Dr. Reddy’s Q2 & H1 FY19 Financial Results
Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for
the quarter and half year ended September 30, 2018 under International Financial Reporting Standards (IFRS).
| Q2 Performance Summary |
|
|
|
H1 Performance Summary |
|
|
|
|
|
|
Rs. 3,798 Cr
|
|
|
|
Rs. 7,519 Cr
|
|
Revenue
|
|
|
|
Revenue
|
| [Up: 2% QoQ; 7% YoY] |
|
|
|
[Up: 10% YoY]
|
|
|
|
|
|
|
55.00%
|
|
|
|
55.40%
|
|
Gross Margin
|
|
|
|
Gross Margin
|
|
[Q1 FY19: 55.7%; Q2 FY18: 53.3%]
|
|
|
|
[H1 FY17: 52.5%]
|
|
|
|
|
|
|
Rs. 1,237 Cr
|
|
|
|
Rs. 2,448 Cr
|
|
SGNA expenses
|
|
|
|
SGNA expenses
|
|
[Up: 2% QoQ, 12% YoY]
|
|
|
|
[Up: 7% YoY]
|
|
|
|
|
|
|
Rs. 412 Cr
|
|
|
|
Rs. 828 Cr
|
|
R&D expenses
|
|
|
|
R&D expenses
|
|
[10.8% of Revenues]
|
|
|
|
[11.0% of Revenues]
|
|
|
|
|
|
|
Rs. 578 Cr
|
|
|
|
Rs. 1,079 Cr
|
|
Profit before Tax
|
|
|
|
Profit before Tax
|
|
[Up: 15% QoQ; 49% YoY]
|
|
|
|
[Up: 132%]
|
|
|
|
|
|
|
Rs. 504 Cr
|
|
|
|
Rs.960 Cr
|
|
Profit after Tax
|
|
|
|
Profit after Tax
|
|
[Up: 10% QoQ, 77% YoY]
|
|
|
|
[Up: 179%]
|
|
|
|
|
|
Commenting on the results, Co-chairman and CEO, G.V. Prasad said, “I am encouraged with our performance and progress in the
second quarter. Our continuous focus on execution, operational efficiency and cost optimization are showing results. Looking ahead,
our priority will be to resolve pending regulatory issues, and continue to work on execution and cost structures that will enable
affordable medicines for more patients.”
|
|
|
|
|
|
All amounts in millions, except EPS
|
|
|
|
All US dollar amounts based on convenience translation rate of I USD = Rs. 72.54
|
|
|
|
|
|
|
|
|
|
|
|
| Dr. Reddy’s Laboratories Limited and Subsidiaries |
| |
|
Consolidated Income Statement
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Particulars |
|
Q2 FY19 |
|
Q2 FY18 |
|
YoY
Gr % |
|
Q1 FY19 |
|
QoQ
Gr% |
| |
($) |
|
(Rs.) |
|
($) |
|
(Rs.) |
|
|
($) |
|
(Rs.) |
|
| Revenues |
|
524 |
|
37,978 |
|
489 |
|
35,460 |
|
7 |
|
513 |
|
37,207 |
|
2 |
| Cost of Revenues |
|
235 |
|
17,081 |
|
228 |
|
16,559 |
|
3 |
|
227 |
|
16,479 |
|
4 |
| Gross Profit |
|
288 |
|
20,897 |
|
261 |
|
18,901 |
|
11 |
|
286 |
|
20,728 |
|
1 |
| Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, General & Administrative expenses |
|
171 |
|
12,372 |
|
152 |
|
11,032 |
|
12 |
|
167 |
|
12,106 |
|
2 |
| Research and Development expenses |
|
57 |
|
4,120 |
|
58 |
|
4,175 |
|
(1) |
|
57 |
|
4,157 |
|
(1) |
| Other (income) / expense, net |
|
(9) |
|
(641) |
|
(2) |
|
(114) |
|
463 |
|
(4) |
|
(303) |
|
112 |
| Results from operating activities |
|
70 |
|
5,046 |
|
52 |
|
3,808 |
|
33 |
|
66 |
|
4,768 |
|
6 |
| Net finance (income) / expense |
|
(9) |
|
(625) |
|
0.3 |
|
24 |
|
- |
|
(2) |
|
(156) |
|
301 |
| Share of (profit) / loss of equity accounted investees, net of
tax |
|
(1) |
|
(109) |
|
(1) |
|
(92) |
|
17 |
|
(1) |
|
(83) |
|
30 |
| Profit before income tax |
|
80 |
|
5,780 |
|
53 |
|
3,876 |
|
49 |
|
69 |
|
5,007 |
|
15 |
| Income tax expense |
|
10 |
|
742 |
|
14 |
|
1,027 |
|
(28) |
|
6 |
|
446 |
|
67 |
| Profit for the period |
|
69 |
|
5,038 |
|
39 |
|
2,849 |
|
77 |
|
63 |
|
4,561 |
|
10 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted Earnings Per Share (EPS) |
|
0.42 |
|
30.31 |
|
0.24 |
|
17.15 |
|
77 |
|
0.38 |
|
27.45 |
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| As % to Revenues |
|
|
Q2
FY19
|
|
|
Q2
FY18
|
|
|
|
Q1
FY19
|
| Gross Profit |
|
|
55.0 |
|
|
53.3 |
|
|
|
55.7 |
| SG&A |
|
|
32.6 |
|
|
31.1 |
|
|
|
32.5 |
| R&D |
|
|
10.8 |
|
|
11.8 |
|
|
|
11.2 |
| EBITDA |
|
|
22.8 |
|
|
19.4 |
|
|
|
21.7 |
| PBT |
|
|
15.2 |
|
|
10.9 |
|
|
|
13.5 |
| PAT |
|
|
13.3 |
|
|
8.0 |
|
|
|
12.3 |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Computation
|
| |
|
|
|
|
|
|
|
|
| Particulars |
|
Q2 FY19 |
|
|
Q2 FY18 |
|
|
Q1 FY19 |
| |
($) |
|
(Rs.) |
|
|
($) |
|
(Rs.) |
|
|
($) |
|
(Rs.) |
| Profit before Income Tax |
|
80 |
|
5,780 |
|
|
53 |
|
3,876 |
|
|
69 |
|
5,007 |
| Interest (income) net* |
|
(2) |
|
(132) |
|
|
1 |
|
72 |
|
|
(1) |
|
(46) |
| Depreciation# |
|
28 |
|
2,033 |
|
|
29 |
|
2,078 |
|
|
31 |
|
2,214 |
| Amortization# |
|
13 |
|
965 |
|
|
12 |
|
862 |
|
|
12 |
|
896 |
| EBITDA |
|
119 |
|
8,646 |
|
|
95 |
|
6,888 |
|
|
111 |
|
8,071 |
|
* Includes income from Investments
|
|
|
# includes impairment charge
|
|
|
|
|
|
All amounts in millions, except EPS
|
|
All US dollar amounts based on convenience translation rate of I USD = Rs.72.54
|
|
|
|
|
|
|
|
|
Key Balance Sheet Items
|
| |
|
|
|
|
|
|
| Particulars |
|
As on 30th Sep,
2018 |
|
As on 30th June
2018 |
|
As on 30th Sep
2017 |
| |
($) |
|
(Rs.) |
|
($) |
|
(Rs.) |
|
($) |
|
(Rs.) |
| Cash and cash equivalents and other investments |
|
287 |
|
20,837 |
|
235 |
|
17,047 |
|
232 |
|
16,793 |
| Trade receivables (current & non-current) |
|
639 |
|
46,317 |
|
663 |
|
48,095 |
|
582 |
|
42,203 |
| Inventories |
|
448 |
|
32,490 |
|
434 |
|
31,498 |
|
372 |
|
26,998 |
| Property, plant and equipment |
|
781 |
|
56,640 |
|
786 |
|
57,020 |
|
798 |
|
57,905 |
| Goodwill and Other Intangible assets |
|
707 |
|
51,290 |
|
679 |
|
49,289 |
|
684 |
|
49,634 |
| Loans and borrowings (current & non-current) |
|
765 |
|
55,522 |
|
748 |
|
54,273 |
|
740 |
|
53,668 |
| Trade and other payables |
|
194 |
|
14,073 |
|
204 |
|
14,816 |
|
196 |
|
14,193 |
| Equity |
|
1,812 |
|
1,31,446 |
|
1,798 |
|
1,30,430 |
|
1,680 |
|
1,21,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix by Segment
|
| |
|
|
|
|
|
|
|
|
|
|
| Particulars |
|
Q2 FY19 |
|
Q2 FY18 |
|
YoY
Growth % |
|
Q1 FY19 |
|
QoQ
Growth % |
| |
(Rs.) |
|
(Rs.) |
|
|
(Rs.) |
|
| Global Generics |
|
30,536 |
|
28,618 |
|
7 |
|
30,636 |
|
0 |
| North America |
|
14,265 |
|
14,318 |
|
-0.4 |
|
15,903 |
|
-10 |
| Europe |
|
1,915 |
|
2,424 |
|
-21 |
|
2,016
|
|
-5 |
| India |
|
6,864 |
|
6,370 |
|
8 |
|
6,074 |
|
13 |
| Emerging Markets |
|
7,492 |
|
5,506 |
|
36 |
|
6,643 |
|
13 |
| Pharmaceutical Services and Active Ingredients (PSAI) |
|
6,029 |
|
5,654 |
|
7 |
|
5,409 |
|
11 |
| Proprietary Products & Others |
|
1,413 |
|
1,188 |
|
19 |
|
1,162 |
|
22 |
| Total |
|
37,978 |
|
35,460 |
|
7 |
|
37,207 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
Segmental Analysis
Global Generics (GG)
Revenues from GG segment at Rs.30.5 billion. Year-on-year growth of 7%, primarily driven by contributions from Emerging
Markets, India and favorable forex. Quarter-on-quarter the sales remained flat.
- Revenues from North America at Rs.14.3 billion. Year-on-year decline is 0.4%. Sequential decline of
10%, primarily due to absence of gSuboxone sales in Q2, competitive pricing pressure on some of the key molecules offset by
favourable forex benefit.
As of 30th Sep 2018, cumulatively 113 generic filings are pending for approval with the USFDA (110 ANDAs and 3 NDAs
under 505(b)(2) route). Of these 110 ANDAs, 63 are Para IVs out of which we believe 32 have ‘First to File’ status.
- Revenues from Emerging Markets at Rs.7.5 billion. Year-on-year growth is 36%. Sequential
growth is 13%. Growth is primarily on account of improved volume offtake in our existing markets and scale up in our new
markets.
- Revenues from Russia at Rs.3.8 billion. Year-on-year growth of 18%. Growth primarily driven by
new launches and improved volume offtake in some of the key molecules marginally offset by unfavourable forex.
- Revenues from other CIS countries and Romania market at Rs.1.4 billion. Year-on-year growth of
56%.
- Revenues from Rest of World (RoW) territories at Rs.2.3 billion. Year-on-year growth of 65%,
primarily driven by new markets and volume traction in base business.
- Revenues from India at Rs.6.9 billion. Year-on-year growth of 8%. Growth was primarily driven
by new products and improvement in base business.
- Revenues from Europe at Rs.1.9 billion. Year-on-year decline of 21%, primarily on account of
higher price erosion in some of the key molecules.
Pharmaceutical Services and Active Ingredients (PSAI)
- Revenues from PSAI at Rs.6.0 billion. Year-on-year growth of 7% and sequential growth of 11%,
growth driven by volume traction in some of our key molecules.
Proprietary Products (PP)
- Revenues from PP at Rs.776 million. Year-on-year growth of 4% and sequential growth of
7%.
Income Statement Highlights:
- Gross profit margin at 55.0%.
- Improved by ~170 bps over that of previous year and declined by ~70 bps sequentially.
- Sequential decline attributable to the contribution from gSuboxone sales in Q1FY19. Ex-Suboxone
marginal improvement in margin led by higher contribution from branded generics markets, favorable forex partially offset by
price erosion in some of our key molecules.
- Year-on-year improvement primarily aided by contribution from new launches, improved leverage, better
product mix coupled with favorable foreign exchange. This was partially offset by higher price erosions due to increased
competitive intensity in some of our key molecules in the US.
- Gross profit margin for GG and PSAI business segments are at 59.3% and 28.1% respectively.
- SG&A expenses at Rs.12.4 billion, increase of 12% on a year-on-year basis and 2% sequentially.
Adjusted for the forex related increase, the balance increase is primarily on account of normal salary increments and increased
spend towards promotion and branding activities.
- R&D expenses at Rs.4.1 billion. As % to Revenues- Q2 FY19: 10.8% | Q1 FY 19: 11.2% | Q2 FY18:
11.8%
- Other income includes gain of Rs.464 million on account of sale of rights relating to Cloderm brand
(including its authorized generic) and profit on sale of antibiotic manufacturing facility in Bristol, US.
- Net Finance income at Rs.625 million compared to net finance expense of Rs.2 million in Q2FY18.
- Profit after Tax at Rs.5.0 billion. Effective tax rate for the quarter is 12.8%. Lower rate is
primarily on account of profit mix and favourable resolutions of certain tax related litigations pertaining to earlier
years.
- Diluted earnings per share is at Rs.30.31.
- Capital expenditure is at Rs.1.4 billion.
Earnings Call Details (06:00 pm IST, 08:30 am EDT, October 26, 2018)
| |
|
The Company will host an earnings call to discuss the performance and
answer any questions from participants. |
|
|
|
|
|
Audio conference Participants can dial-in on the numbers below |
|
|
|
|
|
|
|
|
|
|
Primary number: |
|
|
|
|
91 22 6280 1219
|
|
|
Secondary number: |
|
|
|
|
91 22 7115 8120
|
|
|
The numbers listed above are universally accessible from all networks and all countries.
|
|
|
|
|
|
Local Access number (India): |
|
|
|
91 70456 71221
|
|
|
|
|
|
International Toll Free Number |
|
|
USA
|
|
18667462133
|
|
|
|
|
|
UK
|
|
08081011573
|
|
|
|
|
|
Singapore
|
|
8001012045
|
|
|
|
|
|
Hong Kong
|
|
800964448
|
|
|
|
|
|
|
|
|
|
|
Playback of call:
|
|
91 22 7194 5757, 91 22 6663 5757
|
|
|
Playback Code:
|
|
07565#
|
|
|
|
|
|
|
|
|
|
|
|
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 gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr.
Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia & CIS countries, and Europe. 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.
Dr. Reddy's Laboratories Ltd
INVESTOR RELATIONS
SAUNAK SAVLA
+91-40-4900 2135
saunaks@drreddys.com
or
MEDIA RELATIONS
CALVIN PRINTER
+91-40-4900 2121
calvinprinter@drreddys.com
View source version on businesswire.com: https://www.businesswire.com/news/home/20181026005324/en/