Now, let me explain the financial results for the third quarter, or nine months ended September 30, 2025. Please turn to page 4. The key highlights: We position fiscal 2025 as the year to further enhance our earning power and build the foundation for global sales expansion towards profitable growth. In the third quarter, alongside establishing a strong foundation in Japan, the steady execution of strategic initiatives led to a recovery in the Cosmetics Business and a significant improvement in profitability. As a result, our earning power improved steadily, achieving an operating margin of 9.3%, ROIC of 9.3%, and EPS growth of 19.5%. We're confident that we can reliably achieve the publicly- announced forecast. Moving forward, we'll maintain this momentum while continuously strengthening marketing investments, particularly for growth outside of Japan in skin protection and cosmetics.
Concurrently, to promote growth outside of Japan across the entire business, we will also initiate reforms in areas facing challenges impacted by evolving market dynamics. To achieve K27, the Kao Group is at a transition point from quantity-based to quality-based growth. Through selection and concentration, we will transform into a healthier and stronger business structure, enhancing quality of profit to reliably increase the certainty of achieving K27. Moving to page 6, highlights of consolidated financial results. Net sales reached JPY 1,232,000,000,000 , an increase of 3.5% year-on-year. Excluding currency translation effects, the like-for-like growth was positive 4.1%. Gross margin improved by 0.5 percentage points year-on-year to 39.1%. Operating income was JPY 114.9 billion , up JPY 13.8 billion year-on-year. The operating margin rose to 9.3%, demonstrating steady progress in growth accompanied by profit expansion.
The net income attributable to owners of the parent was JPY 84.7 billion, up 19.3% year-on-year. Earnings per share were JPY 182.64, demonstrating solid progress in both profitability and capital efficiency. Next, please take a look at page 7, highlights of consolidated financial results. Sales for the third quarter, July to September, were JPY 427 billion, up 5.2% from the year before. Excluding currency translation effects, sales increased by 4.8% on a like-for-like basis. Gross margin improved by 1.4 percentage points year-on-year to 40.1%. Operating income increased by JPY 2.3 billion year-on-year to JPY 45.4 billion. Excluding one-off items from the previous year, such as a JPY 6.3 billion gain on the transfer of the Beverage Business, this would represent a like-for-like growth of JPY 8.3 billion. The operating margin reached 10.7%.
Profit attributable to owners of the parent was JPY 35.1 billion, a 27.1% increase year-on-year. This was also aided by the reversal of last year's foreign exchange loss into a gain this fiscal year. Earnings per share were JPY 75.85, representing a significant increase. Moving on to page 8, key points of the results and future initiatives. For the cumulative third quarter, sales increased by 4.1%, operating income rose by JPY 13.8 billion, and ROIC improved by 0.9 percentage points year-on-year to 9.3%. Three key factors contributed to this performance. Firstly, sales recovered in all categories and areas. Both sales and profit increased year-on-year due to continuous improvement in earning power, on top of a volume increase representing growth. Secondly, a significant improvement in profitability in the Cosmetics Business.
Recovery in China, as well as increased sales and progress in streamlining fixed costs in Japan, led to a substantial JPY 10.9 billion increase in operating income. Thirdly, the rigorous implementation of ROIC-focused management. By thoroughly prioritizing capital efficiency in our business operations, ROIC improved by 0.9 percentage points year-on-year to reach 9.3%. We are progressing steadily towards our annual target of 10%. Key initiatives for the fourth quarter are as follows. Japan's Global Consumer Care, or GC, business will strive for further market share expansion through value propositions, incorporating new innovations. We will advance brand restaging centered on Jergens in the U.S. and reforms in areas impacted by evolving market dynamics. Key points will be discussed later. Page 9, please. Net sales in the third quarter year- to- date.
Figures in green represent results excluding the impact of last year's transfers of the Pet Care and Beverage Businesses and structural reforms. Subsequent explanations will use these adjusted figures. First, please look at the GC Business in the total column on the right. The GC Business as a whole achieved a 2.9% increase in sales. By region, Japan showed robust growth of 5.6%. Europe and the Americas and Asia collectively saw a 1.8% decrease, but as detailed on page 11, the third quarter results showed a 3.1% increase, indicating a shift in trends for recovery. In Japan, strong growth was demonstrated in Health and Beauty Care at 7.1% and Cosmetics and Fabric and Home Care at 6.0%. The decline in Asia was primarily due to intensified price competition in Indonesia. The Chemical Business secured revenue growth across all regions.
Turning to page 10, please take a look at consolidated results by segment. I will now explain the results by segment. In Fabric and Home Care, profit increased by JPY 3.8 billion, driven by the implementation of price adjustments while thoroughly promoting high-value-added products and strengthening customer loyalty. The operating margin improved by 0.7 percentage points to 18.5%. As for Sanitary Business, reforms to enhance earning power were advanced through a Scrum-style system. Profit reached JPY 6.1 billion, representing a JPY 4 billion improvement, excluding the impact of the Pet Care Business transfer. Regarding Health and Beauty Care, in Japan, skin care and high-premium hair care grew. In Europe and the U.S., we laid the foundations for growth while also initiating reforms in areas facing challenges. Consequently, even excluding the impact of structural reforms in salon business, profit increased by JPY 200 million from the year before.
In cosmetics, profitability significantly improved through growth of six focus brands and fixed cost streamlining. Profits expanded with a JPY 10.9 billion growth. In Business-connected Business, commercial use hygiene products form the mainstay. Excluding the prior year sales posted by the Beverage Business, transferred in August last year, total sales increased by 1.6%. Profit increased by JPY 2.7 billion year-on-year as the Beverage Business's losses were eliminated. As for Chemical Business, sales volume was slightly below the previous year, but higher prices for natural fat and oil and raw materials were absorbed by passing them on to selling prices, leading to an 8.5% increase in sales value. However, profit decreased due to the impact of European economic slowdown and reduced demand in automotive-related fields, and total company achieved an operating margin of 9.3%. Growth, earning power, and structural reforms functioned as a trinity, delivering solid profit improvement.
Please turn to page 13. In analysis of change in operating income in Q3 year- to- date, the difference between operating income for third quarter year- to- date in fiscal 2024 and that of fiscal 2025 was a JPY 13.8 billion increase. Overall, results exceeded plans, clearly reflecting the effects of measures to expand profits. I will now revisit the sources of profit outlined in our previous earnings announcement, explaining them from three perspectives: growth capabilities, reform of earning power, and effects of structural reforms. First, growth capabilities. Volume growth in the GC Business was the primary driver of sales expansion. After fully allocating and deducting increased expenses, such as marketing investments, from this JPY 10.5 billion volume increase, the net contribution from growth was positive JPY 2 billion approximately. Next, the reform of earning power.
We offset approximately JPY 8 billion rise in raw materials cost through selling price adjustments and improvements in other costs of sales, generating a positive effect of about JPY 12 billion. Finally, the effects of structural reforms. Fixed cost reductions from ongoing domestic and international structural reform of human capital contributed about JPY 5 billion, which was included within the cost of sales and SG&A expenses. Turning to page 14, please take a look at the further improvement of earning power. Despite facing impacts from rising raw material costs, we achieved improved profit margins through the launches of high-value-added products and comprehensive cost reduction activities. The company-wide gross margin improved by 0.5 percentage points from 38.6% in third quarter year- to- date of fiscal 2024 to 39.1% in that of fiscal 2025.
Notably, the GC Business is showing good progress, exceeding its target of 1 percentage point annual improvement, with an actual 1.5 percentage point gain. Please see breakdown in the right bottom part. Negative impact by rising raw material prices was - 1.3 percentage point. Whereas contribution by selling price increases was + 0.9 percentage point. In sales mix improvement and manufacturing cost reduction made positive impact of 1.9 percentage point, clearly more than offsetting the decline. In Q4 and beyond, by continuing initiatives to strengthen price competitiveness by adding value and thorough cost management, we believe it is fully achievable to improve gross margin by one percentage point in the entire GC Business. Please turn to page 15. The biggest factor in sustaining strong sales consistently in GC Business is a consistent launch of competitive products in focus categories. Please refer to the graph in the top.
Since July 2023, which almost overlaps the time when we announced K27 structural reform, Kao's share of H&PC market has been increasing year-on-year for the record of 27 consecutive months. Categories of prominent sales growth rate are shown below. In addition to the laundry detergent and in-bath hair care product, which were presented in the previous financial results briefing, in kitchen care, hair mask, and oral care product as well, in many product groups, we achieved both profitability and market share expansion. Expanding wage hikes and inbound demand have been underpinning the economy in Japan, but consumer activities have been cautious due to rising prices. Under such circumstances, Kao Group has expanded sales volume by adding value, capturing consumers' needs for products, and reflecting them in price setting, as well as promoting innovative marketing to enhance brand loyalty. Please turn to page 16.
In Cosmetics Business, as explained in the business strategy briefing in September, under K27 and the medium-term strategy for further period, we are accelerating the structural reform and the new structure. We identified issues and worked on a Scrum-style system across organizational units, and as a result, we achieved profitability for the first time in three years and expanded profit further in Q3. In Japan business, where we aim to achieve both growth and profitability improvement, contribution by new products were prominent. In particular, six focus brands, including Curél, KANEBO, SENSAI, showed robust growth. Other brands have also been steady by strengthening in-store capabilities and expansion of direct e-commerce. In laying the foundation for global growth, three patterns that were explained in the business strategy briefing have been steadily developing.
In Thailand, the focus area for expansion in Asia, we strengthened global promotion of new products of KANEBO and KATE by the same time launch with those in Japan. As a result, sales increased 129% year-on-year, and sales expansion in ASEAN was as strong as 113% year-on-year. Curél, whose presence in Europe is strengthening, continues to grow in the U.K., where we expanded ahead of other areas, but we also started rollout in Canada to strengthen presence. SENSAI's growth is accelerating through integrated operation in Japan, China, and travel retail. In China business reorganization, we had a strong resumption of growth. Along with the price adjustment in non-official channels, we achieved the better-than-market average sell-out expansion. Locally produced products grew 1.9 times year-on-year, and reorganization of growth foundation has been steadily progressing. Please turn to page 17.
I will explain the global consumer care business initiatives outside Japan to ensure the success of K27. To ensure the success of K27, we are promoting initiatives in two aspects of strengthening growth areas and advancing reforms in areas facing challenges. Within growth areas, in skincare category in Americas and Europe, we implemented the rejuvenation of legacy brand of Jergens. We are developing emerging sales channels leveraging the expertise of Bondi Sands and reviewing portfolio. In skin protection category, focusing on Bioré UV, we deployed differentiation strategy by evidence-based marketing, accelerating rollout through a Scrum-style system. We are steadily expanding distribution in major retail chains in North America. In Asia, we achieved profitable growth even in the severe competitive environment through the combination of portfolio reform of Laurier and the loyalty marketing.
In cosmetics, we are promoting growth strategy steadily for both prestige, SENSAI, and masstige, Curél in Japan, Asia, and Europe. In advancing reforms in areas facing challenges, we are implementing strategic measures to address market dynamics. In hair salon products business in Europe and Americas, we review low margin and inefficient businesses promptly. We improve efficiency in sales and marketing by strengthening mainstay brand GOLDWELL through restage, as well as promoting DX across beauty brands, leveraging expertise of ORIBE. In Asia, amid the intensifying price competition, we review the overall business portfolio. We promote optimization of sales organization, including collaboration with major retailers and rebuilt fabric care Attack. By simultaneously promoting growth and reform as mentioned, we ensure the success of K27. Please turn to page 18 for raw material prices outlook in FY 2025.
Raw material cost improved from the assumed annual cost increase of JPY 9 billion as of Q2 to JPY 8.5 billion, down by JPY 0.5 billion due to domestic naphtha price decline, which is linked to crude oil market. Price of fats and oils continue to be high, but the impact in Q4 will be down by JPY 0.5 billion year-on-year. Despite lingering adverse impact on cost, its impact is trending down. Please turn to page 19 for the forecast of factors in operating income in FY 2025. I explain factors between operating income in FY 2024, JPY 146.6 billion, and operating income forecast in FY 2026, JPY 165 billion. Increase of JPY 18.4 billion.
The impact of the reform of earning power in our initial estimate is expected to be more than JPY 16 billion, and in GC Business, we will achieve improvement of gross margin of + 1% by revising selling prices and cost reduction. Raw material prices are expected to deteriorate by JPY 8.5 billion for the full year, but selling price increase of JPY 12 billion will more than offset the decline, and it will result in + JPY 3.5 billion in net. Adding the cost of sales + JPY 13 billion, JPY 16.5 billion in total will be the improvement by earning power. In volume, GC Business will make JPY 17.5 billion, in particular in cosmetics, as we have been working on the inventory issue of distributors in China since the second half of 2024. We expect the strong growth in sales in China in Q4 FY 2025.
Additionally, by focusing on the six focus brands, strong growth is expected centering on Japan, and we expect to exceed the initial operating income guidance of JPY 7 billion. SG&A expense remains unchanged from the announcement in Q2, with the increase of JPY 12 billion , of which JPY 10 billion is a marketing investment, and remaining JPY 2 billion includes personal expenses, other cost increase, and the structural reform of human capital. We continue proactive marketing investment in growth business areas to promote sales area expansion and strengthen business foundation. In Chemical Business, despite temporary profit decrease, new tertiary amine production plant in the U.S. has been operating steadily, as well as the steady new customer acquisition in value- added business areas, including semiconductors. Impact of currency transactions and other income and expenses minuses is mainly due to the gain on transfer in the previous year, as described below.
In conclusion, we are on the steady growth trajectory with steady expansion of profit. Finally, please turn to page 20 for K27 progress. As I explained today, K27 has been progressing steadily. We ensure the successful achievement of K27 by promoting both growth and reform consistently. This concludes my presentation. Thank you very much for your attention.