Rohto Pharmaceutical (4527.T): 2Q Results: US Business Performance Deteriorated More Than Expected

Rohto Pharmaceutical's 2Q FY2026 operating profit of JPY 7.3bn came in JPY 0.8bn below our JPY 8.1bn estimate, with the JPY 0.7bn shortfall in the US the main driver. The US accounts for only about 6% of sales (as of FY2025), but given the eye-drop recall following FDA findings, we will confirm at the November 13 briefing whether further deterioration is possible. Japan skincare sales fell about 2% YoY, weaker than our assumption, as Obagi and Melano CC declined and sunscreen was hit by weather; Asia skincare grew 22% YoY, accelerating from 15% in 1Q. The company kept its full-year consolidated plan but revised segment plans, cutting the US and raising Japan and Asia. The US cut reflects lower shipments from the eye-drop recall and higher raw material and fuel costs; Japan was raised on better-than-planned sales and cost-ratio improvement; Asia was raised on stronger China and Indonesia expansion despite Eu Yan Sang missing plan and extended downtime at the Vietnam plant. 2Q operating