Rohto Pharmaceutical Q1 FY2027 Earnings Deep-Dive Report

Rohto Pharmaceutical Co., Ltd. (Securities Code: 4527) delivered a strong start to the fiscal year ending March 31, 2027, with its Q1 results (April 1, 2026 – June 30, 2026) marking record-highs for both net sales and operating profit for a first quarter . This growth was driven by sales increases across all regions and improved cost-of-sales ratios. Based on the company's earnings presentation materials, this report provides a multi-faceted analysis of the performance highlights, segment trends in domestic and overseas markets, growth trajectories of key brands, and the growth story behind the upward revision of the full-year forecast.

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1. Performance Highlights: Significant Double-Digit Growth in Sales and Operating Profit

Consolidated results for the first quarter were as follows: Net sales of 91,624 million yen (+11.8% YoY) , operating profit of 13,663 million yen (+16.8% YoY) , and EBITDA of 18,159 million yen (+15.0% YoY) . Even excluding the positive impact of foreign exchange (an increase of 3.8 billion yen in sales and 0.7 billion yen in operating profit), the company achieved solid growth in real terms.

The following slide details the consolidated profit and loss status, year-on-year comparisons, and the primary factors behind the fluctuations.

[Slide Commentary: The Significance of Consolidated P&L Data]

This slide is one of the most critical documents for understanding Rohto Pharmaceutical's robust profit structure. Notably, the gross profit margin rose to 56.3% (a 0.4-point improvement YoY) . While selling, general, and administrative (SG&A) expenses increased by 11.1% due to proactive growth investments, such as promotional expenses (+15.1% YoY) and advertising expenses (+14.0% YoY), the significant revenue growth (+5.4 billion yen boost to profit) and improved gross margin absorbed these costs. This resulted in an operating profit margin of 14.9% (a 0.6-point increase YoY) . Although net profit attributable to owners of the parent was 10,650 million yen (-9.5% YoY), this was primarily due to the reactionary decline from temporary dividend income recorded in the previous year; the core earning power, represented by operating profit and EBITDA, remains on a very steady trajectory.

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2. Domestic Market Trends: Penetration of Price Revisions and Strong Growth in Key Brands

Domestic business net sales reached 42,864 million yen (+5.2% YoY) , with operating profit at 6,867 million yen (+8.8% YoY) . The smooth implementation of price increases across the entire "Hada Labo" series (effective from April 2026 shipments) and record-breaking inbound consumption were the primary drivers of this growth.

The sales trends for key brands that strongly propelled domestic growth are as follows:

[Slide Commentary: Background of the Key Brand Sales Graph]

This slide provides quantitative data demonstrating the "brand power" and "pricing power" of Rohto's core domestic business. The flagship brand, "Hada Labo," grew by 10.5% YoY , confirming that both sales volume and value remained steady without customer attrition even after the price hike. Furthermore, most key brands recorded double-digit growth: "High-end Eye Drops" (+17.7% YoY) , the eye care supplement "Rohto V5" (+11.4% YoY) , the anti-aging brand "Obagi" (+13.4% YoY) , and the lip balm category (+15.3% YoY) . The strategy of acquiring new users through new product launches and shifting toward high-price, high-value-added products is yielding steady results.

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3. Overseas Market Trends: High Growth in Asia and Full-Scale Contribution from EYS

Overall overseas business saw a significant expansion, with net sales reaching 48,759 million yen (+18.3% YoY) , bringing the overseas sales ratio to 53.2% of consolidated net sales. The Asian region, in particular, serves as the group's growth engine.

① Asian Region (Including EYS)

Net sales in Asia were 35,604 million yen (+19.7% YoY) , with operating profit at 5,676 million yen (+18.8% YoY) . Sales increased across a wide range of countries, including Vietnam, China, Malaysia, Myanmar, and Indonesia. In Myanmar, the normalization of operations following the acquisition of import licenses contributed to the results. Eu Yan Sang (EYS), the major herbal and healthcare company that joined the group, achieved significant growth with net sales of 12,017 million yen (+17.2% YoY) and operating profit of 1,565 million yen (+35.2% YoY) . In addition to strong Lunar New Year sales in Malaysia, cost-operation improvement measures proved successful, demonstrating high cash-generating capability.

② American Region

Net sales were 5,465 million yen (+8.3% YoY) , and operating profit was 226 million yen (+22.6% YoY) . While the expansion of "Hada Labo" by Mentholatum in the U.S. and the Brazilian subsidiary progressed steadily, the Hydrox business was impacted by rising cost-of-sales due to soaring raw material prices.

③ European Region

Net sales were 6,684 million yen (+19.9% YoY) , and operating profit showed a dramatic improvement to 664 million yen (+392.7% YoY) . This was driven by improved cost-of-sales ratios due to the normalization of shipments for the "Deep Heat" anti-inflammatory analgesic series in the U.K., as well as the expansion of "Hadalabo Tokyo" sales and improved production efficiency at DAX.

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4. Upward Revision of Full-Year Forecast and Future Growth Strategy

Based on the strong Q1 progress and current foreign exchange trends (depreciating yen), Rohto Pharmaceutical announced an upward revision to its consolidated earnings forecast for the fiscal year ending March 31, 2027 , which was originally released on May 13.

The revised full-year forecast and comparison with the previous year's results are shown in the slide below.

[Slide Commentary: Quantitative Evaluation of the Full-Year Forecast (Upward Revision)]

This slide illustrates the critical juncture of the company's full-year outlook and growth momentum. The revisions from the initial announcement are: +2.8 billion yen in net sales to 372,300 million yen (+8.3% YoY) , +1.2 billion yen in operating profit to 45,000 million yen (+9.4% YoY) , and +0.7 billion yen in net profit to 35,200 million yen (+2.8% YoY) . While this includes the impact of revising foreign exchange assumptions (from 155 yen to 158 yen per USD, and 22.0 yen to 23.0 yen per CNY, resulting in a +11.4 billion yen sales and +1.3 billion yen operating profit impact YoY), the upward revision is fundamentally supported by real demand expansion in core domestic and Asian markets.

Shareholder Return Policy and M&A/Partnership Strategy

Maintaining its shareholder return policy of "providing continuous and stable dividend increases without being swayed by temporary profit fluctuations," the company maintains its annual dividend forecast at 50 yen per share (marking the 23rd consecutive year of dividend increases, with a payout ratio of 32.1%) . Furthermore, the company is actively pursuing growth investments and M&A strategies to enhance corporate value over the medium to long term:

• Acquisition of Magic Cod (Serbia) : Strengthening sales networks for "Hadalabo Tokyo" and eye drops in the Balkans and Europe.
• Acquisition of the "Pain Away" brand (Australia) : Strengthening the foundation of the self-medication business in the Oceania region.
• Acquisition of OP Bio Factory : Promoting research into "phyto-exosomes" utilizing marine biological resources and applying them to core skincare brands.

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5. Conclusion and Future Focus Points

From the Q1 FY2027 earnings, it is clear that Rohto Pharmaceutical is successfully operating three engines: "pricing and brand power of core domestic brands," "global market expansion centered on Asia," and "synergy creation through strategic M&A such as EYS." Moving forward, the focus will remain on the sustainability of domestic price hike effects, profitability improvements in European and American markets, and the ability to generate synergies with newly acquired businesses and subsidiaries to achieve the upwardly revised full-year targets (372.3 billion yen in net sales, 45 billion yen in operating profit).