Unicharm (8113): FY2025 Results Summary — Asia Reset Weighs on Profit Ahead of the 13th Mid-Term Plan

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Unicharm Corporation reported net sales of 945.3 billion yen for the fiscal year ended December 31, 2025 (January 1 to December 31, 2025), down 4.4% year on year, and core operating income of 108.9 billion yen, down 21.4%. Profit attributable to owners of the parent company was 652 (100 million yen), a decrease of 20.3%. The company states that, in response to the reactionary impact of the previous year’s record-high business performance and intensifying competition in Asia, it accelerated “proactive investment” and “structural reforms” with an eye toward the 13th Mid-term Management Plan starting in fiscal year 2026. Despite the profit reduction, Unicharm implemented the planned dividend of 18 yen per share — an increased dividend for 24 consecutive years — and purchases of own shares worth 22 billion yen.

Consolidated Results (Full-Year Actual)

Figures in the table below are stated in units of 100 million yen, as presented in the company’s materials, except where noted. Unicharm explains that focused investments in Asia e-commerce and measures addressing market bipolarization in preparation for the next medium-term plan, together with temporary expenses related to India’s GST amendment and impairment charges, weighed on profits, and that future risks were fully addressed in the current period. The gross profit rate deteriorated by 0.3PP and the selling and administrative expense rate deteriorated by 2.2PP. The impact of exchange rate fluctuations resulted in a decrease of approximately 9.4 billion yen in sales and approximately 0.0 billion yen in core operating income.

Item	FY Ended Dec. 31, 2025	FY Ended Dec. 31, 2024	Change
Net sales	9,453	9,890	-4.4% (actual gap rate -3.5%)
Core operating income (margin-%)	1,089 (11.5%)	1,385 (14.0%)	-21.4% (-2.5pp)
Profit before tax (margin-%)	1,054 (11.1%)	1,345 (13.6%)	-21.7% (-2.5pp)
Profit attributable to owners of parent company (margin-%)	652 (6.9%)	818 (8.3%)	-20.3% (-1.4pp)
EBITDA (profit before tax + depreciation/amortization)	1,661	1,820	-8.7%
Base earnings per share (JPY)	37.30	46.41	-19.6%
USD rate (JPY)	149.71	151.58	-1.2%
CNY rate (JPY)	20.82	21.02	-1.0%

Segment Results

By geography, Japan recorded a 0.8% sales increase and a 0.9% profit reduction, while overseas operations posted a 7.1% sales reduction and a 41.1% profit reduction. Unicharm notes that market share in Japan was maintained despite inflation, that North America and the Middle East continued strong performance, and that active investments are being developed in Africa; China and Indonesia faced difficult conditions, while Thailand and Vietnam showed signs of recovery as competitive countermeasures took effect. On a management accounting base, actual gap rates of sales in main countries were: China -27%, Indonesia -18%, Thailand -9%, India +1%, Vietnam +8%, Middle East +5%, North America +12%, Brazil -2% and Egypt +16%. The sales ratio of overseas markets was 64.2% and the sales ratio of Asian markets was 41.2%.

By product, personal care is focusing on establishing new winning strategies to respond to market changes (bipolarization and the shift to e-commerce), with progress in addressing risks in China and Indonesia. In pet care, strong performance in North America drove earnings, while in Asia the company prioritized prior investment in markets poised to become future mainstays. “Others” refers to products related to industrial materials and similar categories. Units below are 100 million yen.

Segment	Metric	FY Ended Dec. 31, 2025	FY Ended Dec. 31, 2024
Japan	Net sales	3,425	3,399
Japan	Core operating income (margin-%)	674 (19.7%)	680 (20.0%)
Asia	Net sales	3,893	4,431
Asia	Core operating income (margin-%)	114 (2.9%)	429 (9.7%)
Others (North America, Saudi Arabia, Brazil, Netherlands)	Net sales	2,135	2,059
Others (North America, Saudi Arabia, Brazil, Netherlands)	Core operating income (margin-%)	300 (14.0%)	274 (13.3%)
Personal Care	Net sales	7,744	8,261
Personal Care	Core operating income (margin-%)	832 (10.7%)	1,109 (13.4%)
Pet Care	Net sales	1,561	1,487
Pet Care	Core operating income (margin-%)	241 (15.4%)	258 (17.4%)
Other products	Net sales	148	142
Other products	Core operating income (margin-%)	16 (11.0%)	17 (12.2%)
Consolidation	Net sales	9,453	9,890
Consolidation	Core operating income (margin-%)	1,089 (11.5%)	1,385 (14.0%)

FY2026 Forecast

For the fiscal year ending December 31, 2026, Unicharm forecasts consolidated net sales of 1,010 billion yen (YoY +6.8%) and core operating income of 136.0 billion yen (YoY +24.9%). The company states that sales are projected to exceed 1 trillion yen for the first time, that recovery in Asia will drive the entire company, and that raw material-related costs are expected to decrease by approximately 13.0 billion yen annually. Capital expenditure of 40.0 billion yen and depreciation expenses of 47.0 billion yen are planned. Local currency change rates of sales in main countries are guided (management accounting base) at Japan +5-7%, Asia +6-8% (China +14-16%, Indonesia +8-10%, Thailand +4-6%, India +6-8%, Vietnam +4-6%) and Others +2-4% (Middle East +1-3%, North America +7-9%, Brazil +18-20%).

Item	FY Ending Dec. 31, 2026 (Forecast)	FY Ended Dec. 31, 2025 (Actual)	Change
Net sales	10,100	9,453	+6.8% (actual gap rate +6.4%)
Core operating income (margin-%)	1,360 (13.5%)	1,089 (11.5%)	+24.9% (+2.0pp)
Profit before tax (margin-%)	1,358 (13.4%)	1,054 (11.1%)	+28.9% (+2.3pp)
Profit attributable to owners of parent company (margin-%)	865 (8.6%)	652 (6.9%)	+32.6% (+1.7pp)
Base earnings per share (JPY)	49.71	37.30	+33.3%
USD rate (JPY)	150.00	149.71	+0.2%
CNY rate (JPY)	21.50	20.82	+3.3%

Shareholder Returns

For the fiscal year ended December 31, 2025, Unicharm implemented the planned annual dividend of 18 yen per share, marking an increased dividend for 24 consecutive years, and executed purchases of own shares worth 22 billion yen. The dividend policy remains “progressive dividends” with a target dividend on equity ratio (DOE) of 4.5%, and dividends per share for 2026 are planned to increase for a 25th consecutive term, to 22 yen per year. In addition to dividends, the company plans to execute share repurchases of 19.0 billion yen in fiscal 2026 as part of efforts to achieve a total payout ratio of 65% or more, and states it will pursue a flexible capital policy aligned with market conditions to enhance capital efficiency and maximize PBR. In order to achieve its 2030 ROE target of 17%, Unicharm plans to maintain a total return ratio of 65% over the five-year period starting in fiscal year 2026.

Item	’24/12	’25/12	’26/12E
Dividends per share (JPY)	14.7	18.0	22.0
Purchase of own shares (100 million yen)	190	220	190

Note: dividend per share figures are based on the number of shares after the stock split implemented in January 2025, as stated in the materials.

Medium-Term Plan / Topics

The materials include an excerpt from the 13th Mid-term Management Plan. Under its guidelines for PBR maximization, Unicharm aims to achieve a V-shaped recovery in corporate value through the dual approach of business growth and capital policy restructuring (“Rebirth”). The company describes its previous capital policy as a total payout ratio of 50% or more, with PBR at 2x and stagnating and ROE around 10%. The 13th Mid-term Management Plan capital policy guidelines raise the total payout ratio to 65% or more and target DOE of over 4.5% for five continuous years while continuing consecutive dividend increases, thereby curbing net assets (the denominator) to achieve structural improvement in ROE.

On the business side, the company sets out the following priorities for fiscal 2026. In Japan, high value-added products in the wellness care growth area will accelerate, the light incontinence care market will be expanded, functional innovation in incontinent adult diapers will be driven, pet care profitability will be enhanced through aggressive expansion of the premium market and creation of new markets, and the femtech market will be pioneered using “Sofy Be.” In Asia, China is to experience fundamental reform of its revenue structure and renewed growth through brand restoration with differentiated feminine care products and improved e-commerce profitability; India is to accelerate growth through expansion and high value-added transformation of baby care, feminine care and wellness care along with new pet care market entry; and Southeast Asia is to focus on high value-added transformation, a fundamental review of its cost structure, stronger e-commerce and concentrated investment in wellness care and pet care. In other regions, the Middle East will shift toward feminine care and wellness care and expand exports to neighboring countries, North America will pursue continued high-profit and stable growth through expansion of high-value-added products (treats, toiletries), and Brazil will newly enter feminine care and pet care while Africa continues building a business foundation.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.