Dr. Reddy’s Q1 FY14 Financial Results

Tue Jul 30, 2013 7:16am EDT

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Dr. Reddy’s Q1 FY14 Financial Results

Q1 FY14 Revenues at Rs. 28.4 billion (YoY growth of 12%)

Q1 FY14 EBITDA at Rs. 5.7 billion (20% of the revenues, with YoY growth of 13%)

Q1 FY14 Adjusted PAT* at Rs. 3.2 billion (11% of the revenues, with YoY growth of 12%)

Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended June 30, 2013 under International Financial Reporting Standards (IFRS).

Key Highlights (Q1 FY14)

  • Consolidated revenues for Q1 FY14 at Rs. 28.4 billion, recorded YoY growth of 12%.
    • Revenues from the Global Generics segment for Q1 FY14 at Rs. 21.9 billion, YoY growth of 15%.
    • Revenues from the PSAI segment for Q1 FY14 at Rs. 5.9 billion, YoY growth of 6%.
  • R&D expenses for Q1 FY14 increased by 55% to reach Rs. 2.4 billion, 8.5% of revenues as compared to 6.2% of revenues in Q1 FY13.
  • Selling, general & administrative (SG&A) expenses for Q1 FY14 increased by only 6% and stood at Rs. 8.8 billion, 30.9% to revenues as compared to 32.6% to revenues in Q1 FY13.
  • EBITDA for Q1 FY14 at Rs. 5.7 billion, 20% of revenues and has recorded a YoY growth of 13%.
  • PAT for Q1 FY14 at Rs. 3.6 billion, 13% of revenues and has recorded a YoY growth of 7%.
  • Adjusted PAT* for Q1 FY14 at Rs. 3.2 billion, 11% of revenues with a YoY growth of 12%
  • During the quarter, the company launched 18 new generic products, filed 12 new product registrations and filed 5 DMFs globally.

* Q1 FY14 normalized to the FY14 annual effective tax rate and Q1 FY13 normalized to the FY13 annual effective tax rate

All figures in millions, except EPS

 

All US dollar figures based on convenience translation rate of 1USD = Rs. 59.52

 
Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Unaudited Consolidated Income Statement
 
  Q1 FY14   Q1 FY13    
Particulars ($)   (Rs.)   %   ($)   (Rs.)   %   Growth %
Revenues 478 28,449 100.0 427 25,406 100.0 12
Cost of revenues 226   13,430   47.2   199   11,865   46.7   13  
Gross profit 252   15,019   52.8   228   13,541   53.3   11  
Operating Expenses
Selling, general & administrative expenses 148 8,794 30.9 139 8,278 32.6 6
Research and development expenses 41 2,430 8.5 26 1,564 6.2 55
Other operating income (6 ) (376 ) (1.3 ) (4 ) (218 ) (0.9 ) 73  
Results from operating activities 70   4,171   14.7   66   3,917   15.4   6  
Net finance expense 1 70 0.2 4 212 0.8 (67 )
Share of profit of equity accounted investees (1 ) (36 ) (0.1 ) (0 ) (19 ) (0.1 ) 87  
Profit before income tax (PBT) 70   4,137   14.5   63   3,725   14.7   11  
Income tax expense 9   528   1.9   6   365   1.4   45  
Profit for the period (PAT) 61   3,609   12.7   56   3,360   13.2   7  
               
Diluted EPS 0.4   21.17     0.3   19.74     7  
 
 
EBITDA Computation     Q1 FY14         Q1 FY13
($)     (Rs.) ($)     (Rs.)
PBT 70 4,137 63 3,725
Interest (1 ) (61 ) 0 3
Depreciation 19 1,117 15 896
Amortization 8   496   7   400  
EBITDA 96   5,689   84   5,024  
 
Adjusted PAT Computation Q1 FY14 Q1 FY13
($) (Rs.) ($) (Rs.)
PAT 61 3,609 56 3,360
Adjustments:
Tax adjustment* (6 ) (382 ) (8 ) (477 )
Adjusted PAT 54   3,227   48   2,883  
 

* Q1 FY14 normalized to the FY14 annual effective tax rate and Q1 FY13 normalized to the FY13 annual effective tax rate

Segmental Analysis

Global Generics

Revenues from Global Generics segment at Rs. 21.9 billion recorded a YoY growth of 15%. Growth was primarily driven by North America and Emerging market territories.

  • Revenues from North America at Rs. 10.9 billion, recorded a YoY growth of 37%. Growth was primarily driven by:
    • Key difficult to synthesize products with limited competition launched during rest of the quarters of the previous year, i.e. montelukast granules, finasteride 1mg, isotretinoin, zoledronic acid (4mg/5mL), metoprolol succinate extended release, etc.
    • Two new products which have been launched during the quarter – zoledronic acid (5mg/100mL) injection and lamotrigine XL.

    • Significant traction in market share of products such as tacrolimus, fondaparinux, etc. on a YoY basis.

During the quarter, 2 ANDAs were filed. Cumulatively, 64 ANDAs are pending for approval with the USFDA of which 38 are Para IVs and we believe 8 to have ‘First To File’ status.

  • Revenues from Emerging Markets (which include Russia, CIS countries and RoW territories) for Q1 FY14 at Rs. 6.0 billion, YoY growth of 9%.
    • Revenues from Russia at Rs. 3.7 billion, YoY growth of 4%. Growth was muted primarily on account of high base effect of the previous year and changes in the market stocking pattern.
    • Revenues from CIS markets at Rs. 0.8 billion, YoY growth of 28%. Growth was largely driven by volume uptake of existing products and introduction of new products in Ukraine.
    • Revenues from RoW territories stood at Rs. 1.5 billion, YoY growth of 12% despite the devaluation impact in Venezuela.
  • Revenues from India for Q1 FY14 at Rs. 3.5 billion remained flat YoY.
    • Implementation of the new Pricing Policy 2012, which led to destocking in the trade, coupled with the Maharashtra trade strike had an adverse effect on the revenues for the quarter.

  • Revenues from Europe for Q1 FY14 at Rs. 1.6 billion declined YoY by 28%.
    • Revenues from Germany for Q1 FY14 at Rs. 1.1 billion declined YoY by 26%.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI for Q1 FY14 at Rs. 5.9 billion, YoY growth of 6%. Muted growth on the back of lower number of ‘launch molecules’ to our customers during the quarter.
  • During the quarter, 5 DMFs were filed globally, including 3 in the US. The cumulative number of DMF filings as of June 30, 2013 is 581.

Income Statement Highlights:

  • Gross profit margin for Q1 FY14 stood at 52.8%, marginal drop of 50 basis points compared to Q1 FY13. Corresponding values for Global Generics and PSAI segments for the quarter are at 61.6% and 19% respectively. GG gross margin improved primarily on account of higher contribution from new product launches in North America Generics, where as PSAI gross margin declined, primarily on the back of lower number of launch molecules to our customers and relatively higher overheads during the quarter.
  • Selling, general and administration (SG&A) expenses including amortization at Rs. 8.8 billion increased YoY by only 6%. SG&A expenses for Q1 FY14 stood at 30.9% to sales as compared to 32.6% to sales in Q1 FY13.
  • Research & development expenses stood at Rs. 2.4 billion, YoY growth of 55%; 8.5% of revenues in Q1 FY14 as compared to 6.2% of revenues in Q1 FY13. The increase is in line with the increased focus on complex formulations, differentiated portfolio and biosimilars.
  • Net Finance expense is at Rs. 70 million in Q1 FY14 compared to Rs. 212 million in Q1 FY13. The change is on account of:
    • Net forex loss of Rs. 131 million in Q1 FY14 as compared to Rs. 209 million in Q1 FY13.
    • Net interest income of Rs. 61 million in Q1 FY14 compared to net interest expense of Rs. 3 million in Q1 FY13.
  • EBITDA for Q1 FY14 at Rs. 5.7 billion, 20% of revenues with a YoY growth of 13%.
  • Profit after Tax in Q1 FY14 at Rs. 3.6 billion, 13% of revenues with a YoY growth of 7%.
  • *Adjusted Profit after tax in Q1 FY14 at Rs. 3.2 billion, YoY growth of 12%.
  • Diluted earnings per share in Q1 FY 14 are Rs. 21.17
  • Capital expenditure for Q1 FY14 is Rs. 2.0 billion.

* Q1 FY14 normalized to the FY14 annual effective tax rate and Q1 FY13 normalized to the FY13 annual effective tax rate

All US dollar figures based on convenience translation rate of 1USD = Rs. 59.52

 

Appendix 1: Key Balance Sheet Items

(in millions)

     
Particulars As on 30th June 2013 As on 31st March 2013
($)     (Rs.) ($)     (Rs.)
Cash and cash equivalents and current investments 502   29,907 371   22,099
Trade receivables 490   29,168 537   31,972
Inventories 379   22,536 363   21,600
Property, plant and equipment 662   39,393 635   37,814
Goodwill and other Intangible assets 248   14,787 236   14,021
Loans and borrowings (current & non-current) 738   43,937 616   36,678
Trade payables 169   10,076 199   11,862
Total Equity 1,261   75,051 1,223   72,805
 
 

Appendix 2: Revenue Mix by Segment

 

(in millions)

 
      Q1 FY14     Q1 FY13     Growth %
($)     (Rs.)     % ($)     (Rs.)   %
Global Generics 368   21,903 77 320   19,066 75 15  
North America   10,871 50   7,920 42 37  
Europe   1,573 7   2,178 11 (28 )
India   3,493 16   3,482 18 0  
Russia & Other CIS   4,489 20   4,167 22 8  
RoW   1,477 7   1,319 7 12  
PSAI 99   5,868 21 93   5,527 22 6  
North America   1,093 19   1,064 19 3  
Europe   2,093 36   2,233 40 (6 )
India   791 13   611 11 29  
RoW   1,891 32   1,619 29 17  
Proprietary Products & Others 11   679 2 14   813 3 (16 )
Total 478   28,449 100 427   25,406 100 12  

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.

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 businesses - 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 and differentiated formulations. Major therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management and anti-infective. Major markets include India, USA, Russia-CIS and Europe apart from other select geographies within Emerging Markets.

For more information, log on to: www.drreddys.com

Note: All discussions in this release are based on unaudited consolidated IFRS financials.

Dr. Reddy’s Laboratories Ltd.
Investors and Financial Analysts:
Kedar Upadhye, +91-40-66834297
kedaru@drreddys.com
or
Saunak Savla, +91-40-49002135
saunaks@drreddys.com
or
Milan Kalawadia (USA), +1 908-203-4931
mkalawadia@drreddys.com
or
Media:
S Rajan, +91-40-49002445
rajans@drreddys.com