Low Operating MarginsDespite margin recovery at the gross and net levels, persistently low EBIT/EBITDA margins limit operating leverage and profitability resilience. Thin operating margins reduce capacity to absorb cost shocks, constrain reinvestment potential, and limit cushion over the coming quarters.
Limited Discretionary Free CashWhile FCF is positive, the modest free-cash-flow-to-net-income ratio signals limited excess cash after operations. That constraint can restrict capital expenditures, acquisitions, or higher dividends, forcing trade-offs between growth and shareholder returns in the medium term.
Raw Material Cost ExposureThe business is structurally exposed to petrochemical-derived inputs (pigments, resins, solvents). Volatile raw material prices and limited pass-through ability can compress margins cyclically, creating recurring pressure on profitability across a 2–6 month horizon.