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Dr. Reddy's Q3 & 9 Months FY13 Financial Results

Stocks in this article: RDY

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended December 31, 2012 under International Financial Reporting Standards (IFRS).

Key Highlights (Q3 FY13)

  • Consolidated revenues for Q3 FY13 at Rs. 28.7 billion, recorded YoY growth of 23% # . Consolidated revenues for 9 months FY13 at Rs. 82.9 billion, recorded YoY growth of 26% # .
    • Revenues from the Global Generics segment for Q3 FY13 at Rs. 20.8 billion, recorded a YoY growth of 24% # primarily driven by North America and the Emerging market territories.
    • Revenues from the PSAI segment for Q3 FY13 at Rs. 7.1 billion, recorded YoY growth of 28%.
  • EBITDA for Q3 FY13 at Rs. 6.0 billion, 21% of revenues. EBITDA for 9 months FY13 at Rs. 18.6 billion, 22% of the revenues.
  • PAT for Q3 FY13 at Rs. 3.8 billion, 13% of revenues. PAT for 9 months at Rs. 11.1 billion, 13% of revenues.
  • *Adjusted PAT for Q3 FY13 at Rs. 3.6 billion, 13% of revenues.
  • During the quarter, the company launched 17 new products, filed 13 new product registrations and filed 13 DMFs globally.

# Excluding the impact of the olanzapine profit share recorded in Q3 FY12

* Adjusted for tax normalization on account of the annual effective tax rate

** Adjusted for (a) impairment charges in Q2 FY13 and (b) tax normalization on account of the annual effective tax rate.

All figures in millions, except EPS

   

All US dollar figures based on convenience translation rate of 1USD = Rs. 54.86

       
Dr. Reddy’s Laboratories Limited and Subsidiaries
Unaudited Consolidated Income Statement
 
Particulars Q3 FY13 Q3 FY12  
($)     (Rs.)     % ($)     (Rs.)     % Growth %
Revenue 522 28,651 100 505 27,692 100 3
Cost of revenues 247 13,559 47 203 11,117 40 22
Gross profit 275 15,092 53 302 16,575 60 (9)
Operating Expenses
Selling, general & administrative expenses 156 8,571 30 140 7,679 28 12
Research and development expenses 37 2,026 7 28 1,514 5 34
Other operating (income) / expense (4) (233) (1) (3) (165) (1) 41
Results from operating activities 86 4,728 17 138 7,547 27 (37)
Net finance (income) / expense 2 96 0 (3) (174) (1) NC
Share of (profit) / loss of equity accounted investees (1) (32) (0) (0) (26) (0) 23
Profit before income tax 85 4,664 16 141 7,747 28 (40)
Income tax expense 16 882 3 48 2,617 9 (66)
Profit for the period 69 3,782 13 94 5,130 19 (26)
               
Diluted EPS 0.4 22.20   0.5 30.16   (26)

Profit Computation:

EBITDA Computation     Q3 FY13     Q3 FY12
($)    

(Rs.)

($)    

(Rs.)

PBT 85 4,664 141 7,747
Net Interest Expenses / (Income) (0) (13) 3 155
Depreciation 18 971 16 899
Amortization 7 411 7 408
Reported EBITDA 110 6,033 168 9,209
 
Adjusted PAT Computation Q3 FY13 Q3 FY12
($)

(Rs.)

($)

(Rs.)

PAT (reported) 69 3,782 94 5,130
Adjustments:
Tax adjustment* (3) (138) 16 852
Adjusted PAT 66 3,644 109 5,982

* Q3 FY13 normalized to the FY13 annual effective tax rate and Q3 FY12 normalized to the FY12 annual effective tax rate

Note: The above presented unaudited consolidated income statement for 3 months ended 31 December 2012 is based on the financial submissions to be made with the US SEC in the form 6K. A charge of Rs 20.4 crs towards fuel surcharge adjustment was accounted in Q2 FY13 after the unaudited results were announced as a subsequent event adjustment since the related judgement of AP High Court was delivered before the filing of Form 6K with US SEC for Q2 FY13 financials. However, in the financials submitted to SEBI this charge has been considered in Q3 FY13 only.

Segmental Analysis

Global Generics

Revenues from Global Generics segment for Q3 FY13 at Rs. 20.8 billion, recorded YoY growth of 24% # driven by key markets of North America and the Emerging market territories.

  • Revenues from North America for Q3 FY13 at Rs. 9.2 billion ($178 Mn), recorded YoY growth of 38% # .
    • Growth is largely driven by key limited competition products of ziprasidone, tacrolimus, fondaparinux and ramp-up in antibiotics portfolio.
    • Continued focus on gaining market shares in new products such as atorvastatin, metoprolol, ibandronate and montelukast granules during the quarter.
    • 31 products from the prescription portfolio are ranked among the Top 3 in their respective market shares. (Source: IMS Health Volumes, November 2012)
    • During the quarter, 4 ANDAs were filed. Cumulatively, 65 ANDAs are pending for approval with the USFDA of which 35 are Para IVs and 8 have ‘First To File’ status.
  • Revenues from Russia and Other CIS markets for Q3 FY13 at Rs. 4.4 billion recorded YoY growth of 32%.
    • Revenues from Russia for Q3 FY13 at Rs. 3.7 billion recorded YoY growth of 35%, largely aided by seasonal offtake across major brands and new product launches.
    • Revenues from Other CIS markets for Q3 FY13 at Rs. 0.7 billion recorded YoY growth of 19%.
  • Revenues from India for Q3 FY13 at Rs. 3.7 billion recorded YoY growth of 12%.
    • Biosimilars portfolio grew YoY by 47% during the quarter.
    • 8 new brands were launched during the quarter.
  • Revenues from Europe for Q3 FY13 at Rs. 1.9 billion declined YoY by 20%.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI for Q3 FY13 at Rs. 7.1 billion, recorded YoY growth of 28%.
  • During the quarter, 13 DMFs were filed globally, including 3 in the US and 1 in Europe. The cumulative number of DMF filings as of December 31, 2012 is 566.

# Excluding the impact of the olanzapine profit share recorded in Q3 FY12

Income Statement Highlights:

  • Gross profit margin is at 53% in Q3 FY13. Gross profit margin for Global Generics and PSAI business segments are at 60% and 29% respectively.
  • Selling, General and Administration (SG&A) expenses for Q3 FY13 including amortization at Rs. 8.6 billion increased YoY by 12%.
  • Research & development expenses for Q3 FY13 at Rs. 2.0 billion is at 7% of revenues.
  • Net Finance expense is at Rs. 96 million, in Q3 FY13 compared to the net finance income of Rs. 174 million in Q3 FY12. The change is on account of:
    • Net decline in the forex benefit primarily on account of the loss on time value of options, due to the recent depreciation in the rupee.
    • Incremental Interest income of Rs. 168 million primarily on account of higher interest income from Fixed Deposit and mutual funds.
  • EBITDA for Q3 FY13 is Rs. 6.0 billion, 21% of revenues.
  • Profit after Tax in Q3 FY13 at Rs. 3.8 billion, 13% of revenues.
  • *Adjusted Profit after tax in Q3 FY13 at Rs. 3.6 billion, 13% of revenues.
  • Diluted earnings per share in Q3 FY13 are Rs. 22.2.
  • Capital expenditure for Q3 FY13 is Rs. 1.5 billion.

* Adjusted for tax normalization on account of the annual effective tax rate

All figures in millions

   

All US dollar figures based on convenience translation rate of 1USD = Rs. 54.86

   

Appendix 1: Key Balance Sheet Items

 
Particulars As on 31st Dec 12 As on 30th Sep 12
($)    

(Rs.)

($)    

(Rs.)

Cash and cash equivalents 424 23,264 376 20,641
Trade receivables 490 26,873 478 26,247
Inventories 422 23,169 399 21,885
Property, plant and equipment 659 36,126 643 35,300
Goodwill and Other Intangible assets 226 12,436 224 12,297
Loans and borrowings (current & non current) 672 36,825 636 34,901
Trade payables 200 10,996 190 10,412
Equity 1,217 66,789 1,155

 

63,354

Appendix 2: Revenue Mix by Segment

Segment     Q3 FY13     Q3 FY12     Growth %
($)    

(Rs.)

    % ($)    

(Rs.)

    %
Global Generics 380 20,828 73 388 21,287 77 (2)
North America   9,243 44   11,114 52 (17)
Europe   1,931 9   2,426 11 (20)
India   3,718 18   3,333 16 12
Russia & Other CIS   4,380 21   3,317 16 32
RoW   1,556 7   1,097 5 42
PSAI 130 7,127 25 101 5,563 20 28
North America   1,266 18   1,170 21 8
Europe   2,472 35   1,652 30 50
India   1,268 18   862 15 47
RoW   2,121 30   1,880 34 13
Proprietary Products & Others 13 696 2 15 841 3 (17)
Total 522 28,651 100 505 27,691 100 3

All figures in millions, except EPS

   

All US dollar figures based on convenience translation rate of 1USD = Rs. 54.86

       

Appendix 3: Consolidated Income Statement

 
Particulars 9 months FY13 9 months FY12 Growth %
($)    

(Rs.)

    % ($)    

(Rs.)

    %
Revenues 1,510 82,866 100 1,279 70,153 100 18
Cost of revenues 713 39,133 47 562 30,818 44 27
Gross profit 797 43,733 53 717 39,335 56 11
Operating Expenses
Selling, general and administrative expenses 453 24,862 30 395 21,651 31 15
Research and development expenses 97 5,347 6 76 4,170 6 28
Impairment loss on goodwill and intangible assets 12 688 1 0 0 0 0
Other operating (income) / expense (15) (848) (1) (10) (567) (1) 50
Results from operating activities 249 13,684 17 257 14,081 20 (3)
Net finance (income) / expense (1) (63) (0) (1) (78) (0) (20)
Share of (profit) / loss of equity accounted investees (1) (79) (0) (1) (43) (0) 84
Profit before income tax 252 13,826 17 259 14,202 20 (3)
Income tax expense 50 2759 3 61 3,367 5 (18)
Profit for the period 202 11,067 13 197 10,835 15 2
               
Diluted EPS 1.2 64.95   1.2 63.68   2

Appendix 4: Profit Computation:

EBITDA Computation     9 months FY13     9 months FY12
($)    

(Rs.)

($)    

(Rs.)

PBT 252 13,826 259 14,202
Net Interest Expenses / (Income) (0) (1) 11 601
Depreciation 51 2,810 48 2,607
Amortization & Impairment 35 1,932 22 1,202
Reported EBITDA 338 18,567 339 18,612
 
PAT Computation 9 months FY13 9 months FY12
($)

(Rs.)

($)

(Rs.)

PAT (reported) 202 11,067 197 10,835
Adjustments:
Impairment loss on goodwill and intangible assets 13 688
Tax adjustment* (8) (417) 2 133
Adjusted PAT 207 11,338 199 10,968

* Adjusted for tax normalization on account of the annual effective tax rate for respective YTD financial years.

Disclaimer

This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, our ability to successfully implement our strategy, the market acceptance of and demand for our products, our growth and expansion, technological change and our exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.

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