I will begin by providing an overview of the consolidated financial results. Please turn to page four. These are the key highlights. Let me start by looking back at fiscal 2025. In Japan, market share continued to expand steadily, and earning power became firmly established, making fiscal 2025 a year of solid progress in overseas businesses. While challenges became clearer, we also entered a phase in which tangible signs of growth began to emerge in targeted growth areas. ROIC management has become firmly embedded across the organization, and we can now see a clear path toward achieving the K27 target of 11% or higher ROIC. In 2026, we will focus on businesses with strong growth potential and pursue expansion while simultaneously turning around overseas businesses facing challenges toward achieving our planned profit targets.
At the same time, we position fiscal 2026 as a preparation period to ensure the achievement of K27 profit targets and to extend that growth to beyond K27. Near the end of my presentation today, I will also clearly reiterate our approach to capital allocation. As stated here, with regard to the share repurchases totaling about JPY 80 billion conducted in fiscal 2025, the acquisition and retirement of shares have already been completed. I will also explain our plan for a dividend increase in fiscal 2026 as well as the share split scheduled for July 1st of this year. Page six. Net sales amounted to JPY 1,688.6 billion, an increase of 3.7% year-on-year.
On a like-for-like basis, excluding the impact of foreign exchanges, net sales also increased by 3.7%, gross margin improved by 0.4 percentage points from the previous year to 39.6%, operating income totaled JPY 164.1 billion, an increase of JPY 17.4 billion year-on-year. Although this was JPY 0.9 billion below our revised forecast, this shortfall was primarily due to inventory valuation losses as a result of declining prices of fats and oils in the chemical business. The operating margin improved to 9.7%, excluding one-time factors such as gains on business transfers recorded in the previous year. Operating income increased by JPY 24.7 billion on a like-for-like basis. Net income attributable to owners of parent was JPY 120.1 billion, up JPY 12.3 billion or 11.4% year-on-year. Basic earnings per share were 260.3 JPY, an increase of 12.2% year-on-year, demonstrating solid progress in both profitability and capital efficiency.
The year-end dividend is planned at JPY 77 per share, subject to approval at general meetings of shareholders, bringing the full-year dividend to JPY 154 per share, an increase of JPY 2. As a result of our ability to generate stable cash flows, we have continued to increase dividends even amid economic fluctuations. We expect this fiscal year to mark the 36th consecutive year of dividend increases. Next, please turn to page eight. Let me summarize the key points for the full year of fiscal 2025 once again. Net sales increased by 3.7% and operating income increased by JPY 24.7 billion on a like-for-like basis. ROIC improved by 0.5 percentage point year on year to 9.7%. There are three main drivers behind these results. First, each GC business in Japan successfully achieved both growth and enhanced earning power.
In addition to volume growth, earning power became firmly established, resulting in year-on-year increase in both sales and profits. Second, the cosmetics business achieved a significant improvement in profitability. Along with the recovery in China, sales growth in Japan and the streamlining of fixed costs were particularly evident in the fourth quarter, resulting in a substantial full-year increase in operating income of JPY 14.1 billion. Third, we thoroughly implemented ROIC-based management, with business operations increasingly focused on capital efficiency. ROIC improved by 0.5 percentage points year-on-year to 9.7%. We will continue to pursue further improvements, aiming to achieve our K27 target of 11% ahead of schedule. Next, please turn to page nine. The green figures represent results excluding the impact of transfer of pet care and beverage businesses and structural reforms implemented last year. From this point onward, I will explain our performance based on these adjusted figures.
First, please look at the total column on the right, which shows the GC business. Overall, the GC business net sales grew by 2.8%. By region, Japan grew by 4.9%, while total overseas sales across Europe, the Americas, and Asia declined by 1.1%. However, as shown on page 11, sales grew by 1.1% in the fourth quarter following growth in the third quarter, indicating that we have entered a recovery phase in the second half of the year. In Japan, cosmetics grew by 6.3%, health and beauty care by 6.1%, and fabric and home care by 5.5%. All categories clearly outperformed market growth and delivered robust expansion. In Asia, sales declined in Indonesia as we prioritized profitability and avoided price competition. However, this was offset by a significant increase in sales resulting from the resolution of excessive distributive inventories in China's cosmetics business, and overall sales declined only slightly.
The chemical business achieved sales growth in all regions. Page 10 shows segment performance. Fabric and home care saw operating income grow by JPY 5.7 billion, driven by price revisions supported by a thorough focus on the higher value-added products and strengthening customer loyalty. The operating margin improved by 0.8 percentage points to 19.1%. Sanitary delivered operating profit of JPY 7.1 billion as a result of advancing earning power reforms through a cross-functional scrum structure, excluding the impact of the pet care business transfer. This represents a like-for-like improvement of JPY 4.1 billion. Health and beauty care saw growth in skincare and high-premium hair care in Japan. In Europe and the Americas, we worked on building foundations for growth while initiating reforms in challenged areas.
As a result, even excluding the impact of structural reforms implemented in the hair salon businesses two years ago, operating profit increased by JPY 1.3 billion year-on-year. Cosmetics significantly improved profitability through the growth of six focus brands and the effects of fixed cost reductions, expanding profitability and delivering a profit increase of JPY 14.1 billion, well above plan. The business-connected business recorded a 1.5% increase in sales, excluding the prior-year sales of the beverage business transferred in August last year. Profit improved by JPY 3.4 billion, excluding gains from the beverage business transfer. The chemical business was impacted in Europe by weak market conditions and inflows of products from China. Also, in the fourth quarter, a sharper-than-expected decline in fats and oils prices led to customer purchasing restraint and inventory valuation losses due to market price declines, resulting in a profit decrease of JPY 5.5 billion.
However, these factors were largely temporary, and we believe profit recovery is achievable from 2026 onward by focusing on growth areas. On a company-wide basis, we achieved an operating margin of 9.7%. The combined contribution of growth, earning power, and the structural reforms delivered steadily is profit improvement. Please review pages 11 and 12 later and turn to page 13. Analysis of change in operating income in fiscal year 2025. Operating profit was JPY 164.1 billion, an increase of JPY 17.4 billion year-on-year. Excluding one-time factors such as gains on business transfers included in 2024, operating profit increased by JPY 24.7 billion on a like-for-like basis. As explained in the previous earnings briefing, I will break down the sources of profit from three perspectives: growth, capability, earning power reform, and fixed cost reduction effects. First, growth capability. In the GC business, volume growth drove sales expansion.
Higher volume contributed to JPY 15.5 billion operating income increase, but after subtracting about JPY 9 billion in increased expenses such as marketing investments, the net contribution was about JPY 6.5 billion. Next, earning power reform. Against raw material cost increases of JPY 8.5 billion, we offset these through selling price increases of JPY 9 billion and other cost of sales improvements of JPY 18.5 billion, including JPY 17 billion from TCR initiatives and product mix improvements. As a result, we generated an improvement effect of about JPY 17.5 billion. Finally, fixed cost reduction effects. Through personnel and structural reform implemented both domestically and overseas, fixed costs were reduced by about JPY 5.5 billion. These effects are included in other cost of sales and SG&A expenses. Page 14. Further improvements of earning power.
Despite headwinds from rising raw material prices, we improved profit margins through the introduction of high value-added products and cost reduction in initiatives purchased from all angles. Company-wide gross margin, including the chemical business, improved by 0.4 percentage points from 39.2% in 2024 to 39.6% in 2025. In GC business, against our target of a positive 1 percentage point annual improvement, we achieved 1.5-point improvement in 2025, representing steady progress ahead of plan. Please turn to page 15. The competitiveness of the Japan GC business has improved significantly. Please look at the graph at the top. Since announcing K27 and structural reforms in July 2023, Kao's share in the toiletry market has exceeded the same months of the previous year for 30 consecutive months, an extremely rare trend. One of the factors behind this is portfolio management with clearly defined focus, covering both premium and mass price segments.
In Japan, while consumer behavior tends to be restrained amid rising prices, the reality is increasing polarization, with consumers cutting spending thoroughly in areas they are indifferent to while not compromising and seeking added value in areas they care about. Kao has captured this consumer insight and is pursuing growth through a clear division of roles, creating a new value in premium segments while broadly delivering universal value in mass segments to expand the customer base. The lower section shows examples in laundry detergents, kitchen care, and in-bath hair care. For example, in laundry detergents, by promoting both the Attack ZERO series and the Attack Antibacterial EX series as dual pillars, we further increased share by 2 percentage points to reach 46%. Profitability improvements have been achieved in both segments.
Through this dual-value approach, we are maintaining a pyramid-shaped customer structure with a broad base, connecting that to scale expansion and profit growth.
Page 16. Cosmetics business was explained at the business strategy briefing last September. We have strengthened toward the K27 and beyond three key areas: growth and profitability, earning power, and streamlining through the three systems that transcend the organizational boundaries. As a result, operating income exceeded JPY 10 billion, achieving the profitability in our Japan operations. First, growth and profitability in Japan. Our six focus brands, including the Curél, Kanebo, and SENSAI, in particularly well. Other brands also grown steadily thanks to the strengthened retail presence and the expansion of the direct-operated e-commerce. Next is the building the foundation for global growth. All three development patterns introduced at the business strategy briefing are progressing steadily.
In Asia, we promoted new Kanebo and KATE products simultaneously with Japan and primarily in Thailand. The sales grew significantly, reaching the 130% year-on-year and 116% across ASEAN as a whole. Curél, which is expanding in Europe and North America, continued its growth in the U.K. and launched in Canada. Sales in the U.K. expanded to 1.8 times of the previous year. Furthermore, SENSAI doubled its sales compared to the previous year by integrating the operations in Japan, China, and travel retail. Reorganizing the China business, we achieved a sell-out growth exceeding the market average while advancing the price correction in non-authorized channels. 2025 is the year of the structural reform. We also worked to streamline our business. In Japan, we generated the cost saving exceeding JPY 4 billion as a result of reducing the global inventory. The ROIC also improved significantly.
The cosmetics business, a key pillar of our global growth area, is steadily progressing with its restructuring toward the K27. Next. Please look at page 17. In our overseas GC business, we advanced the reforms by strengthening the brands and expanding the market, focusing on the cosmetics and skin protection. Bioré UV significantly expanded its distribution in Europe and U.S. by highlighting its features' Aqua Rich through the influencer marketing and strengthened the partnership with strategic chains. While facing challenges in Asia, it is now catching up through the full-scale rollout of its Airy UV, which attracted attention in Japan last year. Jergens, primarily operating in America, face challenges with brand aging. Starting in the Q3 2025, it strengthened the new product launches and communications. The brand recognition among the younger consumers has significantly recovered, providing the solid evidence of the brand.
In 2026, the company will restage its main product line to advance the brand rebuilding. Additionally, while not mentioned in the materials, Oribe became the first Kao-owned brand to be adopted by Sephora, in the United States. Thus, we are steadily increasing our presence in retail channels. Page 18, please. As highlighted earlier, our company-wide ROIC reached 9.7% with improvement across all three business segments. This table shows that the improvement rates in operating income and the ROIC across three areas as part of our efforts. In the stable earnings and the business transformation segments, 2025 ROIC improved by 1.4 points and 1.1 points, respectively. In the business transformation area, multifaceted initiatives in the sanitary business and the premium hair care brand in Japan contributed to this improvement. In the stable earnings, high value-added initiatives and enhanced brand loyalty made big contributions.
We will continue to pursue the further ROIC improvements in these areas. In the growth driver area, we will focus on growth for fiscal year 2027 and beyond by actively investing in the tertiary amines in the chemicals segment and in marketing in the beauty care segment. Page 20, please. We project net sales of JPY 1,750 billion, representing the real growth of 3.2%. Operating income is planned at JPY 182 billion, an increase of 17.9 billion year-on-year. Net income attributable to the parent company shareholders is projected to be JPY 130 billion, an increase of JPY 9.9 billion year-on-year. The basic core earnings per share are projected to be 287.4 yen, representing 10.4% growth rate. The dividend is planned to be 156 yen per share on a pre-split basis, representing plus 2 yen from the previous year.
Our CEO will discuss the details on page 22 later. Page 24, 2026 operating profit forecast. We will explain that the JPY 17.9 billion increase in operating income from the JPY 164.1 billion in fiscal year 2025 to the fiscal year 2026 forecast of JPY 182.0 billion. More than JPY 17 billion accrued by our earning power is a reason. In the GC business, we will aim to improve the gross margin by at least 1% through both sales price revisions and the cost reduction. JPY 10 billion from selling price increases are combined with JPY 7 billion from adjusting selling price, a totaling JPY 17 billion. In the GC business, real volume-based growth of 3.5% is anticipated and contributes to approximately JPY 18 billion.
For health and beauty care, we will accelerate the global expansion centered on our six focus brands in the cosmetics business, with hair care in Japan and UV Care in the Americas. SG&A are projected to increase by JPY 25.5 billion. Of this, JPY 10 billion for the marketing investment, with the remaining JPY 15.5 billion representing increases in the personnel cost and the others. While fiscal 2025 saw a reduction in the fixed costs due to the structural reform, this effect will not be present in 2026. The chemical business is expected to recover from the temporary profit decline caused by falling fat and oil prices in the latter half of the 2025.
2026 profit growth is anticipated due to the startup of the new U.S. tertiary amines production plants from the second quarter, and steady progress in acquiring new customers in high value-added fields, including the electronic materials for semiconductors. In summary, we will steadily expand the earnings, ensure the return to a growth trajectory, and achieve 2027 goals. Page 25, please. This is a summary of the K27 progress. The progress on the key KPIs for K27. The 2026 plan projects the ROIC of 10.5%, EVA of JPY 51 billion, in operating income of JPY 182 billion, and the sales outside of Japan JPY 760 billion. Page 26, as shown in the graph, we have achieved the operating income increase of JPY 24.7 billion for two consecutive years since implementing the structural reform. Coincidentally, we achieved the same number, 24.7, in two years in a row.
While income increase for the 2026 appears slightly smaller, there is no significant deviation from the initial plan. The main factors are increased personnel expenses, as well as the inclusion of the upfront cost for turning around the overseas businesses. Two years remain until the fiscal year 2027. In the GC business, we will maintain the strong performance in Japan while strengthening the overseas management to accelerate growth. In the chemicals business, we are proceeding with the necessary investment as planned and expect to catch up in fiscal 2026. Finally, I will explain the Kao's approach to capital allocation. Approximately 40% will be allocated for future growth and approximately 30% for strategic investment, including M&A and the share repurchase. Regarding the shareholder returns, we aim for a stable and continuous dividend increase, targeting approximately 30%. Now, the decision-making criterion for the capital allocation is EVA.
For capital expenditures and M&A, we emphasize whether they are expected to generate the value exceeding the cost of capital. We will actively utilize debt as necessary, without being overly fixated on the equity ratio. On the other hand, when investment opportunities exceeding the cost of the capital are limited, we will flexibly utilize share repurchase for capital efficiency. Kao does not intend to hold the surplus cash for an extended period. Kao has consistently demonstrated this perspective based on our past performance. This concludes our fundamental capital allocation plan. And concludes my explanation. Thank you.
Thank you very much, Mr. Negoro. Next, we would like to call on our CEO, Mr. Hasebe, for his presentation.
I would now like to talk about the progress of the K27 mid-term plan and the path to growth beyond that.
Under K27, we are not merely aiming to achieve numerical targets but also focusing on building a management foundation that can reproducibly generate the next phase of growth. Today's discussion will focus on four key points. First is the progress of K27 itself. Second is the pathways for further growth of Kao. Plans for 2026 and the direction for 2027 have become clearer, so I will talk about that. Third, I will touch on digital transformation to build a foundation for business growth. Finally, about advancing dialogue-based management, I will briefly discuss the management reforms we implement every year. Let me begin with the progress of our portfolio management and share our thinking. We have clearly defined and managed Kao's businesses in three business areas.
In the stable earnings area, we see steady growth of Fabric and Home Care and personal health centered around Japan, our home market, and Asian markets. This business area functions as the engine of our business. In the growth driver area, skin care, hair care, cosmetics, and chemicals are driving global growth. As mentioned earlier by Negoro, in 2025, the pace of this growth became more solid and reliable. Please turn back briefly to page 22, which covers our priority overseas business. Since what happens in 2026 will lead to 2027, I would like to explain them here. In 2026, we aim to further enhance the domestic operations' earnings power as our earnings base and, at the same time, strengthen our key overseas businesses. In the cosmetics business, we will clearly position growth overseas as our core focus, streamline our offerings, and achieve steady expansion.
In the Japan-origin model, we will have full-scale rollout of Curél in key countries in Europe and Americas, expanding the number of countries while achieving double-digit year-on-year sales growth in targeted markets. In the Asia model with Thailand as a base, the KATE and Kanebo models that are very successful will be further solidified, and we will aim for double-digit growth, significantly outpacing market growth. At the same time, we will enhance earnings power through price revisions in priority categories and strengthen sales capabilities while balancing growth and profitability through data-driven management and inventory optimization. In the health and beauty care business, we will make focused investments to further accelerate growth.
In the skin care business, in our strategic category of core UV businesses, including skin protection, we will deploy globally integrated initiatives through concentrated investment in digital marketing, aiming for double-digit year-over-year growth in Japan, Asia, Europe, and the Americas. Furthermore, in expanding our business in Europe and the Americas, our key focus regions, we will strengthen Bioré to achieve double-digit growth, exceeding market growth. For Jergens, we will pursue revitalization through brand renewal, aiming to balance growth and profitability. In 2025, Jergens has been successfully restaged with very positive momentum. We intend to leverage this momentum to further elevate Jergens into an even stronger brand. In the chemicals business, under the newly established three-region production structure, we will accelerate the global rollout of tertiary amines while also driving double-digit growth in high-profit areas such as electronic materials, including semiconductors.
Through these initiatives, we aim to ensure steady progress toward achieving K27. Now, let me return to the previous page. The key points of growth potential required to achieve K27 can be broadly explained in three areas. The first is the chemical business shown at the top. Here, we aim to accelerate high-value-added businesses such as electronic materials and agrochemicals. The chemical business is the most advanced in terms of global expansion, so it is essential to strengthen our presence in countries that we serve. In skin care and hair care, we will advance global expansion centered on skin protection. In cosmetics, we will roll out overseas expansion models and further enhance our channel strategies. Through the combination of these initiatives, we aim to achieve additional operating income growth of JPY 30 billion from 2026 to 2027.
This represents adding further JPY 30 billion on top of the targets for 2026 mentioned earlier by Negoro. Next slide, please. When looking beyond K27, both now and going forward, we place importance on three axes: global, sharp, and top. This is our policy and, indeed, is our strategy itself. Global refers to market scale, growth potential, and growth rates necessary for global operations. Sharp represents exclusive uniqueness, technology, and the sharpness of brands. Top refers to whether we can clearly hold the number one position in the specific markets we target. We will concentrate management resources on businesses that enhance these three indicators. This is a fundamental philosophy that will continue beyond K27. Now, I'd like to take a step back and explain how we will advance these three businesses.
Our core technologies are not easily expressed in a single phrase, but today, I'd like to touch on three distinctive technologies using three examples. To put it simply, they are technologies that protect what is essential, remove only what is unnecessary, and precisely control physical properties. These technologies, from the core of what we have cultivated over many years, starting from soap with which we wash our faces, today I will explain them by dividing them into three categories. First is precision selective cleansing. Next slide. From here, I will discuss three concrete examples with which to jump up our businesses by adding high values. First is the electronic materials field within the chemical business. With the growth of generative AI and data centers, semiconductor manufacturing is becoming increasingly miniaturized, complex, and sophisticated.
There are more than 500 semiconductor manufacturing steps, and 30%-40% of them are actually related to cleaning. This is where we come in. As manufacturing becomes more advanced, what to clean, how to clean, and how to clean it become critical in determining yield and performance. With our focused efforts, we have now reached a very strong position. Next slide, please. As mentioned earlier, Kao's strength lies in selective cleansing technologies accumulated over nearly 140 years. That is, technologies for washing selectively. Removing dirt without damaging the skin. That is, selective cleansing of skin. Removing dirt from fabrics without damaging fabrics. That is, selective washing of clothes. And now, semiconductors, while protecting areas that have already been cleaned, we clean the deep inner parts. We have been refining this technology.
As structures become more complex, you want to avoid damaging the parts already cleaned in subsequent cleaning steps. The ability to clean increasingly intricate areas with even greater precision is our true strength and represents the essence of our technology. The more miniaturization advances and the higher the cleaning difficulty becomes, the more it becomes our field of play. In fact, up to this point, we have achieved record-high sales for two consecutive years and also renewed record-high profits. This is strongly linked to the growth of data centers. With the expansion of data centers, hard disks are used for long-term data storage, and in this area of hard disk manufacturing agents, we hold a 50% global market share. Also, for semiconductors, which are short-term memory devices, remembering and recalling in an instant, to use a brain analogy, we hold a 60% global market share in semiconductor manufacturing agents.
Beyond this, we have built a strong formation in electronic materials by combining various businesses such as CMP slurries, and dispersants for multi-layer ceramic capacitors. Under K27, we are pursuing a plan to double sales. We are planning high growth with a CAGR of about 20%. Furthermore, as shown on the right, we are not just working by ourselves, but under the concept of Team Japan, we are further strengthening our capabilities by combining our core technologies with the strengths of other companies. We have established a cleaning center in Taiwan and aim to further enhance co-creation with partners. Next, I'd like to talk about the cosmetics business in the skin care and hair care domain. I touched briefly on this last month, so today I will focus only on the key points.
As many of you know, competition in this domain has shifted due to generative AI and the use of data. In the past, it was KOL and other influencers, as well as commercials, that induced brand switching behavior or mind change of many customers. Today, however, we are in an era where more and more AI determines consumer choices. Even KOLs and influencers are now using AI to select cosmetics that they seek and wish to communicate. In other words, advanced personalization is progressing rapidly. Going forward, not only price and shelf placement, but also scientifically validated data, reproducibility, and data itself will become the axis of competition. This is an area where we must engage from an early stage by leveraging RNA data that can be easily obtained from skin surface lipids.
Kao aims to build a business model that simultaneously improves marketing investment efficiency, the probability of successful matching with consumers, and the reduction of social waste. Next slide, please.
The so-called Skin Gene Model is derived from our RNA research insight. It's a new yardstick to see a person's current skin conditions. You may consider that your skin stays the same till the end of your life once that you measure your skin conditions, but no. The skin conditions fluctuate in about 60% of the people. What fits you today may completely change in a year later based on the accumulated data that we have. Enable AI image analysis to classify the two distinct skin groups, and the result can be displayed on your cell phones with high accuracy. 80% of the genes can be classified into specific categories. Next slide, please.
The Skin Gene Model successfully and visibly match the skin and corresponding skin care. I have prepared the three case studies applying the available products of ours. We have more. We have accumulated the rich source of such paired data of the customers of Kao and the other companies. Rich stock of the data improves the matching accuracy, which will derive our competitive advantage. Cumulative LTV model based on the estimated skin types will raise our profitability. Thus, this platform business promotes the competitiveness and profitability simultaneously. That the former competitors within the consortium will all contribute their data of their different categories to this platform and, in turn, extract the better ideas for the customers to apply the products best fit for their skins.
While we explain the Skin Gene Model today, Kao is actively developing numerous other business models that leverage detailed knowledge of each customer's unique characteristics to help them select the optimum solution in 2026 and 2027. Next, let me introduce specific examples of the individualized optimal selection products that may be brief. Through RNA stratum corneum research, we can observe the daily changes in skin conditions and align the products just fit for each day cyclically. SOFINA is already very successful in the market as a master brand, and we will place SOFINA iP in the brand. The answer line is already a big hit in the market, and we will uplift its benefit even more to offer the serum that best matches just to your skin, calling THE ANSWER program. That the high LTV model would boost the customer's loyalty.
This product line will evolve from the simple sellout model into the continuously selling model to repeaters. This is a third case study of what I call environment-adaptive selection. Globally, the population growth and the surging consumption prices are depleting the surfactant, a key ingredient for the washing. The conventional active ingredient for cleaning, lauric acid, accounted for only 5% of all fat and oils, leaving the balance of 95% unusable for washing. Kao has been working to solve this challenge for about 20 years squarely and developed the world's first high-performance surfactant Bio IOS. Bio IOS is using the C16C18 oleic stearic acid and is used and richly extracted from the algae. The new ingredient is far superior to conventional agents because, for one, it does not use a fossil fuel, and two, it does not produce byproducts, including dioxin.
And also, it is far cheaper than C12 and C14 and still positively used in products. We are not simply a chemical business. Kao is also a consumer of our own products. Next, please. These are some of the Bio IOS-based products on our portfolio. There are others. The Attack ZERO contains the highest amount of the Bio IOS, followed by the Attack Antibacterial EX, Bioré u The Body, and Merit Osoro, launched last year. All these innovative products are developed thanks to the Bio IOS. We are committed to expand this portfolio, each product uplift and add the value. That significantly reduces CO2 emissions and increases the renewable carbon ratio. Compared with their predecessors, provided a product is not completely new, the unit price per product volume is higher and thereby increases the sales in each category. In short, we are transforming the sustainability from cost into a revenue driver. Next page, please.
Kao's approach to ESG as a way to grow. Kao is not aspiring to be an environmentally compliant company, but aspires to turn environmental compliance into a competitive advantage. In general, ESG is considered a costly operation, but we position it as a competitive edge and a revenue source if it is backed by our exclusive and proprietary technology and not only the pro bono activities contributing to society. Maximum with minimum. I have been advocating this philosophy ever since I assumed the post of CEO. By adjusting the numerators and denominators of the formula, we can include the ESG initiative into one of our competitive pillars, or transforming non-financial to future financial as a part of our proactive strategy. My belief is taking root in corporate culture.
The figure explains the functions of the surfactant, and I would like to emphasize that the washing has been always our core business, and we have to protect this technology in a sustainable manner. That we procure the raw materials, distribute them not among ourselves but the other companies in order to disseminate the know-how. This is our strong commitment. Next page, please. The slide shows the three core technologies. Please note that each includes the terms selective and cleaning. It is not enough that if we are selected as a detergent producer, we have to know what is the expectation of the customer is first. What do they wish to or need to cleanse? What makes them select us from many others? What can we leave behind the environment? We summarize into these three growth drivers.
The three drivers helped us grow in 2025 and will help us grow in 2026 and subsequent years. They would not proceed linearly. On the left side, you can see a new detergent designed to wash semiconductors, which is a very new field. Advanced individual optimum selection agent should offer the unique features differentiating it from the conventional products. We have to deep dive into the new market in a very focused manner, even to the genomic level. Number 3, sustainability will be a must for a company to achieve, taking up the challenge of the sustainability, aggressively develop the world's first product, and thereby lead the global market. This is our strong commitment. Next, please. I would like to explain the progress and outcomes of the digital transformation. Digital transformation supports both management and the business growth as a solid foundation.
Eight years ago, we launched a new group called SIT, and I assumed the leadership. The impact of our initiatives far exceeded my initial expectation both in depth and width. AI Big Bang took place two years ago and further extended our scope of activities. AI-centric initiatives help us identify the RNA genes and accurately segment the washing and cleaning operations. The slide shows our internal data as well as some outside opinions on our digitization efforts. Next page, please. These three partner companies of ours are all noted for their unique characteristics. These are the evaluations made by each of them when we asked how they view our DX. We asked them to be very frank without sweetening any words. That Microsoft says that they are impressed that every single person of Kao, including executives, can comfortably use AI and plug in the database into Data Lake.
The global sales turnover and inventory of all our products completely visible daily by anybody from anywhere within Kao thanks to our fixed site observation network. SAP representatives stated that Kao excels in using the AI for all levels of ROIC and ESG decision making. Perfect is a venture company noted for the image processing and creation. Kao is good at playing around with images but has also been collaborating with Perfect in order to create the database consisting of images. Perfect praises Kao by saying that the images are used efficiently and comprehensively at implementation levels. In order to advance dialogue-based management, we invited two highly capable professionals on board as partners in order to evolve our leadership lineup to a higher level. First, Mr. Shinji Okuyama, who has experience as a president of a global consumer goods company and is well-versed in IT.
Though his nomination must be approved by a board meeting in March, he is expected to bring his objective and professional point of view. As you know, he was the CEO of the most formidable rival company in Japan a decade ago. We decided to invite this former worthy enemy as our board member. The other is Wakako Sato, who possesses extensive experience in capital market and industrial analysis within our market sector. I strongly requested her to come and join us, identifying what is lacking from us, how can we communicate with the sales stakeholders, and how to access our customers. In short, she will be our interpreter to interface with other members of the community. As you can see, Kao is committed to let our leadership grow and evolve by inviting the fresh talent from outside. Furthermore, Kao will strengthen its communication capabilities from the investors' perspective.
Four key K27 targets should be achieved by all means. We are progressing in line with the targets and aspiring to overperform. Next page, I do not have to repeat the key highlights. Finally, I would like to briefly touch upon the main upcoming events of this fiscal year. Scientific marketing strategy or scientific marketing has been promoted by Kao for some time, but what is the definition of the scientific marketing? You will hear the detailed explanation of scientific marketing strategy during the upcoming briefing. Another is a briefing on research and development strategy, where you will be able to hear how our R&D budget will be used and allocated into the future. That's all from me. Thank you very much for your attention.
Dear equity market participants, Sato has returned.
Of course, the reason I'm here is to enhance Kao's corporate value and to deepen and strengthen its dialogue with the capital markets. I will swiftly and accurately convey investors' concerns to management and turn them into inputs for decision making and execution. I will also make every effort to communicate the company's management strategy to the capital markets as a clearly articulated equity story. I believe that the management invited me back because they are committed to realize growth by any means possible, not shying away from harsh criticism from an outsider's perspective. Now, recently, Japan has been recognized among global travelers as the most attractive travel destinations in the world. One of the reasons cited is that Japan is a clean and beautiful country. Clean and beautiful is Kao's purpose. And I believe it is Kao that supports this concept from the foundation, from advanced technologies.
If Japan's cleanliness and beauty have become an object of admiration worldwide, I am convinced that now is precisely the moment when Kao's global growth will accelerate. My own challenge in the capital markets also resumes here at Kao. I will strive to meet your expectations by providing results. I sincerely ask for your continued guidance and support.