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Company Representative: Now please turn to Page 5 of the materials. These are the key highlights. To summarize the first three quarters of the fiscal year, I can say that K27 has progressed as planned. The effects of the structural reforms, which were our major target for fiscal 2024, have become clear, and the competitive advantages of our core brands improved. By actively implementing capital efficiency improvement measures, ROIC improved by 4.9 percentage points year-on-year.

For structural reforms, we entrenched earning power improvement by shifting to manufacturing that enhances value. Also, we have achieved revitalization through measures such as speeding up decision-making with scrum-type organization, and we have also seen the effects of career support. In our core brands, we are continuing to expand the trend of improving profit margins and increasing market share at the same time. One example of this is our entry into the premium hair care market in Japan, launching THE ANSWER as the second new brand following melt. It has made a good start.

This can also be said to be the result of our scrum-type organization. We also upgraded our marketing methods, including using DX to visualize progress in establishing loyal users. With these measures, we firmly established the foundations of our earning power and we ramped up global rollout of high-value-added products. That is a basic strategy of K27. Its focal areas include skin protection, the six focal cosmetics brands, Oribe products for hair salons in the Americas and Europe, and the highly functional chemicals.

I’d like to touch on the progress of these areas a little at the end. In the Chemical Business, we are responding to market recovery with expansion of high-value-added products and growing as we improve operating margin by 1.6 points. While overall progress is being made as planned, a negative factor is Cosmetics Business in China. Although China’s share in the overall Cosmetics Business is small, as explained at the time of the interim earnings, the market conditions which we expected would recover from the second half now seem to continue to slow down and we are optimizing distribution inventory in response to this. Although transitory, fiscal 2024 Cosmetic Business operating income, which we previously forecast at the interim earnings to be break-even, has deteriorated by about ¥3 billion since then, and we now expect an annual operating loss of about ¥3 billion.

Regarding the K27 priority target of improving capital efficiency, ROIC management is permeating, and at the end of the third quarter, ROIC improved by 4.9 points to 8.4%. Next, please take a look at the highlights of the consolidated financial results on Page 6. Net sales increased by 5.7% to ¥1,190 billion, excluding the impact of currency translation. Net sales increased by 2.1%. The gross margin improved by 2.3 percentage points year-on-year to 38.6%.

Operating income was ¥101.1 billion. This was a year-on-year increase of 42.8% or ¥30.3 billion. Operating margin recovered to 8.5%. Net income attributable to owners of the parent was ¥71 billion, a year-on-year increase of 41.5% or ¥20.8 billion. Basic earnings per share were ¥152.85 per share, a significant increase of 41.5% year-on-year.

Next, Page 8. These are the key points of the Q3 year-to-date results. As a result of structural reform, the earning power improvement became more entrenched and there were transfer of businesses and the lower depreciation expenses, as well as the effect of fixed cost reductions through career support, leading to an operating income of ¥101.1 billion, despite some increases in expenses. In Fabric and Home Care, by introducing new high value-added products centered on core brands such as Attack, Cucute, and Magiclean, we improved our market share and achieved a 7.2% increase in net sales and our operating margin increased to 17.8%. In the Sanitary Products Business, the gain on the transfer of business was recorded in the second quarter, but even excluding this, the business remained profitable as a result of structural reforms and improvements in earnings power.

For Health and Beauty Care, in addition to incurring some structural reform costs for European and American subsidiaries in the third quarter, we also actively invested in growth, particularly in the Skin Care & Hair Care. As a result, our operating margin went down by 2.5 percentage points year-on-year to 8.1%. In the Chemical Business, in addition to the recovery of the market, efforts to add value to products such as tertiary amines and semiconductor chemicals contributed to an improvement in the operating margin by 1.6 points to 8.3%. Cosmetic sales grew by 3.1%, excluding China, but due to the impact of inventory optimization in China, the operating margin was down 3.6 points year-on-year to minus 4.6%. We will continue this inventory optimization in China in the fourth quarter and we aim to normalize inventory by the end of the year.

Please turn to Page 9. This is the third quarter year-to-date net sales. Net sales for Consumer Products Business as a whole grew by 1.5%, but when looking at sales by region, Japan grew by 4% and Europe grew by 9.5% due to the addition of Bondi Sands sales and strong Hair Care sales, while sales in the Americas grew by 3.8%. Asia continued to see declining net sales down 10.8%, mainly due to significant slowdown in China centered around Cosmetics. Excluding China, Asia’s total consumer products business net sales were down 2.7%, but profitability improved, with operating income growing 25%.

In Japan, the Fabric and Home Care business grew significantly, and the Cosmetics and Skin Care businesses also performed well. In the Chemical Business, falling prices of natural fats and oils in the first half led to price revisions, resulting in sales growing by only 3.8%, but both volume and profits are growing steadily. Next, please refer to the results by segment on Page 10. The operating margin for the Fabric and Home Care business improved by 5.3 percentage points year-on-year to 17.8%. Sanitary’s year-to-date operating income was up ¥13.6 billion.

This includes a ¥4.3 billion gain on the transfer of the Pet Care business. Of the 1.5% increase in net sales for the Consumer Product Business as a whole, contribution from price increases was 2.1%. The Hygiene and Living Care Business had a particularly large contribution of 4%. Also, consolidated operating income was ¥101.1 billion, a significant increase of ¥30.3 billion compared to the same period last year. The breakdown shows that the Hygiene and Living Care Business made a significant contribution.

The operating margin improved by 2.2 points from 6.3% in the third quarter year-to-date last year to 8.5% this year. Health and Beauty Care business contributed to increased sales in terms of volume. Operating income was ¥25.6 billion, down ¥4.9 billion year-on-year and the operating margin was 8.1%. But this includes ¥3.7 billion in structural reform expenses for subsidiaries in the Americas and Europe. Excluding structural reform expenses, the operating margin would be 9.3%.

In the Life Care Business, the transfer of Beverage Business in August generated a gain of ¥6.3 billion. As a result, operating income was ¥5.6 billion. Net sales for the Cosmetics Business was down by 3.7%. Although we made price revisions, the impact of the sales volume drop in China was significant and operating losses increased, resulting in a Q3 year-to-date operating loss of ¥7.9 billion. As mentioned, sales in the Chemical Business only increased by 3.8%, but due to an increase in volume and improved margins, operating margin improved by 1.6 points and operating income was up ¥6.6 billion to ¥25.1 billion.

Please refer to Page 13 for analysis of change in operating income in Q3 year-to-date. The analysis shows a difference of ¥30.3 billion between FY 2023 Q3 year-to-date core operating income and FY 2024 Q3 year-to-date operating income. The effect of structural reforms may be the improvement of earning power in core brands, including selling price adjustments through promotion of high value-added products made a significant contribution of ¥25 billion. In the Chemical Business, gross margins also recovered due to a recovery in market conditions, as well as price revisions through promotion of high value-added and differentiated products. Specifically, raw material costs declined, contributed by ¥3 billion, and selling price revision that is mainly reflective of higher value-added products in H&PC and Cosmetics achieved contribution of ¥20 billion, furthermore, gross profit in chemical improved by ¥8 billion.

Other costs of sales includes a decrease of about ¥3.1 billion in amortization costs due to the impairment of Mary’s Japan and China as a result of structural reforms, plus the TCR effect and some special career support. The increase in SG&A expenses of ¥12 billion Japanese consists of bond license joining the Kao Group that accounts for about 40%, marketing expenses by approximately 30% and other costs such as personnel expenses. As for impact of currency translation, other incomes and expenses, although the transfer of business generated a large gain of ¥10.6 billion. Total resulted at ¥4.8 billion due to one-off expenses, such as ¥3.7 billion Japanese in restructuring costs for European and U.S. subsidiaries, and ¥3 billion in land disposal and other costs.

Of the approximately ¥25 billion of Q3 year-to-date effect of structural reforms, the earning power reform is included in selling price in this presentation deck, while the fixed cost reduction benefits of Mary’s are included in other costs of sales. Next, please refer to Page 14 for improvement of profit margin through progress of earning power reforms. The price division due to promotion of high value-added products has progressed better than planned, mainly in Japan. The gross margin improved by 2.3 percentage points to 38.6% in the first nine months of 2024, compared with 36.3% in the first nine months of 2023. Internally, more than ever before, business, research, production and sales are working together strongly to improve and monitor the marginal profit ratio for each and every brand.

This has resulted in this improvement in the gross profit margin. Our sales activities through a sales company structure has also been strengthened by linking profit targets to remuneration as KPIs, in addition to the introduction of a management system from this year. Please refer to Page 15 for forecast of factors in operating income. The analysis shows a difference of ¥25.3 billion between core operating income of ¥114.7 billion in FY 2023 and the forecast ¥140 billion for FY 2024. Structure reform effects are expected to be around ¥28 billion.

The price of raw materials such as natural oils and fats and petrochemicals is expected to rise in the fourth quarter, but raw material prices are expected to be plus or minus zero for the year. On the other hand, the increase in selling prices due to promotion of high value-added products is expected to continue in the fourth quarter, with a total annual increase of ¥21.5 billion compared to the previous year. The overall sales volume is expected to be negative by ¥4.5 billion. Consumer Products volumes are expected to grow by H&PC, but volumes are expected to decrease due to a slowdown in the Cosmetic Business in China and the optimization of distribution inventories. In Chemicals, expanded facilities for tertiary amines, fragrances and others in Europe will start operating and contribute to profits.

In addition, the gross profit margin expected to improve by ¥10.5 billion due to the promotion of high value-added products in functional products and information materials, as well as further price revisions and volume increases. Other costs of sales includes the effects of the structural reforms and others in FY 2023. The increase in SG&A includes investments in marketing and personnel expenses with the aim to achieve growth, while marketing expenses are to be strengthened with a focus on the core brands of Skin Protection, Cosmetics and Fabric Care. In addition, we expect the expenses to increase by ¥20 billion in anticipation of higher logistic costs and others. Impact of currency translation, other income and expenses are expected to amount to ¥4.8 billion in the third quarter and ¥2 billion in the fourth quarter.

As a result, operating income is expected to be ¥140 billion Japanese. Please now move to Page 16 for the raw material price outlook. In terms of raw material prices, although crude oil prices have stabilized at a low level, an increase of ¥3 billion is expected in the fourth quarter, mainly due to an increase in prices linked to the natural oil and fat market. The impact for the year is expected to be the same as last year. Next is progress of Global Sharp Top Strategy on the following three pages starting from Page 17.

I would now like to share some of the progress of the Global Sharp Top Strategy set out in the K27 Strategy. Bioré UV Care, the core of the Skin Protection Business, is accelerating its global expansion centered on Kao’s unique technologies. In Japan, we further promoted our high value-added proposals and achieved the number one market share position for the fourth consecutive year. In the United States, where we are focusing our efforts, we are steadily making progress towards establishing the business by expanding the number of doors of brick-and-mortar stores. In the premium proposition of the Hair Care business, Oribe is leveraging its brand power to grow its business in the U.S.

and Europe, mainly through its own e-commerce. The company has also started to generate positive results in manufacturing efforts through strong EC sales of a new product jointly developed by Oribe brand and Kao. The Kanebo brand in a Cosmetic Business has increased sales in Japan by more than 30% through proactive new product launches. The brand is making steady progress towards global growth by strengthening cooperation between Japan and Asia, including the simultaneous launch of a new flagship beauty serum in autumn. Next is Hair Care.

The key point here is product development through DX, more sophisticated marketing and super-fast speed. A prime example of this approach is the first high premium product melt, which has more than doubled its market share with an increase in the number of sales channels since this autumn. The second product, THE ANSWER, was also launched this autumn. The product is off to a good start with leading retailers and customers on word-of-mouth [ph] websites, giving it a high score. The Kao Group as a whole will continue to further improve marketing through DX and turn the Hair Care business into one of its growth drivers.

Finally, progress of Global Sharp Top Strategy in Chemical Business on Page 19. In oils and fats, sales of tertiary amines, which are representative of the Global Sharp Top Business, are growing steadily in disinfection and cleaning applications, with a 15% increase in volume terms. In addition to the new plant in Germany, which came on stream last year, a further new facility in the U.S. is scheduled to start its operation in the middle of the next year. We are also trying to expand sales of agrochemical product Adjuvant in China.

In the current year, sales have grown by 80% year-over-year, although they are still not large in terms of scale. We expect further growth by signing a strategic partnership with the largest distributor in China. In the area of Performance Chemicals, the group is working on developing standards for highly durable asphalt modifiers for adoption on public roads. At the same time, we are also strengthening our cooperation with local governments. Our initiative to utilize waste fishing nets, PET, in Miyagi Prefecture was highly regarded as an effective use of PET waste, which is difficult to process and was awarded the Ministry of Economy, Trade and Industry prize.

Through these initiatives, we expect further sales growth in the coming year. In addition, the company maintains the top share of the market for foundry sand binders in Japan and Thailand, and is also expanding into India, where sales are growing at 25% year-over-year. In the information materials, sales of semiconductor chemicals have recovered and sales have increased significantly by 40% year-over-year due to increased demand for AI. Further sales growth is expected in the coming year as a result of the decision to adopt our new process chemicals. As for inkjet inks, expansion in industrial and commercial printing sectors in Europe is progressing steadily, with sales growing by about 10%.

This concludes my presentation. Q - :