High LeverageA relatively high debt-to-equity position raises refinancing and interest-rate vulnerability, reducing financial flexibility. Persistently elevated leverage can constrain capex, limit ability to absorb margin shocks, and increase solvency risk if cash generation weakens over the medium term.
Weak Cash ConversionNegative operating cash flow and a sharp decline in free cash flow show earnings are not reliably converting to cash. This undermines the company's capacity to service debt, fund working capital or invest, making profitability improvements less durable without cash conversion fixes.
Cost Pressure On MarginsA slipping gross margin and falling EBIT margin point to input-cost inflation or weaker pricing power. If cost pressures persist, they may erode the recent net income gains and force reliance on volume increases or further efficiency measures to sustain margins over the medium term.