ROHTO PHARMACEUTICAL CO.,LTD. Q2 FY2026 earnings call

• Core Business Expansion

  • Acquired the Japanese trademark for Obagi from OBAGI (a subsidiary of Waldencast) for 82.5 million USD (~12.4 billion yen). Rohto already distributed Obagi products in Japan and paid royalties; the acquisition grants permanent rights to sell across all channels (including beauty clinics, dermatology clinics, and esthetic salons) to support the brand's second stage of growth.
  • Drove demand for eye care among younger demographics with marketing partnerships (ambassador SixTONES) and public outreach at the Osaka-Kansai Expo, successfully increasing sales volume of youth-focused eye drops.
  • Expanded global skincare distribution: Hadalabo Tokyo is now available in 40 countries, and the full Hadalabo brand is sold in 60 countries, with continued expansion into new markets planned.
  • Entered new high-growth categories: Launched a new color treatment from proly, a premium hair care brand for hair salons and D2C channels, and established Annitto, a new pet care brand focused on wellness for both dogs and their owners.

• Growth Business Development

  • Advanced phyto-science R&D for internal medicine and nutrition products: Established Japan's first algae farm and algae technology research institute on Kume Island, Okinawa, and launched a new 100% algae-based DHA/EPA dietary supplement.
  • New innovation MOCOLA, a time-release beauty drink concept, was ranked in Nikkei Trendy's 2026 Top 30 Hit Predictions, indicating strong expected growth.
  • Executed targeted youth-focused marketing for the Pansiron gastrointestinal medicine brand to increase brand awareness among younger consumers.

• Future Investment: Medical Business Infrastructure

  • Continued growth in ophthalmology: Rohto Nitten is performing well, with new prescription ophthalmic drugs planned for launch.
  • Autogel, launched last year for refractory wounds, has shown strong clinical efficacy and contributes to patient wellness.
  • Clinic-exclusive cosmetics perform well globally: the DRX brand in Japan marked its 20th year of sales, and Dermacept RX in Indonesia expanded its product line for its 10th anniversary.

• Human Capital Management

  • Launched new flexible work policies to support employee growth and organizational vitality: introduced "Beyond Work", which allows 3 or 4-day work weeks with remaining time for side work, education, or social contribution, and a no-core-hour flex schedule to support diverse work styles aligned with different life stages.

By product business segment (all year-to-date interim results):

• Eye Care: 6.9% YoY revenue growth, driven by strong performance of Rohto's domestic business, resumed sales in Myanmar, and strong demand in Southeast Asian markets including Vietnam and Indonesia.
• Skincare: 5.7% YoY revenue growth, supported by steady domestic performance and revenue growth in Indonesia and Myanmar.
• Internal Medicine & Food: 122.6% YoY revenue growth, with the large increase mainly attributable to the consolidation of Eu Yan Sang.
• Medical: 12.6% YoY revenue growth overall; although Qualitech Pharma in the Japan segment saw a revenue decline, the addition of Eu Yan Sang and MONO to consolidated results increased revenue from medical institution products and clinic income.

By geographic segment (all interim results, converted per magnitude rules):

• Japan: Revenue of 83.559 billion yen, +2.6% YoY; Operating profit of 11.061 billion yen, +12% YoY. Contributes 50.9% of total interim consolidated revenue.
• Asia: Revenue of 57.348 billion yen, +51.3% YoY; Operating profit of 7.139 billion yen, +18.3% YoY. Contributes 34.9% of total interim consolidated revenue. Even after deducting 0.77 billion yen in goodwill amortization and 0.44 billion yen in other intangible asset amortization from the Eu Yan Sang acquisition, Eu Yan Sang maintains an operating profit.
• Americas: Revenue of 10.107 billion yen, +0.6% YoY; Operating profit of 0.428 billion yen, -35.1% YoY. Contributes 6.15% of total interim consolidated revenue. Results outperformed plan despite the profit decline from higher selling, general and administrative expenses.
• Europe: Revenue of 11.538 billion yen, +43.7% YoY; Operating profit of 0.225 billion yen, -58.2% YoY. Contributes 7.03% of total interim consolidated revenue. The large profit decline was caused by rising cost rates after a UK packaging supplier went bankrupt, and results came in below plan, though the overall impact on consolidated results is minor.

• Full-year consolidated guidance was upwardly revised from August's published estimates. The new full-year forecast (converted per magnitude rules):

  • Revenue: 338.5 billion yen, +9.7% YoY, 4 billion yen higher than the prior forecast
  • Operating profit: 39.5 billion yen, +3.3% YoY, 0.5 billion yen higher than the prior forecast
  • Ordinary income: 44 billion yen, +10.8% YoY, 1 billion yen higher than the prior forecast
  • Net income attributable to parent shareholders: 32 billion yen, +3.8% YoY, 0.5 billion yen higher than the prior forecast
  • Expected EBITDA margin of 16.7%. The updated forecast assumes an exchange rate of 148 yen per US dollar and 20 yen per Chinese yuan, expecting more yen depreciation than the prior quarter's assumption.

• Segment-level guidance revisions:

  • Japan: No change to revenue guidance (171.2 billion yen, +3.8% YoY); operating profit guidance revised upward by 0.6 billion yen to 22.3 billion yen (-0.7% YoY), driven by stronger than expected performance from Rohto's core domestic business.
  • Asia: Revenue guidance revised upward by 3.7 billion yen to 119.7 billion yen (+19.3% YoY); operating profit guidance revised upward by 0.5 billion yen to 13.3 billion yen (+14.7% YoY), driven by the resumed growth in Myanmar and continued double-digit local currency growth in Southeast Asia, as well as the full-year consolidation of Eu Yan Sang.
  • Americas: Revenue guidance revised upward by 0.3 billion yen to 20.5 billion yen; no change to operating profit guidance which remains at 1.4 billion yen.
  • Europe: No change to revenue guidance (23.8 billion yen, +24.2% YoY, driven by continued growth at Dax Cosmetics and full-year consolidation of MONO); operating profit guidance revised downward by 0.6 billion yen to 1.4 billion yen (-1% YoY), due to rising cost from the supplier bankruptcy issue in the UK.

• Dividend guidance: The year-end dividend forecast is increased by 1 yen to 22 yen per share, with an annual dividend of 43 yen per share (up 7 yen year-over-year), representing a 30.4% payout ratio and marking the 22nd consecutive year of dividend increases.

• Macroeconomic risks: Rising consumer prices are driving increased savings sentiment in Japan, while overseas markets face high uncertainty from trade policy changes and continued tough personal consumption environments. Competitive pressure from local and global brands is expected to intensify across all markets.
• Foreign exchange risk: The shift from yen depreciation to yen appreciation is expected to create material negative impacts on consolidated results.
• Market specific risks: China and Hong Kong continue to face tough market conditions; Eu Yan Sang's performance is trailing plan due to the weak economic environment in Hong Kong and Singapore, which account for two-thirds of its revenue. Inbound demand in Japan remains uncertain.
• Operational risks: A UK external packaging supplier for anti-inflammatory analgesic products went bankrupt, leading to higher cost rates in the Europe segment. Unusual bad weather across Asia hurt sunscreen sales in the first half. Myanmar faced prolonged import restrictions that disrupted sales prior to the second quarter, and import difficulties persist.

The provided earnings call transcript does not include a transcribed question and answer section, so no exchanges are available to summarize.