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TheStreet Open House

Dr. Reddy’s Q1 FY13 Financial Results

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended June 30, 2012 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues at Rs. 25.4 billion in Q1 FY13, year-on-year growth of 28%, driven by healthy growth in key markets of North America, Russia & other emerging markets in Global Generics segment.
  • EBITDA of Rs. 5.1 billion in Q1 FY13, 20% of revenues.
  • PAT of Rs. 3.4 billion in Q1 FY13, 13% of revenues & recorded YoY growth of 28%.
  • During the quarter, the company launched 33 new generic products, filed 18 new product registrations and filed 7 DMFs globally.

All figures in millions, except EPS

 

All US dollar figures based on convenience translation rate of 1USD = Rs. 55.57

 
Dr. Reddy’s Laboratories Limited and Subsidiaries
Unaudited Consolidated Income Statement
             
Particulars Q1 FY13   Q1 FY12    
  ($)  

(Rs.)

  %   ($)  

(Rs.)

  %  

Growth %

Revenue 457   25,406   100   356   19,783   100  

28

Cost of revenues   214   11,865   47   166   9,228   47  

29

Gross profit   244   13,541   53   190   10,555   53   28
Operating Expenses
Selling, general and administrative expenses 149 8,277 33 122 6,755 34 23
Research and development expenses 28 1,564 6 22 1,197 6 31
Other operating (income) / expense   (4)   (218)   (1)   (3)   (186)   (1)   17
Results from operating activities   70   3,918   15   50   2,789   14   41
Net finance (income) / expense 4 212 1 1 46 0 361
Share of (profit) / loss of equity accounted investees   (0)   (19)   (0)   (0)   (4)   (0)   375
Profit / (loss) before income tax   67   3,725   15   49   2,746   14   36
Income tax (benefit) / expense   7   365   1   2   120   1   205
Profit / (loss) for the period   60   3,360   13   47   2,627   13   28
                             
Diluted EPS   0.4   19.7       0.3   15.5       28
 

Profit Computation:

   
EBITDA Computation Q1 FY13   Q1 FY12
  ($)  

(Rs.)

  ($)  

(Rs.)

PBT 67   3,725 49   2,746
Net Interest Expenses / (Income) 1 44 4 221
Depreciation 16 896 15 828
Amortization   7   400   7   405
Reported EBITDA   91   5,065   76   4,201
Adjustments of exceptional items:
One-time charge of Voluntary Retirement Scheme           2   136
Adjusted EBITDA   91   5,065   78   4,337
PAT Computation Q1 FY13   Q1 FY12
  ($)  

(Rs.)

  ($)  

(Rs.)

PAT 60 3,360 47 2,627
Adjustments:
Voluntary retirement scheme 2 136
Tax adjustment   (5)   (306)   (6)   (342)
Adjusted PAT   55   3,054   44   2,421
 

Segmental Analysis

Global Generics

Revenues from Global Generics segment at Rs. 19.1 billion in Q1 FY13, year-on-year growth of 32% driven by key markets of North America, Russia & other emerging markets.

  • Revenues from North America at Rs. 7.9 billion in Q1 FY13 grew by 27% in USD terms, over previous year.
    • Growth was largely driven by new product launches of clopidogrel, OTC lansoprazole and was further supported by key products of ziprasidone, fondaparinux, quetiapine, etc, marginally offset by regular year-on-year price declines in existing product basket.
    • 5 new products were launched during the quarter including clopidogrel 300 Mg which was launched under 180-day exclusivity.
    • 29 products of prescription portfolio feature among the Top 3 ranks in market shares (Source: IMS Health Volumes April 2012).
    • During the quarter, 4 ANDAs were filed. Cumulatively 73 ANDAs are pending for approval with the USFDA of which 36 are Para IVs and 6 are with FTF status.
  • Revenues in Russia and Other CIS markets at Rs. 4.2 billion in Q1 FY13 represented year-on-year growth of 38%.
    • Revenues in Russia at Rs. 3.5 billion in Q1 FY13 was the highest ever from this market and represented year-on-year growth of 30% in Rouble terms.
      • Growth was driven by new product launches, volume increase across key brands and OTC portfolio.
    • Revenues in Other CIS markets at Rs. 0.65 billion in Q1 FY13 grew by 22% over previous year.
  • Revenues in India at Rs. 3.5 billion in Q1 FY13 grew by 19% over previous year.
    • Growth driven by volume increase across most of our key brands.
    • Biosimilars portfolio grew by 15% over previous year.
    • 10 new brands were launched during the quarter.
  • Revenues from Europe at Rs. 2.2 billion in Q1 FY13 grew by 14% over previous year.
    • Revenues from Germany at Rs. 1.5 billion in Q1 FY13 grew by 17% in Euro terms over previous year. This growth was largely due to the products supplied under the AOK tender won last year.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI are at Rs. 5.5 billion in Q1 FY 13, year-on-year growth of 14%.
  • During the quarter, 7 DMFs were filed globally, with 1 each in the US and Europe. The cumulative DMF filings as of 30 th June 2012 are 550.

Income Statement Highlights:

  • Gross profit margin at 53% in Q1 FY13 remained flat versus Q1 FY12. Gross profit margin for Global Generics and PSAI business segments were at 59% and 31% respectively.
  • Selling, General and Administration (SG&A) expenses including amortization at Rs. 8.3 billion increased by 23% over previous year. This increase is on account of year-on-year salary increments, higher sales & marketing costs and the effect of rupee depreciation against multiple currencies.
  • Research & development expenses for Q1 FY13 at Rs. 1.6 billion is at 6% to sales.
  • Net Finance expense was at Rs. 212 million in Q1 FY13 versus Rs. 46 million in Q1 FY12. The change is on account of :
    • Net forex loss of Rs. 209 million in Q1 FY13 versus net forex gain of Rs. 158 million in Q1 FY12. Q1 FY13 includes a charge of Rs. 297 million due to time value of options. Adjusting the impact of this charge, net forex gain on P&L is at Rs. 88 million in Q1 FY13.
    • Net interest expense of Rs. 44 million in Q1 FY13 versus Rs. 221 million in Q1 FY12. This decrease in expense is largely on account of higher interest income from FD & mutual fund.
    • Profit on sale of investments of Rs. 41 million in Q1 FY13 versus Rs. 17 million in Q1 FY12.
  • EBITDA of Rs. 5.1 billion in Q1 FY13, 20% of revenues and recorded year-on-year growth of 21%.
  • Profit after Tax in Q1 FY13 at Rs. 3.4 billion recorded year-on-year growth of 28%.
  • Diluted earnings per share in Q1 FY 13 were Rs. 19.7.
  • Capital expenditure in Q1 FY13 was Rs. 1.9 billion.

Appendix 1: Key Balance Sheet Items

   

(in millions)

Particulars   As on 30th Jun 12   As on 31st Mar 12
  ($)  

(Rs.)

  ($)  

(Rs.)

Cash and cash equivalents   384   21,353   327   18,152
Trade receivables   449   24,975   456   25,339
Inventories   370   20,580   348   19,352
Property, plant and equipment   622   34,550   598   33,246
Goodwill and Other Intangible assets   245   13,597   243   13,529
Loans and borrowings (current & non current)   638   35,430   580   32,210
Trade payables   157   8,750   171   9,503
Equity   1,074   59,664   1,034   57,444
   

Appendix 2: Revenue Mix by Segment

 

 

 

(in millions)

    Q1 FY13   Q1 FY12   Growth %
  ($)  

(Rs.)

  %   ($)  

(Rs.)

  %  
Global Generics   343   19,066   75   260   14,424   73  

32

North America       7,920   42       5,756   40   38
Europe       2,178   11       1,917   13   14
India       3,482   18       2,936   20   19
Russia & Other CIS       4,167   22       3,018   21   38
RoW       1,319   7       797   6   65
PSAI   99   5,527   22   87   4,832   24   14
North America       1,064   19       842   17   26
Europe       2,233   40       1,693   35   32
India       611   11       662   14   (8)
RoW       1,619   29       1,635   34   (1)
Proprietary Products & Others   15   813   3   9   527   3   54
Total   457   25,406   100   356   19,783   100   28
     

About Dr. Reddy's

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three business segments - Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars, differentiated formulations and NCEs. Therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management, anti-infective and pediatrics. Focus markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, Australia and New Zealand.

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