[January 25, 2018] |
|
Dr. Reddy's Q3 and 9M FY18 Financial Results
Dr. Reddy's Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY)
today announced its consolidated financial results for the third quarter
and nine months ended December 31, 2017 under International Financial
Reporting Standards (IFRS).
Q3 Performance Summary
|
|
|
|
9M Performance Summary
|
Rs.3,806 Cr
|
|
|
|
Rs.10,668 Cr
|
Revenue
|
|
|
|
Revenue
|
[Up: 7% QoQ, Up: 3% YoY]
|
|
|
|
[Up: 1% YoY]
|
|
|
|
|
|
56.3%
|
|
|
|
53.8%
|
Gross Margin
|
|
|
|
Gross Margin
|
[Q2 FY18: 53.3%; Q3 FY17: 59.1%]
|
|
|
|
[9M FY17: 57.2%]
|
|
|
|
|
|
Rs.1,205 Cr
|
|
|
|
Rs.3,484 Cr
|
SGNA expenses
|
|
|
|
SGNA expenses
|
[Up: 6% YoY]
|
|
|
|
[Down: 2% YoY]
|
|
|
|
|
|
Rs.467 Cr
|
|
|
|
Rs.1,392 Cr
|
R&D expenses
|
|
|
|
R&D expenses
|
[12.3% of Revenues]
|
|
|
|
[13.0% of Revenues]
|
|
|
|
|
|
Rs.806 Cr
|
|
|
|
Rs.1,830 Cr
|
EBITDA
|
|
|
|
EBITDA
|
[21.2% of Revenues]
|
|
|
|
[17.2% of Revenues]
|
|
|
|
|
|
Rs.334 Cr*
|
|
|
|
Rs.678 Cr*
|
Profit after Tax
|
|
|
|
Profit after Tax
|
[8.8% of Revenues]
|
|
|
|
[6.4% of Revenues]
|
|
|
|
|
|
* During Q3 FY18, the 'Tax Cuts and Jobs Act of 2017' was approved and
enacted in the United States. Consequent to this enactment the deferred
tax assets and liabilities of the US entity have been re-measured
resulting in a one-time charge of Rs. 93 Crores. [Adjusted PAT for Q3 FY
18: Rs.427 Crores and 9M FY 18: Rs.771 Crores]
Commenting on the results, CEO and Co-chairman G.V. Prasad said,
"We had a satisfactory third quarter performance, with all our key
markets performing well. We recorded sequential revenue growth of 7%,
despite continuing challenges such as price erosion in the U.S. Our
first-cycle NDA approval of Impoyz™ is a significant milestone in the
commercialization of our proprietary products pipeline. We will continue
our focus on operational excellence and controlling of SG&A costs across
the organisation."
All amounts in millions, except EPS
|
|
|
|
All US dollar amounts based on convenience translation rate of
I USD = Rs. 63.83
|
|
|
|
|
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Dr. Reddy's Laboratories Limited and Subsidiaries
Consolidated Income Statement
|
|
Particulars
|
|
|
|
Q3 FY 18
|
|
Q3 FY 17
|
|
Growth %
|
|
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
|
Revenues
|
|
|
|
596
|
|
|
38,060
|
|
|
100.0
|
|
|
581
|
|
|
37,065
|
|
|
100.0
|
|
|
3
|
|
Cost of revenues
|
|
|
|
261
|
|
|
16,649
|
|
|
43.7
|
|
|
238
|
|
|
15,166
|
|
|
40.9
|
|
|
10
|
|
Gross profit
|
|
|
|
335
|
|
|
21,411
|
|
|
56.3
|
|
|
343
|
|
|
21,899
|
|
|
59.1
|
|
|
(2
|
)
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Selling, general & administrative expenses
|
|
|
|
189
|
|
|
12,048
|
|
|
31.7
|
|
|
178
|
|
|
11,341
|
|
|
30.6
|
|
|
6
|
|
Research and development expenses
|
|
|
|
73
|
|
|
4,667
|
|
|
12.3
|
|
|
78
|
|
|
4,956
|
|
|
13.4
|
|
|
(6
|
)
|
Other operating expense / (income)
|
|
|
|
(5
|
)
|
|
(313
|
)
|
|
(0.8
|
)
|
|
(3
|
)
|
|
(187
|
)
|
|
(0.5
|
)
|
|
67
|
|
Results from operating activities
|
|
|
|
78
|
|
|
5,009
|
|
|
13.2
|
|
|
91
|
|
|
5,789
|
|
|
15.6
|
|
|
(13
|
)
|
Finance expense / (income), net
|
|
|
|
(13
|
)
|
|
(851
|
)
|
|
(2.2
|
)
|
|
(1
|
)
|
|
(44
|
)
|
|
(0.1
|
)
|
|
1850
|
|
Share of (profit) of equity accounted investees, net of income tax
|
|
|
|
(1
|
)
|
|
(85
|
)
|
|
(0.2
|
)
|
|
(1
|
)
|
|
(89
|
)
|
|
(0.2
|
)
|
|
(5
|
)
|
Profit before income tax
|
|
|
|
93
|
|
|
5,945
|
|
|
15.6
|
|
|
93
|
|
|
5,922
|
|
|
16.0
|
|
|
0
|
|
Income tax expense
|
|
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|
41
|
|
|
2,601*
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|
6.8
|
|
|
19
|
|
|
1,221
|
|
|
3.3
|
|
|
113
|
|
Profit for the period
|
|
|
|
52
|
|
|
3,344
|
|
|
8.8
|
|
|
74
|
|
|
4,701
|
|
|
12.7
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted EPS
|
|
|
|
0.32
|
|
|
20.13
|
|
|
|
|
0.44
|
|
|
28.32
|
|
|
|
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(29
|
)
|
* ~Rs. 930 million impact on account of reforms in US tax laws
|
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EBITDA Computation
|
|
Particulars
|
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|
|
Q3 FY 18
|
|
Q3 FY 17
|
|
|
|
($)
|
|
|
(Rs.)
|
|
($)
|
|
|
(Rs.)
|
Profit before income tax
|
|
|
|
93
|
|
|
5,945
|
|
|
93
|
|
|
5,922
|
|
Interest (income) / expense net*
|
|
|
|
(14
|
)
|
|
(881
|
)
|
|
(1
|
)
|
|
(53
|
)
|
Depreciation
|
|
|
|
33
|
|
|
2,089
|
|
|
30
|
|
|
1,936
|
|
Amortization
|
|
|
|
14
|
|
|
882
|
|
|
15
|
|
|
956
|
|
Impairment
|
|
|
|
0.3
|
|
|
20
|
|
|
0.5
|
|
|
32
|
|
EBITDA
|
|
|
|
126
|
|
|
8,055
|
|
|
138
|
|
|
8,793
|
|
EBITDA (% to revenues)
|
|
|
|
|
|
21.2
|
|
|
|
|
23.7
|
|
* - Includes income from Investments
|
|
|
|
|
|
|
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|
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Key Balance Sheet Items
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|
Particulars
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|
|
As on 31st Dec 17
|
|
As on 30th Sep 17
|
|
|
|
($)
|
|
|
(Rs.)
|
|
($)
|
|
|
(Rs.)
|
Cash and cash equivalents and Other current Investments
|
|
|
|
344
|
|
|
21,958
|
|
263
|
|
|
16,793
|
Trade receivables (current)
|
|
|
|
665
|
|
|
42,432
|
|
661
|
|
|
42,203
|
Inventories
|
|
|
|
420
|
|
|
26,825
|
|
423
|
|
|
26,998
|
Property, plant and equipment
|
|
|
|
912
|
|
|
58,189
|
|
907
|
|
|
57,905
|
Goodwill and Other Intangible assets
|
|
|
|
755
|
|
|
48,182
|
|
778
|
|
|
49,634
|
Loans and borrowings (current & non-current)
|
|
|
|
860
|
|
|
54,911
|
|
841
|
|
|
53,668
|
Trade payables
|
|
|
|
228
|
|
|
14,575
|
|
222
|
|
|
14,193
|
Equity
|
|
|
|
1,938
|
|
|
1,23,685
|
|
1,909
|
|
|
1,21,840
|
|
|
|
|
|
|
|
|
|
|
|
All amounts in millions, except EPS
|
|
|
|
All US dollar amounts based on convenience translation rate of
I USD = Rs. 63.83
|
|
|
|
|
|
Revenue Mix by Segment [Year on year]
|
|
Particulars
|
|
|
|
Q3 FY 18
|
|
Q3 FY 17
|
|
Growth %
|
|
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
Global Generics
|
|
|
|
472
|
|
|
30,105
|
|
79
|
|
480
|
|
|
30,638
|
|
83
|
|
-2
|
North America
|
|
|
|
|
|
16,073
|
|
|
|
|
|
16,595
|
|
|
|
-3
|
Europe*
|
|
|
|
|
|
2,006
|
|
|
|
|
|
2,148
|
|
|
|
-7
|
India
|
|
|
|
|
|
6,126
|
|
|
|
|
|
5,947
|
|
|
|
3
|
Emerging Markets#
|
|
|
|
|
|
5,900
|
|
|
|
|
|
5,948
|
|
|
|
-1
|
PSAI
|
|
|
|
85
|
|
|
5,436
|
|
14
|
|
85
|
|
|
5,400
|
|
14
|
|
1
|
North America
|
|
|
|
|
|
863
|
|
|
|
|
|
1,259
|
|
|
|
-31
|
Europe
|
|
|
|
|
|
1,572
|
|
|
|
|
|
1,828
|
|
|
|
-14
|
India
|
|
|
|
|
|
627
|
|
|
|
|
|
409
|
|
|
|
53
|
Rest of World
|
|
|
|
|
|
2,374
|
|
|
|
|
|
1,904
|
|
|
|
25
|
Proprietary Products & Others
|
|
|
|
39
|
|
|
2,519
|
|
7
|
|
16
|
|
|
1,027
|
|
3
|
|
145
|
Total
|
|
|
|
596
|
|
|
38,060
|
|
100
|
|
581
|
|
|
37,065
|
|
100
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix by Segment [Sequential]
|
|
Particulars
|
|
|
|
Q3 FY 18
|
|
Q2 FY 18
|
|
Growth %
|
|
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
($)
|
|
|
(Rs.)
|
|
%
|
|
Global Generics
|
|
|
|
472
|
|
|
30,105
|
|
79
|
|
448
|
|
|
28,618
|
|
81
|
|
5
|
North America
|
|
|
|
|
|
16,073
|
|
|
|
|
|
14,318
|
|
|
|
12
|
Europe*
|
|
|
|
|
|
2,006
|
|
|
|
|
|
2,424
|
|
|
|
-17
|
India
|
|
|
|
|
|
6,126
|
|
|
|
|
|
6,370
|
|
|
|
-4
|
Emerging Markets#
|
|
|
|
|
|
5,900
|
|
|
|
|
|
5,506
|
|
|
|
7
|
PSAI
|
|
|
|
85
|
|
|
5,436
|
|
14
|
|
89
|
|
|
5,654
|
|
16
|
|
-4
|
North America
|
|
|
|
|
|
863
|
|
|
|
|
|
962
|
|
|
|
-10
|
Europe
|
|
|
|
|
|
1,572
|
|
|
|
|
|
1,938
|
|
|
|
-19
|
India
|
|
|
|
|
|
627
|
|
|
|
|
|
436
|
|
|
|
44
|
Rest of World
|
|
|
|
|
|
2,374
|
|
|
|
|
|
2,318
|
|
|
|
2
|
Proprietary Products & Others
|
|
|
|
39
|
|
|
2,519
|
|
7
|
|
19
|
|
|
1,188
|
|
3
|
|
112
|
Total
|
|
|
|
596
|
|
|
38,060
|
|
100
|
|
556
|
|
|
35,460
|
|
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. 30.1 billion.
Sequential growth of 5%, primarily driven by the US and Emerging Markets.
Year-on-year decline of 2%, primarily on account of adverse foreign
exchange as the US dollar depreciated by ~4% and lower contribution from
Europe generics market.
-
Revenues from North America at Rs. 16.1 billion.
-
Sequential growth of 12%, primarily on account of contribution
from new products major being sevelamer carbonate
-
Year-on-year decline of 3%, primarily on account of higher price
erosions due to channel consolidation and increased competition in
some of our key molecules, and impact of adverse foreign exchange.
The above is partly offset by new products contribution.
-
As of 31st December 2017, cumulatively 102 generic
filings are pending for approval with the USFDA (99 ANDAs and 3
NDAs under 505(b)(2) route). Of these 99 ANDAs, 59 are Para IVs
out of which we believe 29 have 'First to File' status.
-
Revenues from Emerging Markets at Rs. 5.9 billion.
-
Revenues from Russia at Rs. 3.4 billion. Year-on-year
growth of 9%. In constant currency i.e. in Rouble terms
year-on-year growth is 5%.
-
Revenues from other CIS countries and Romania market at Rs.
1.0 billion. Year-on-year decline of 2%.
-
Revenues from Rest of World (RoW) territories at Rs. 1.5
billion. Year-on-year decline of 17%.
-
Revenues from India at Rs. 6.1 billion. Year-on-year
growth of 3%. Normalizing for the GST (News - Alert) transition related adjustments,
the comparable growth is ~11%.
-
Revenues from Europe at Rs. 2.0 billion. Year-on-year decline
of 7%, primarily on account of higher price erosion in some of the key
molecules coupled with temporary supply disruptions.
Pharmaceutical Services and Active Ingredients (PSAI)
-
Revenues from PSAI at Rs. 5.4 billion. Year-on-year growth of
1%.
-
During the quarter, 13 DMFs were filed globally of which 1 was in the
US. The cumulative number of DMF filings as of 31st
December, 2017 was 791.
Proprietary Products (PP)
-
Revenues from PP at Rs. 2.1 billion.
During Q3 FY18 USFDA
approved IMPOYZ™ (clobetasol propionate) Cream 0.025%. In line with
the existing out licensing agreement with Encore Dermatology Inc. this
approval triggered milestone recognition of Rs. 1.3 billion during Q3
FY18.
Income Statement Highlights:
-
Gross profit margin at 56.3%.
-
Improved by ~300 bps sequentially, aided by better product mix and
milestone receipt of Rs. 1.3 billion in Proprietary Products.
-
Declined by ~280 bps over that of previous year primarily on
account of higher price erosions, increased competitive intensity
in some of our key molecules in the US and adverse foreign
exchange impact.
-
Gross profit margin for GG and PSAI business segments are at 59.5%
and 23.8% respectively.
-
SG&A expenses at Rs. 12.0 billion, an increase of 6%. During the
quarter, a settlement agreement was entered into with the US
Department of Justice on the litigation involving packaging against a
payout of Rs. 319 million. The balance increase is on account of sales
& marketing and other spends towards events specific to the quarter.
-
Research & development expenses at Rs. 4.7 billion, a decrease of 6%.
As % to Revenues- Q3 FY18: 12.3% | Q2 FY 18: 11.8% | Q3 FY17: 13.4%.
Focus continues on building complex generics, biosimilars and
differentiated products pipeline.
-
Net Finance income at Rs. 851 million compared to Rs. 44 million in Q3
FY17. The incremental income of Rs. 807 million is on account of:
-
Increase in profit on sales of investments by Rs. 698 million.
-
Increase in net interest income by Rs. 129 million.
-
Net foreign exchange loss of Rs. 30 million in the current quarter
vs net foreign exchange loss of Rs. 10 million in the previous
year.
-
Profit after Tax at Rs. 3.3 billion. During the quarter, the 'Tax Cuts
and Jobs Act of 2017' was approved and enacted in the United States.
Consequent to this enactment the deferred tax assets and liabilities
in the US entity have been re-measured resulting in a one-time charge
of Rs. 930 million being recorded under tax expense.
-
Diluted earnings per share is at Rs. 20.13.
-
Capital expenditure is at Rs. 2.2 billion.
Earnings Call Details (06:30 pm IST, 08:00 am EST, January 25, 2018)
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:
|
|
|
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91 22 6746 5826
|
International Toll Free Number
|
|
USA
|
|
18667462133
|
|
|
UK
|
|
08081011573
|
|
|
Singapore
|
|
8001012045
|
|
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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/20180125005531/en/
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