Rising Leverage And Debt LevelsHigher leverage reduces financial flexibility and raises sensitivity to interest costs. If debt continues to grow, the company may face constrained ability to invest in inventory, pursue growth opportunities, or sustain dividends, especially during slower manufacturing cycles.
Weak Free Cash Flow And Operating Cash ConversionNegative free cash flow driven by weak operating cash conversion and higher capex undermines the company’s ability to self-fund operations and growth. Persistent cash shortfalls increase refinancing risk and can force cutbacks or higher borrowing over the medium term.
Declining Profit MarginsFalling EBIT and net margins suggest margin compression from cost or pricing pressures. Reduced profitability weakens returns on capital, limits reinvestment capacity and makes earnings more vulnerable if revenue growth normalizes or input costs rise further.