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Dr. Reddy’s Q1 FY15 Financial Results

Companies mentioned in this article: Dr. Reddy’s Laboratories Ltd.

HYDERABAD, India -- (BUSINESS WIRE) -- Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter ended June 30, 2014 under International Financial Reporting Standards (IFRS).

Key Highlights (Q1 FY15)

  • Consolidated revenues at Rs.35.2 billion, year-on-year growth of 24%.
    • Revenues from the Global Generics (GG) segment at Rs.29.0 billion, year-on-year growth of 32%.
    • Revenues from the Pharmaceutical Services and Active Ingredients (PSAI) segment at Rs.5.5 billion, year-on-year decline of 6%.
  • Gross Profit Margin at 59.3% versus 52.8% as in Q1 FY 14.
  • Research & Development (R&D) expenses at Rs.3.9 billion, year-on-year increase of 59%. Expenses at 11.0% of revenues versus 8.5% of revenues as in Q1 FY14.
  • Selling, general & administrative (SG&A) expenses at Rs.10.7 billion, year-on-year increase of 21%. Expenses at 30.4% of revenues versus 30.9% of revenues as in Q1 FY14.
  • EBITDA at Rs.8.9 billion, 25% of revenues; year-on-year growth of 56%.
  • Profit after tax at Rs.5.5 billion, 16% of revenues; year-on-year growth of 52%.
  • During the quarter the company launched 25 new generic products, filed 27 new product applications and 20 DMFs globally.
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of I USD = Rs.60.06

 
Dr. Reddy’s Laboratories Limited and Subsidiaries
Unaudited Consolidated Income Statement
     
Particulars Q1 FY15 Q1 FY14

Growth
%

  ($)   (Rs.)   %   ($)   (Rs.)   %  
Revenues 586   35,175   100 474   28,449   100 24
Cost of revenues   239   14,331   40.7   224   13,430   47.2   7
Gross profit   347   20,844   59.3   250   15,019   52.8   39
Operating Expenses
Selling, general & administrative expenses 178 10,679 30.4 146 8,794 30.9 21
Research and development expenses 65 3,875 11.0 40 2,430 8.5 59
Other (income) / expense, net   (3)   (185)   (0.5)   (6)   (376)   (1.3)   (51)
Results from operating activities   108   6,475   18.4   69   4,171   14.7   55
Net finance income / (expense) 8 481 1.4 (1) (70) (0.2)
Share of profit of equity accounted investees, net of tax   1   53   0.2   1   36   0.1   50
Profit before tax   117   7,009   19.9   69   4,137   14.5   69
Tax expense   25   1,505   4.3   9   528   1.9   185
Profit for the period   92   5,504   15.6   60   3,609   12.7   52
                             
Diluted Earnings Per Share (EPS)   0.54   32.24       0.35   21.17       52
 
 

EBITDA Computation

   
Particulars Q1 FY15 Q1 FY14
  ($)   (Rs.)   ($)   (Rs.)
Profit before tax 117   7,009 69   4,137
Interest income (0) (5) (1) (61)
Depreciation 22 1,317 19 1,117
Amortization   9   555   8   496
EBITDA   148   8,876   95   5,689
EBITDA (% to sales)       25       20
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of 1 USD = Rs.60.06

Segmental Analysis

Global Generics

Revenues at Rs.29.0 billion, year-on-year growth of 32%, primarily driven by North America, select Emerging Market territories and India.

  • Revenues from North America at Rs.16.5 billion, year-on-year growth of 51%.
    • Sustained performance from limited competition launches namely decitabine, azacitadine, zoledronic acid injection 5mg/100mL, donepezil 23mg and divalproex ER.
    • Progress on market share expansion of key base molecules namely metoprolol succinate and ziprasidone.
    • 4 new products were launched during the quarter.
    • 9 product filings in the US in the Q1 FY15. Cumulatively, 70 ANDAs are pending for approval with the USFDA of which 42 are Para IVs, and we believe 8 to have ‘First To File’ status.
  • Revenues from Emerging Markets at Rs.7.1 billion, year-on-year growth of 19%.
    • Revenues from Russia at Rs.4.2 billion, year-on-year growth of 18% in local currency, largely driven by higher volumes in the OTC segment and certain key products in prescription segment.
    • Emerging Markets (Ex-Russia) at Rs.2.9 billion recorded year-on-year growth of 25% primarily driven by Venezuela Market.
  • Revenues from India at Rs.4.0 billion, year-on-year growth of 15%.
    • Growth is driven by healthy volume expansion in our focus brands, some of which are also listed under the NLEM portfolio.
    • IMS June ’14, Dr Reddy’s MAT Gr% 9.6% versus IPM MAT Gr% of 9.4%. (Source: IMS).

Pharmaceutical Services and Active Ingredients

  • Revenues from PSAI at Rs.5.5 billion, year-on-year decline of 6%.
  • During the quarter 20 DMFs were filed globally, of which 5 were filed in the US. The cumulative number of DMF filings as of June 30, 2014 is 678.

Income Statement Highlights:

  • Gross profit margin at 59.3% and improved by approximately 650 basis points over Q1 FY14. Gross profit margin for GG and PSAI business segments are at 66.5% and 22.3% respectively.
    GG gross profit margin improved primarily on account of better product mix.
  • SG&A expenses at Rs.10.7 billion increased by 21% on a year-on-year basis. However there is a 55 basis points improvement wrt revenues. Increase in absolute value is largely due to depreciation of the rupee against multiple currencies, annual increment, additional manpower deployment in the past 12 months and other sales and marketing spend for events specific to this quarter.
  • R&D expenses at Rs.3.9 billion, year-on-year growth of 59%. 11.0% of revenues in Q1 FY15 as compared to 8.5% of revenues in Q1 FY14. The increase is in line with our planned scale-up in development activities.
  • Net Finance income of Rs.481 million compared to Net Finance expense of Rs.70 million in Q1 FY14. The change is on account of :
    • Net incremental forex benefit of Rs.606 million.
    • Net Incremental interest expense of Rs.56 million.
  • EBITDA at Rs.8.9 billion, year-on-year growth of 56%; 25% of revenues.
  • Profit after Tax at Rs.5.5 billion, year-on-year growth of 52%; 16% of revenues.
  • Diluted earnings per share in Q1 FY 15 at Rs.32.24.
  • Capital expenditure for Q1 FY15 is Rs.2.2 billion.
 

Appendix 1: Key Balance Sheet Items

   
Particulars As on 30th June 14 As on 31st March 14
  ($)   (Rs.)   ($)   (Rs.)
Cash and cash equivalents and Other current Investments   549   32,950   558   33,534
Trade receivables   601   36,110   550   33,037
Inventories   422   25,319   399   23,992
Property, plant and equipment   755   45,350   740   44,424
Goodwill and Other Intangible assets   238   14,277   245   14,697
Loans and borrowings (current & non-current)   696   41,818   745   44,741
Trade payables   177   10,640   175   10,503
Equity   1,611   96,730   1,512   90,801
   
 

Appendix 2: Revenue Mix by Segment

     
Particulars Q1 FY15 Q1 FY14

Growth
%

  ($)   (Rs.)   %   ($)   (Rs.)   %  
Global Generics   483   29,003   82   365   21,903   77   32
North America       16,468   57       10,871   50   51
Europe       1,459   5       1,573   7   (7)
India       3,999   14       3,493   16   14
Russia & Other CIS       4,861   17       4,489   20   8
Rest of World       2,215   8       1,477   7   50
PSAI   92   5,538   16   98   5,868   21   (6)
North America       547   10       1,093   19   (50)
Europe       2,681   48       2,093   36   28
India       775   14       791   13   (2)
Rest of World       1,534   28       1,891   32   (19)
Proprietary Products & Others   11   634   2   11   679   2   (6)
Total   586   35,175   100   474   28,449   100   24
       

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.


Copyright © Business Wire 2014
Contact:

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
Ashish Girotra (USA), +1 609-375-9805
ashishg@drreddys.com
or
Media:
SVS Chowdary, +91-40- 49002448
chowdaryl@drreddys.com