equity

Kao Corporation and Consolidated Subsidiaries

Fiscal year ended December 31, 2024 (Millions of yen)

Equity attributable to owners of the parent

Other components of equity

Net gain (loss) on revaluation

capital

Share Capital surplus

Treasury shares

Exchange differences on translation of

foreign operations

Net gain (loss) on derivatives designated as cash flow

hedges

of financial assets

measured at fair value

through other com-

prehensive

income

January 1, 2024 Net income

Other comprehensive

income

Comprehensive income

Disposal of treasury shares

Purchase of treasury shares

Share-based payment transactions

Dividends

Changes in the ownership interest in subsidiaries

Transfer from other

components of equity to retained earnings

Total transactions with the

owners

December 31, 2024

Equity attributable to owners of the parent

Total

Other components of equity

Non-

Remeasurements of defined benefit

Total

Retained earnings

controlling interests

Total equity

plans

January 1, 2024 Net income

Other comprehensive

income

Comprehensive income Disposal of treasury shares

Purchase of treasury shares

Share-based payment transactions

Dividends

Changes in the ownership interest in subsidiaries

Transfer from other

components of equity to retained earnings

Total transactions with the

owners

December 31, 2024

Fiscal year ended December 31, 2025 (Millions of yen)

Equity attributable to owners of the parent

Other components of equity

Net gain (loss) on revaluation

capital

Share Capital surplus

Treasury shares

Exchange differences on translation of

foreign operations

Net gain (loss) on derivatives designated as cash flow

hedges

of financial

assets measured at

fair value

through other com-

prehensive

income

January 1, 2025 Net income

Other comprehensive

income

Comprehensive income Disposal of treasury shares

Purchase of treasury shares

Share-based payment transactions

Dividends

Changes in the ownership interest in subsidiaries

Transfer from other

components of equity to retained earnings

Total transactions with the

owners

December 31, 2025

Equity attributable to owners of the parent

Total

Other components of equity

Non-

Remeasurements of defined benefit

Total

Retained earnings

controlling interests

Total equity

plans

January 1, 2025 Net income

Other comprehensive

income

Comprehensive income Disposal of treasury shares

Purchase of treasury

shares

Share-based payment transactions

Dividends

Changes in the ownership interest in subsidiaries

Transfer from other

components of equity to

retained earnings

Total transactions with the

943 671 (152,241) (150,629) (2,292) (152,921)

owners

December 31, 2025 － 160,759 716,621 1,064,077 30,623 1,094,700

Share of profit in investments accounted for using the equity method

(3,482) (3,406)

Cash flows from investing activities

Cash flows from financing activities

Net increase (decrease) in cash and cash equivalents 51,105 (45,221)

Cash and cash equivalents at the beginning of the year

Effect of exchange rate changes on cash and cash equivalents

291,663 357,713

14,945 10,790

Cash and cash equivalents at the end of the year 357,713 323,282

1. Notes to Consolidated Financial Statements

   1. 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.

         Due to a change in organization as of January 1, 2025, the Kao Group reclassified its five former

         reportable segments (the Hygiene and Living Care Business, the Health and Beauty Care Business, the Life Care Business, the Cosmetics Business, and the Chemical Business) into the above-noted five

         reportable segments (the Hygiene Living Care Business, the Health Beauty Care Business, the

         Cosmetics Business, the Business Connected Business, and the Chemical Business) from the three months ended March 31, 2025. Segment information for the same period a year earlier has been restated to reflect the reclassification.

         Information about major customers has been omitted as the revenue from each customer is less than 10% of the Group's net sales.

         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, 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

      2. Sales and Results of Reportable Segments

         Fiscal year ended December 31, 2024

         Reportable segments Global Consumer Care Business

         Chemical

         (Millions of yen)

         Reconciliation1 Consolidated

         Hygiene

         Health

         Cosmetics

         Business

         Business Total

         Living Care Beauty Care Business Business

         Business

         Connected

         Business

         Subtotal

         Net sales
         Sales to customers	544,278	423,967	244,102	40,478	1,252,825	375,623	1,628,448	-	1,628,448
         Intersegment sales and transfers2	-	-	-	-	-	45,678	45,678	(45,678)	-
         Total net sales	544,278	423,967	244,102	40,478	1,252,825	421,301	1,674,126	(45,678)	1,628,448
         Operating income (loss)	75,771	34,433	(3,664)	5,206	111,746	35,721	147,467	(823)	146,644

         Financial income 4,988

         Financial expenses (4,090)

         								3,482
         								151,024
         30,309	19,633	13,297	2,336	65,575	20,774	86,349	2,073	88,422
         726	76	69	3	874	658	1,532	281	1,813
         28,394	18,632	15,132	1,682	63,840	28,631	92,471	1,059	93,530

         Share of profit in investments accounted for using the equity method

         Income before income taxes

         Other items Depreciation and amortization Impairment losses Capital expenditures3

         Notes:

         1. The operating income (loss) reconciliation of (823) million yen includes 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.

         3. Capital expenditures include investments in property, plant and equipment, right-of-use assets and intangible assets.

            Fiscal year ended December 31, 2025

            Reportable segments

            (Millions of yen)

            Global Consumer Care Business

            Chemical

            Reconciliation1 Consolidated

            Hygiene

            Health

            Cosmetics

            Business

            Business Total

            Living Care Beauty Care Business Business

            Business

            Connected Business

            Subtotal

            Net sales

            Sales to customers 549,333 432,882 261,563 39,174 1,282,952 405,681 1,688,633 － 1,688,633

            Intersegment sales

            and transfers2 － － － － － 45,840 45,840 (45,840) －

            Total net sales 549,333 432,882 261,563 39,174 1,282,952 451,521 1,734,473 (45,840) 1,688,633

            81,273

            39,136

            10,411

            2,254

            133,074

            30,188

            163,262

            807

            164,069

            Operating income (loss)

            Financial income 6,198

            Financial expenses (3,827)

            								3,406
            								169,846
            30,657	19,789	11,546	1,397	63,389	20,477	83,866	1,975	85,841
            126	12	20	0	158	143	301	-	301
            32,276	17,171	13,409	1,321	64,177	30,496	94,673	6,463	101,136

            Share of profit in investments accounted for using the equity method

            Income before income taxes

            Other items Depreciation and amortization Impairment losses Capital expenditures3

            Notes:

            1. The operating income (loss) reconciliation of 807 million yen includes 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.

            3. Capital expenditures include investments in property, plant and equipment, right-of-use assets and intangible assets.

      3. Geographical Information

         Sales to customers and non-current assets (excluding financial assets, deferred tax assets and retirement benefit assets) by region consist of the following:

         Sales to Customers (Millions of yen)

         2024 2025

         Japan		903,857		945,050
         Asia		332,029		349,030
         Americas		213,270		212,435
         Europe		179,292		182,118
         	Total	1,628,448		1,688,633

         Note: Sales are classified by country or region based on the location of customers.

         Non-current Assets (excluding Financial Assets, Deferred Tax Assets and Retirement Benefit Assets)

         (Millions of yen)

         2024 2025

         Japan 519,501 522,309

         Asia 101,924 101,470

         Americas 192,254 204,341

         Europe 57,555 62,099

         Total 871,234 890,219

   2. Selling, General and Administrative Expenses

      Selling, general and administrative expenses consist of the following:

      2024		(Millions of yen) 2025
      Advertising	88,270	92,346
      Sales promotion	54,327	58,905
      Employee benefits	176,955	175,751
      Depreciation	16,696	15,451
      Amortization	11,637	11,737
      Research and development	62,092	61,127
      Other	88,163		89,816
      Total	498,140		505,133

   3. Earnings per Share

      The Basis for Calculating Basic Earnings per Share

      Net income attributable to owners of the parent

      Amounts not attributable to ordinary

      (Millions of yen, unless otherwise noted) 2024 2025

      107,767 120,081

      － －

      shareholders of the parent

      Net income used to calculate basic

      107,767 120,081

      earnings per share

      Weighted average number of ordinary shares (Thousands of shares)

      464,625 461,315

      Basic earnings per share (Yen) 231.94 260.30

      Note: Diluted earnings per share are not presented because there were no potential ordinary shares.

   4. Significant Subsequent Events

(Share split and Partial Amendment to the Articles of Incorporation in Connection with the Share split) At a meeting of the Board of Directors held on February 5, 2026, the Company resolved to conduct a share split and to partially amend its Articles of Incorporation in connection with the share split, as follows.

1. Purpose of the Share split

   The share split is intended to reduce the price per investment unit, making Kao shares more accessible to a wider range of investors - including individual investors who share our purpose, "To realize a Kirei World in which all life lives in harmony" - and thereby expand our investor base.

2. Overview of the Share split

   1. Method of the share split

      Each share of the Company's ordinary share held by shareholders listed or recorded on the final shareholder register as of the record date of Tuesday, June 30, 2026, will be split into two shares.

   2. Number of shares to be increased by the share split

      Total number of issued shares before the share split	453,600,000 shares
      Number of shares to be increased as a result of the share split	453,600,000 shares
      Total number of issued shares after the share split	907,200,000 shares
      Total number of authorized shares after the share split	2,000,000,000 shares

   3. Schedule for the share split