Rising LeverageLeverage rising to ~1.20 and debt exceeding equity reduces financial flexibility and raises interest-rate sensitivity. Higher indebtedness limits strategic optionality, increases refinancing risk, and magnifies earnings volatility in a downturn or rising-rate environment.
Cash Conversion VolatilityAlthough FCF is positive now, conversion at ~64% of net income and a prior negative FCF year indicates working-capital or capex timing swings. This variability can pressure liquidity, dividend sustainability, or force reliance on external funding when cash flow weakens.
Margin ModerationA step-back from earlier peak margins suggests increased competitive intensity, adverse mix, or reinvestment needs. Sustained margin erosion would compress returns on capital, reduce free cash flow margins, and raise need for higher growth to maintain ROE levels.