ROHTO PHARMACEUTICAL CO.,LTD. Q4 FY2025 earnings call

• 2025 March Full Year Consolidated Financial Performance

  • Total consolidated revenue hit 308.625 billion yen, a 14.0% double-digit increase year-over-year. The growth was driven by inbound demand increases, yen depreciation effects, and the addition of newly acquired Eu Yan Sang (Singapore) and MONO (Austria) to the consolidation scope starting from the second half of the period.
  • Gross profit margin was 56.7%, a 1.4 percentage point decrease year-over-year, due to higher raw material costs, lower operating leverage from missed sales targets, increased depreciation and labor costs from a main Japanese plant renovation. Operating profit was 38.939 billion yen, a 2.8% decrease year-over-year, while net profit attributable to parent shareholders was 31.006 billion yen, a 0.2% increase year-over-year. Yen depreciation added approximately 7.7 billion yen in revenue and 0.89 billion yen in operating profit.
  • Inbound sales grew approximately 15% year-over-year, which fell short of internal expectations. Seasonal products underperformed in Q4 due to unseasonable Japanese weather and lower-than-expected pollen dispersal.

• Strategic Framework & Vision

  • The company launched its first public medium-to-long term growth strategy (2025-2035), aligned with the existing Vision 2030 "Connect for Well-being" mission to deliver health and well-being to consumers globally. The core strategic direction is to evolve as a science-based company, applying scientific approaches across R&D, data/IT, sales, production and management.
  • The company targets doubling total consolidated revenue and profit over the 10-year strategy period, with the overseas revenue share projected to expand to 53% by 2030.

• Core Strategic Priorities

  1. Strengthen business profitability: Expand self-care business globally, deliver innovative value in core eye care and skincare categories, and focus growth on new categories including hair care and femcare to expand scale and improve overall profitability.
  2. Deepen and expand technological and product capabilities: Leverage Rohto's unique science and collaboration with Eu Yan Sang to develop innovative plant-based supplements via phyto-science research; enter gastrointestinal care and post-recovery prognostic care segments to grow the internal medicine and food business.
  3. Build a foundation for the medical business: Expand CDMO business from low-molecular chemical manufacturing into bio and cell processing segments; strengthen collaboration between global group ophthalmology companies; develop regenerative medicine-based dermatology cosmetics; prioritize new drug development for myopia control, knee cartilage regeneration and cirrhosis treatment.

• Capital Allocation (2025-2030, 6-year period)

  • Projected total available capital: 330 billion yen in operating cash flow (before R&D deduction) plus 20 billion yen in additional planned funding.
  • Allocation breakdown: 100 billion yen for capital expenditure (for facility maintenance/upgrades, overseas production expansion, headquarter plant renovation, China eye care production capacity expansion); 90 billion yen for R&D (capped at 5% of total revenue, focused on core business enhancement and next generation growth areas); 30 billion yen for DX/IT investment to improve per capita productivity; 50 billion yen for M&A and equity investment to capture synergies and enter new segments; 80 billion yen for total shareholder return.
  • Shareholder return policy targets a payout ratio of 30%+ and a dividend on equity (DOE) of 3.5%+ to deliver stable, growing returns aligned with long-term profit growth.

1. Japan Segment: Revenue was 164.988 billion yen, a 5.2% increase year-over-year, accounting for 53.47% of total consolidated revenue. Operating profit was 22.453 billion yen, an 8.1% decrease year-over-year. 2. Asia Segment: Revenue was 100.336 billion yen, a 27.4% increase year-over-year, accounting for 32.51% of total consolidated revenue. Operating profit was 12.289 billion yen, a 2.2% increase year-over-year. 3. Americas Segment: Revenue was 20.769 billion yen, an 11.9% increase year-over-year, accounting for 6.73% of total consolidated revenue. Operating profit was 1.542 billion yen, a 27.9% increase year-over-year. 4. Europe Segment: Revenue was 19.163 billion yen, a 38% increase year-over-year, accounting for 6.21% of total consolidated revenue. Operating profit was 1.425 billion yen, a 2.9% increase year-over-year.

• For the 2026 March fiscal year, management expects overall sales to hit a new all-time high and profit growth to be maintained despite expected headwinds from the shift from yen depreciation to yen appreciation. Full year guidance is: 334.5 billion yen in total revenue (+8.4% YoY), 39 billion yen in operating profit (+0.2% YoY), 40.5 billion yen in ordinary profit (+0.2% YoY), and 31.1 billion yen in net profit (+0.3% YoY).
• Segment-level 2026 guidance: Japan: 171.2 billion yen revenue (+3.8% YoY), 21.7 billion yen operating profit (-3.4% YoY); Asia: 116 billion yen revenue (+15.6% YoY), 12.8 billion yen operating profit (+4.2% YoY, with a 10 billion yen negative impact from yen appreciation); Americas: 20.2 billion yen revenue (-2.7% YoY), 1.4 billion yen operating profit (-9.2% YoY); Europe: 23.8 billion yen revenue (+24.2% YoY), 2 billion yen operating profit (+40.3% YoY). The full-year consolidation of Eu Yan Sang and MONO (which were only consolidated for half a year in 2025) is a major driver of top-line growth for Asia and Europe.
• Medium-term (2025-2030) targets: 365 billion yen revenue and 46 billion yen operating profit by 2027 (3-year out); 415 billion yen revenue and 54 billion yen operating profit by 2030 (6-year out), with a 13% operating margin and 18.2% EBITDA margin.
• Dividend guidance: The full-year 2025 dividend is planned at 36 yen per share (26.4% payout ratio). For 2026, management plans a 6 yen per share increase to 42 yen per year (21 yen interim + 21 yen year-end), representing a 30.5% payout ratio and extending the company's consecutive dividend growth streak to 22 years.
• 2035 long-term revenue targets by category: 65-80 billion yen for eye care, 270-290 billion yen for skincare, 80-90 billion yen for internal medicine/food, 55-65 billion yen for medical business.

• Domestic macro: Persistent high inflation has driven stronger consumer thriftiness, preventing a full domestic economic recovery, which creates pressure on domestic consumer product demand.
• Market slowdown: China, Hong Kong and Singapore markets are experiencing ongoing demand slowdown, which weighed on 2025 results for the newly consolidated Eu Yan Sang and caused it to miss internal targets.
• Foreign exchange: The projected shift from yen depreciation to yen appreciation will create significant negative impacts on 2026 consolidated results, with an expected 10 billion yen negative revenue impact and 1.2 billion yen negative operating profit impact in Asia alone.
• Geopolitical and regulatory: Myanmar has enforced stricter import regulations that have made importing raw materials and finished products significantly more difficult, leading to large profit declines in the Myanmar market despite revenue growth.
• Competitive pressure: Global foreign peers face intense competition from local, Chinese and South Korean firms in Southeast Asian markets, even as Rohto has outperformed peers due to early investment in local retail and e-commerce channels.
• Weather-related demand volatility: Unseasonable weather and lower-than-expected pollen dispersal in Japan caused Q4 seasonal product underperformance and dragged down full-year results.
• External trade policy: Ongoing tariff risks from the Trump administration are expected to keep market conditions challenging for the Americas segment.

No question and answer section is included in the provided earnings call transcript.