[October 31, 2017] |
|
Dr. Reddy's Q2 and H1 FY18 Financial Results
Dr. Reddy's Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY)
today announced its consolidated financial results for the second
quarter and half year ended September 30, 2017 under International
Financial Reporting Standards (IFRS).
Q2 FY18: Key Highlights
-
Revenues at Rs. 35.5 billion [QoQ growth: 7%; YoY decline: 1%]
-
Gross Profit Margin at 53.3% [Q1 FY18: 51.6%; Q2FY 17: 56.0%]
-
Research & Development (R&D) spend at Rs. 4.2 billion. [11.8% of
Revenues]
-
Selling, general & administrative (SG&A) expenses at Rs. 11.0 billion
[YoY decrease: 6%]
-
EBITDA at Rs. 6.9 billion [19.4% of Revenues]
-
Profit after tax at Rs. 2.8 billion [8.0% of Revenues]
H1 FY18: Key Highlights
-
Revenues at Rs. 68.6 billion [YoY growth: 1%]
-
Gross Profit Margin at 52.5% [H1 FY17: 56.1%]
-
Research & Development (R&D) spend at Rs. 9.3 billion. [13.5% of
Revenues]
-
Selling, general & administrative (SG&A) expenses at Rs. 22.8 billion
[YoY decrease: 5%]
-
EBITDA at Rs. 10.2 billion [14.9% of Revenues]
-
Profit after tax at Rs. 3.4 billion [5.0% of Revenues]
Commenting on the results, CEO and Co-chairman, G.V. Prasad said,
"Healthy performances in India, Emerging Markets, Europe and PSAI
businesses, as well as continued focus on cost control, have contributed
to sequential growth in our topline as well as bottom line, with an
EBITDA increase of 105% over the previous quarter.
Looking ahead, we expect to see results from products launched in the
U.S. during the first half of this fiscal. We will continue to focus on
the launching of new products, as well as on improving operational
efficiencies and quality management systems across the company."
All amounts in millions, except EPS All US dollar amounts
based on convenience translation rate of I USD = Rs. 65.30
|
Dr. Reddy's Laboratories Limited and Subsidiaries
|
Consolidated Income Statement
|
|
Particulars
|
|
|
|
Q2 FY 18
|
|
Q2 FY 17
|
|
Growth %
|
|
|
|
($)
|
|
(Rs.)
|
|
%
|
|
($)
|
|
(Rs.)
|
|
%
|
|
Revenues
|
|
|
|
543
|
|
|
35,460
|
|
|
100.0
|
|
|
549
|
|
|
35,857
|
|
|
100.0
|
|
|
(1
|
)
|
Cost of revenues
|
|
|
|
254
|
|
|
16,559
|
|
|
46.7
|
|
|
241
|
|
|
15,760
|
|
|
44.0
|
|
|
5
|
|
Gross profit
|
|
|
|
289
|
|
|
18,901
|
|
|
53.3
|
|
|
308
|
|
|
20,097
|
|
|
56.0
|
|
|
(6
|
)
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses
|
|
|
|
169
|
|
|
11,032
|
|
|
31.1
|
|
|
180
|
|
|
11,774
|
|
|
32.8
|
|
|
(6
|
)
|
Research and development expenses
|
|
|
|
64
|
|
|
4,175
|
|
|
11.8
|
|
|
80
|
|
|
5,214
|
|
|
14.5
|
|
|
(20
|
)
|
Other operating expense / (income)
|
|
|
|
(2
|
)
|
|
(114
|
)
|
|
(0.3
|
)
|
|
(4
|
)
|
|
(277
|
)
|
|
(0.8
|
)
|
|
(59
|
)
|
Results from operating activities
|
|
|
|
58
|
|
|
3,808
|
|
|
10.7
|
|
|
52
|
|
|
3,386
|
|
|
9.4
|
|
|
12
|
|
Finance expense / (income), net
|
|
|
|
0
|
|
|
24
|
|
|
0.1
|
|
|
(6
|
)
|
|
(365
|
)
|
|
(1.0
|
)
|
|
|
Share of (profit) of equity accounted investees, net of income tax
|
|
|
|
(1
|
)
|
|
(92
|
)
|
|
(0.3
|
)
|
|
(1
|
)
|
|
(84
|
)
|
|
(0.2
|
)
|
|
10
|
|
Profit before income tax
|
|
|
|
59
|
|
|
3,876
|
|
|
10.9
|
|
|
59
|
|
|
3,835
|
|
|
10.7
|
|
|
1
|
|
Income tax expense
|
|
|
|
16
|
|
|
1,027
|
|
|
2.9
|
|
|
14
|
|
|
885
|
|
|
2.5
|
|
|
16
|
|
Profit for the period
|
|
|
|
44
|
|
|
2,849
|
|
|
8.0
|
|
|
45
|
|
|
2,950
|
|
|
8.2
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
0.26
|
|
|
17.15
|
|
|
|
|
0.27
|
|
|
17.76
|
|
|
|
|
(3
|
)
|
|
EBITDA Computation
|
|
Particulars
|
|
|
|
Q2 FY 18
|
|
Q2 FY 17
|
|
|
|
($)
|
|
(Rs.)
|
|
($)
|
|
(Rs.)
|
Profit before income tax
|
|
|
|
59
|
|
|
3,876
|
|
59
|
|
|
3,835
|
|
Interest (income) / expense net*
|
|
|
|
1
|
|
|
72
|
|
(5
|
)
|
|
(329
|
)
|
Depreciation
|
|
|
|
32
|
|
|
2,078
|
|
29
|
|
|
1,897
|
|
Amortization
|
|
|
|
13
|
|
|
862
|
|
15
|
|
|
950
|
|
Impairment
|
|
|
|
-
|
|
|
-
|
|
1
|
|
|
67
|
|
EBITDA
|
|
|
|
105
|
|
|
6,888
|
|
98
|
|
|
6,420
|
|
EBITDA (% to sales)
|
|
|
|
|
|
19.4
|
|
|
|
17.9
|
|
|
* - Includes income from Investments
|
|
Key Balance Sheet Items
|
|
Particulars
|
|
|
|
As on 30th Sep 17
|
|
As on 30th June 17
|
|
|
|
($)
|
|
(Rs.)
|
|
($)
|
|
(Rs.)
|
Cash and cash equivalents and Other current Investments
|
|
|
|
257
|
|
|
16,793
|
|
223
|
|
|
14,572
|
Trade receivables
|
|
|
|
646
|
|
|
42,203
|
|
630
|
|
|
41,140
|
Inventories
|
|
|
|
413
|
|
|
26,998
|
|
430
|
|
|
28,095
|
Property, plant and equipment
|
|
|
|
887
|
|
|
57,905
|
|
882
|
|
|
57,611
|
Goodwill and Other Intangible assets
|
|
|
|
760
|
|
|
49,634
|
|
744
|
|
|
48,564
|
Loans and borrowings (current & non-current)
|
|
|
|
822
|
|
|
53,668
|
|
773
|
|
|
50,462
|
Trade payables
|
|
|
|
217
|
|
|
14,193
|
|
203
|
|
|
13,225
|
Equity
|
|
|
|
1,866
|
|
|
1,21,840
|
|
1,890
|
|
|
1,23,423
|
|
Revenue Mix by Segment [Year on year]
|
|
Particulars
|
|
|
|
Q2 FY 18
|
|
Q2 FY 17
|
|
Growth %
|
|
|
|
($)
|
|
(Rs.)
|
|
%
|
|
($)
|
|
(Rs.)
|
|
%
|
|
Global Generics
|
|
|
|
438
|
|
|
28,618
|
|
81
|
%
|
|
444
|
|
|
28,995
|
|
81
|
%
|
|
-1
|
North America
|
|
|
|
|
|
14,318
|
|
|
|
|
|
16,134
|
|
|
|
-11
|
Europe*
|
|
|
|
|
|
2,424
|
|
|
|
|
|
1,776
|
|
|
|
36
|
India
|
|
|
|
|
|
6,370
|
|
|
|
|
|
6,251
|
|
|
|
2
|
Emerging Markets#
|
|
|
|
|
|
5,506
|
|
|
|
|
|
4,834
|
|
|
|
14
|
PSAI
|
|
|
|
87
|
|
|
5,654
|
|
16
|
%
|
|
89
|
|
|
5,784
|
|
16
|
%
|
|
-2
|
North America
|
|
|
|
|
|
962
|
|
|
|
|
|
1,135
|
|
|
|
-15
|
Europe
|
|
|
|
|
|
1,938
|
|
|
|
|
|
2,095
|
|
|
|
-7
|
India
|
|
|
|
|
|
436
|
|
|
|
|
|
575
|
|
|
|
-24
|
Rest of World
|
|
|
|
|
|
2,318
|
|
|
|
|
|
1,979
|
|
|
|
17
|
Proprietary Products & Others
|
|
|
|
18
|
|
|
1,188
|
|
3
|
%
|
|
17
|
|
|
1,078
|
|
3
|
%
|
|
10
|
Total
|
|
|
|
543
|
|
|
35,460
|
|
100
|
%
|
|
549
|
|
|
35,857
|
|
100
|
%
|
|
-1
|
|
Revenue Mix by Segment [Sequential]
|
|
Particulars
|
|
|
|
Q2 FY 18
|
|
Q1 FY 18
|
|
Growth %
|
|
|
|
($)
|
|
(Rs.)
|
|
%
|
|
($)
|
|
(Rs.)
|
|
%
|
|
Global Generics
|
|
|
|
438
|
|
|
28,618
|
|
81
|
|
|
420
|
|
|
27,455
|
|
83
|
%
|
|
4
|
North America
|
|
|
|
|
|
14,318
|
|
|
|
|
|
14,946
|
|
|
|
-4
|
Europe*
|
|
|
|
|
|
2,424
|
|
|
|
|
|
2,075
|
|
|
|
17
|
India
|
|
|
|
|
|
6,370
|
|
|
|
|
|
4,687
|
|
|
|
36
|
Emerging Markets#
|
|
|
|
|
|
5,506
|
|
|
|
|
|
5,747
|
|
|
|
-4
|
PSAI
|
|
|
|
87
|
|
|
5,654
|
|
16
|
|
|
71
|
|
|
4,651
|
|
14
|
%
|
|
22
|
North America
|
|
|
|
|
|
962
|
|
|
|
|
|
779
|
|
|
|
23
|
Europe
|
|
|
|
|
|
1,938
|
|
|
|
|
|
1,863
|
|
|
|
4
|
India
|
|
|
|
|
|
436
|
|
|
|
|
|
288
|
|
|
|
51
|
Rest of World
|
|
|
|
|
|
2,318
|
|
|
|
|
|
1,721
|
|
|
|
35
|
Proprietary Products & Others
|
|
|
|
18
|
|
|
1,188
|
|
3
|
|
|
16
|
|
|
1,053
|
|
3
|
%
|
|
13
|
Total
|
|
|
|
543
|
|
|
35,460
|
|
100
|
%
|
|
508
|
|
|
33,159
|
|
100
|
%
|
|
7
|
* Europe primarily includes Germany, UK and out licensing sales
business # Emerging Markets refers to Russia, other CIS countries,
Romania and Rest of the World markets including Venezuela
Segmental Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 28.6 billion, year-on-year
marginal decline of 1%; decline primarily on account of lower
contribution from North America offset by increased contribution from
Europe, India and Emerging Markets.
-
Revenues from North America at Rs. 14.3 billion. Year-on-year
decline of 11%, primarily on account of higher price erosions due to
channel consolidation and increased competition in some of our key
products namely Valgancyclovir, Azacitidine, Esomeprazole, etc.
During
the quarter we launched 4 new products i.e. Sevelamer Carbonate,
Cefixime OS, Bupropion XL and Metaxalone tabs. Since Sevelamer
carbonate was launched post the cut-off date for revenue recognition,
no sales have been recorded during the quarter.
As of 30th
September 2017, cumulatively 103 generic filings are pending for
approval with the USFDA (100 ANDAs and 3 NDAs under 505(b)(2) route).
Of these 100 ANDAs, 60 are Para IVs out of which we believe 28 have
'First to File' status.
-
Revenues from Emerging Markets at Rs. 5.5 billion, year-on-year
growth of 14%.
-
Revenues from Russia at Rs. 3.2 billion, year-on-year
growth of 20%. In constant currency i.e. in Ruble terms
year-on-year growth of 13%. Growth driven by higher volume uptake
in base business and new products.
-
Revenues from other CIS countries and Romania market at Rs.
0.9 billion, year-on-year growth of 3%.
-
Revenues from Rest of World (RoW) territories at Rs. 1.4
billion, year-on-year growth of 9%.
-
Revenues from India at Rs. 6.4 billion, year-on-year
growth of 2%. Partial recovery was witnessed in the inventory holding
by the channel post the transition to the GST (News - Alert) regime. Pre-GST
transition, the reported numbers included the excise duty component
with a corresponding charge in the income statement. Post the
transition, revenues reported are lower to the extent of the ED
component, though it's a profit neutral adjustment. Normalizing for
this and some other transition related adjustments, the comparable
year-on-year growth would be around 10%.
-
Revenues from Europe at Rs. 2.4 billion, year-on-year growth of
37%. Growth primarily driven by new launches and volume uptake in some
of the key products.
Pharmaceutical Services and Active Ingredients (PSAI)
-
Revenues from PSAI at Rs. 5.7 billion, year-on-year decline of
2%. On a sequential basis revenues registered a growth of 22% aided by
improved order flow and supply situations.
-
During the quarter, 16 DMFs were filed globally of which 2 were in the
US. The cumulative number of DMF filings as of 30th
September, 2017 was 780.
Income Statement Highlights:
-
Gross profit margin at 53.3% and declined by ~270 bps over that of
previous year, decline primarily on account of higher price erosions
due to channel consolidation and increased competitive intensity in
some of our key molecules in the US. Gross profit margin for GG and
PSAI business segments are at 59.2% and 19.6% respectively.
Gross
profit margins improved 170 bps sequentially, aided by favorable
manufacturing overheads leverage (higher revenues and lower overheads).
-
SG&A expenses at Rs. 11.0 billion, a decrease of 6% both year-on-year
and sequentially. In Q2 FY17 the company had accrued a potential
liability of Rs. 344 million towards NPPA provision. After adjusting
the base, the marginal decline is primarily on account of prudent
control on spend.
-
Research & development expenses at Rs. 4.2 billion. As % to Revenues-
Q2 FY18: 11.8% | Q1 FY 18: 15.3% | Q2 FY17: 14.5%]. Compared to the
trend, spend is lower partially on account of deferment in some of the
milestone related payments to subsequent quarters. Focus continues on
building complex generics, biosimilars and differentiated products
pipeline.
-
Net Finance expense at Rs. 24 million compared to the net finance
income of Rs. 365 million in Q2FY17. The incremental expense of Rs.
389 million is on account of:
-
Net foreign exchange gain of Rs. 47 million in the current quarter
vs net foreign exchange gain of Rs. 37 million in the previous
year.
-
Decrease in profit on sales of investments by Rs. 289 million.
-
Net increase in interest expense of Rs. 110 million.
-
Profit after Tax at Rs. 2.8 billion.
-
Diluted earnings per share is at Rs. 17.15.
-
Capital expenditure is at Rs. 2.8 billion.
Earnings Call Details (06:30 pm IST, 09:00 am EDT, October 31, 2017)
The Company will host an earnings call to discuss the performance and
answer any questions from participants. This call will be accessible
through an audio dial-in and a web-cast.
Audio conference Participants can dial-in on the numbers below
|
Primary number:
|
|
|
|
|
91 22 3960 0616
|
Secondary number:
|
|
|
|
|
91 22 6746 5826
|
International Toll Free Number
|
|
|
USA
|
|
|
|
|
|
18667462133
|
|
|
|
|
|
|
UK
|
|
|
|
|
|
08081011573
|
|
|
|
|
|
|
Singapore
|
|
|
|
|
|
8001012045
|
|
|
|
|
|
|
Hong Kong
|
|
|
|
|
|
800964448
|
|
Playback of call:
|
|
|
91 22 3065 2322, 91 22 6181 3322
|
Conference ID:
|
|
|
375#
|
Web-cast
|
|
|
More details will be provided through our website, www.drreddys.com
|
Transcript of the event will be available at www.drreddys.com.
Playback will be available for a few days.
About Dr. Reddy's: Dr. Reddy's Laboratories Ltd. (BSE: 500124,
NSE: DRREDDY, NYSE: RDY) is an integrated pharmaceutical company,
committed to providing affordable and innovative medicines for healthier
lives. Through its three businesses - Pharmaceutical Services & Active
Ingredients, Global Generics and Proprietary Products - Dr. Reddy's
offers a portfolio of products and services including APIs, custom
pharmaceutical services, generics, biosimilars and differentiated
formulations. Our major therapeutic areas of focus are
gastro-intestinal, cardiovascular, diabetology, oncology, pain
management and dermatology. Dr. Reddy's operates in markets across the
globe. Our major markets include - USA, India, Russia and other CIS
countries. For more information, log on to: www.drreddys.com
Disclaimer: This press release may include statements of future
expectations and other forward-looking statements that are based on the
management's current views and assumptions and involve known or unknown
risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such
statements. In addition to statements which are forward-looking by
reason of context, the words "may", "will", "should", "expects",
"plans", "intends", "anticipates", "believes", "estimates", "predicts",
"potential", or "continue" and similar expressions identify
forward-looking statements. Actual results, performance or events may
differ materially from those in such statements due to without
limitation, (i) general economic conditions such as performance of
financial markets, credit defaults , currency exchange rates , interest
rates , persistency levels and frequency / severity of insured loss
events (ii) mortality and morbidity levels and trends, (iii) changing
levels of competition and general competitive factors, (iv) changes in
laws and regulations and in the policies of central banks and/or
governments, (v) the impact of acquisitions or reorganisation ,
including related integration issues.
The company assumes no obligation to update any information contained
herein.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171031005639/en/
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