Dr. Reddy’s Q1 FY20 Financial Results

HYDERABAD, India--(BUSINESS WIRE)-- Dr. Reddy's Laboratories Ltd.  (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the quarter ended June 30, 2019 under International Financial Reporting Standards (IFRS).

Revenues

 

Rs.3,844 Cr

 

 

[YoY: 3% Up, QoQ: 4% Dc]

 

 

 

 

 

 

Gross Margin

 

51.7%

 

 

[Q1 FY19: 55.7%; Q4 FY19: 52.4%]

 

 

 

 

 

 

SG&A expenses

 

Rs.1,207 Cr

 

 

[YoY: Flat; QoQ: 3% Dc]

 

 

 

 

 

 

R&D expenses

 

Rs.361 Cr

 

 

[9.4% of Revenues]

 

 

 

 

 

 

Profit before Tax

 

Rs.850 Cr

 

 

[22.1% of Revenues]

 

 

 

 

 

 

Profit after Tax

 

Rs.663 Cr

 

 

[17.2% of Revenues]

Commenting on the results, CEO and Co-chairman, GV Prasad said “This quarter, we grew in most of our key markets and hope to continue this momentum with a sharper focus on performance. We will continue our journey of operational excellence, cost leadership and innovation across our businesses”.

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs.68.92

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement

                   

Particulars

 

Q1 FY20

Q1 FY19

YoY
Gr %

Q4 FY19

QoQ
Gr%

 

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Revenues

 

 

558

 

38,435

 

 

540

 

37,207

 

3

 

 

583

 

40,166

 

(4

)

Cost of Revenues

 

 

270

 

18,576

 

 

239

 

16,479

 

13

 

 

277

 

19,113

 

(3

)

Gross Profit

 

 

288

 

19,859

 

 

301

 

20,728

 

(4

)

 

305

 

21,053

 

(6

)

Operating Expenses

 

 

 

 

 

 

 

 

 

Selling, General & Administrative expenses

 

 

175

 

12,065

 

 

176

 

12,106

 

(0

)

 

180

 

12,376

 

(3

)

Research and Development expenses

 

 

52

 

3,609

 

 

60

 

4,157

 

(13

)

 

53

 

3,662

 

(1

)

Other operating (income)

 

 

(55

)

(3,759

)

 

(4

)

(303

)

1141

 

 

(5

)

(330

)

1038

 

Results from operating activities

 

 

115

 

7,944

 

 

69

 

4,768

 

67

 

 

78

 

5,345

 

49

 

Net finance (income)

 

 

(6

)

(393

)

 

(2

)

(156

)

152

 

 

(5

)

(349

)

13

 

Share of (profit) / loss of equity accounted investees

 

 

(2

)

(163

)

 

(1

)

(83

)

96

 

 

(2

)

(157

)

4

 

Profit before income tax

 

 

123

 

8,500

 

 

73

 

5,007

 

70

 

 

85

 

5,851

 

45

 

Income tax expense

 

 

27

 

1,872

 

 

6

 

446

 

320

 

 

22

 

1,507

 

24

 

Profit for the period

 

 

96

 

6,628

 

 

66

 

4,561

 

45

 

 

63

 

4,344

 

53

 

     

-

 

 

-

 

   

-

 

 

Diluted Earnings Per Share (EPS)

 

 

0.58

 

39.91

 

 

0.40

 

27.45

 

45

 

 

0.38

 

26.16

 

53

 

                                         

As % to Revenues

 

Q1 FY20

 

Q1 FY19

   

Q4 FY19

Gross Profit

 

51.7

 

55.7

   

52.4

SG&A

 

31.4

 

32.5

   

30.8

R&D

 

9.4

 

11.2

   

9.1

EBITDA

 

29.5

 

21.7

   

22.0

PBT

 

22.1

 

13.5

   

14.6

PAT

 

17.2

 

12.3

   

10.8

   

 

 

 

   

 

EBITDA Computation

                   

Particulars

 

Q1 FY20

 

Q1 FY19

 

Q4 FY19

 

($)

(Rs.)

 

($)

(Rs.)

 

($)

(Rs.)

Profit before Income Tax

 

 

123

 

8,500

 

 

 

73

 

5,007

 

 

 

85

 

5,851

 

Interest (income) net*

 

 

(3

)

(239

)

 

 

(1

)

(46

)

 

 

(3

)

(215

)

Depreciation#

 

 

31

 

2,124

 

 

 

32

 

2,214

 

 

 

31

 

2,136

 

Amortization#

 

 

14

 

958

 

 

 

13

 

896

 

 

 

15

 

1,047

 

EBITDA

 

 

165

 

11,343

 

 

 

117

 

8,071

 

 

 

128

 

8,819

 

* Includes income from Investments # includes impairment charge

                 
                   

Key Balance Sheet Items

   

 

 

 

 

 

 

Particulars

 

As on 30th June, 2019

As on 31st March, 2019

As on 30th June, 2018

 

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Cash and cash equivalents and other investments

 

413

28,439

371

25,570

247

17,047

Trade receivables (current & non-current)

 

551

37,961

580

39,982

698

48,095

Inventories

 

510

35,137

487

33,579

457

31,498

Property, plant and equipment

 

785

54,083

785

54,088

827

57,020

Goodwill and Other Intangible assets

 

694

47,821

700

48,269

715

49,289

Loans and borrowings (current & non-current)

 

499

34,387

557

38,381

787

54,273

Trade payables

 

215

14,842

211

14,553

215

14,816

Equity

 

2,121

1,46,208

2,034

1,40,197

1,892

1,30,430

               

Revenue Mix by Segment

   

 

 

 

 

 

Particulars

 

Q1 FY20

Q1 FY19

YoY
Growth %

Q4 FY19

QoQ
Growth %

 

(Rs.)

(Rs.)

(Rs.)

Global Generics

 

32,982

30,636

8

 

30,384

9

 

North America

 

16,322

15,903

3

 

14,957

9

 

Europe

 

2,404

2,016

19

 

1,912

26

 

India

 

6,960

6,074

15

 

6,505

7

 

Emerging Markets

 

7,296

6,643

10

 

7,010

4

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

4,539

5,409

(16

)

6,765

(33

)

Proprietary Products & Others

 

914

1,162

(21

)

3,017

(70

)

Total

 

38,435

37,207

3

 

40,166

(4

)

Segmental Analysis

Global Generics (GG)

Revenues from GG segment at Rs.33.0 billion. Year-on-year growth of 8%, primarily driven by Emerging Markets, India and Europe. Sequential growth is 9%.

  • Revenues from North America at Rs.16.3 billion. Year-on-year growth is 3%. Sequential growth of 9%, is driven by contribution from new products and increase in volumes, partly offset by price erosion coupled with adverse foreign exchange movement. We launched five new products (Daptomycin, Testosterone gel, Tobramycin, Vitamin K & OTC calcium carbonate) and re-launched Isotretinoin during the quarter.

As of 30th June 2019, cumulatively 107 generic filings are pending for approval with the USFDA (104 ANDAs and 3 NDAs under 505(b)(2) route). Of these 104 ANDAs, 58 are Para IVs out of which we believe 34 have ‘First to File’ status.

  • Revenues from Emerging Markets at Rs.7.3 billion. Year-on-year growth is 10%. Sequential growth is 4%.

- Revenues from Russia at Rs.4.0 billion. Year-on-year growth of 5%. Growth primarily driven by new launches and better realizations in some of the key molecules.

- Revenues from other CIS countries and Romania market at Rs.1.2 billion. Year-on-year growth of 2%.

- Revenues from Rest of World (RoW) territories at Rs.2.1 billion. Year-on-year growth of 27%, primarily driven by new products, traction in new markets and volume traction in base business.

  • Revenues from India at Rs.7.0 billion. Year-on-year growth of 15%, driven by volume traction and improved realizations in base business and new product launches. Sequential growth is 7%.
  • Revenues from Europe at Rs.2.4 billion. Year-on-year growth of 19%, primarily on account of new products and volume traction on account of improvement in supplies. Sequential growth is 26%.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI at Rs.4.5 billion. Year-on-year decline of 16% and sequential decline is 33% due to decline in the sales volume of certain products.

Proprietary Products (PP)

  • Revenues from PP at Rs.281 million. Year-on-year decline of 61% due to absence of the derma products sales (which were divested in the previous year).

Income Statement Highlights:

  • Gross profit margin at 51.7%.

- declined by ~70 bps sequentially and ~400 bps over that of previous year

- sequentially – excluding the impact of one-time out licensing income of Rs.1.8 billion realized from the sale of derma brands, the gross margins have witnessed improvement of 150 bps on a sequential basis

- YoY impacted by price erosion due to increased competitive intensity in some of our key molecules in the US and Europe, and lower sales from PSAI business

- Gross profit margin for GG and PSAI business segments are at 57.6% and 7.2% respectively.

  • SG&A expenses at Rs.12.1 billion, remained flat on a year-on-year basis and declined by 3% sequentially.
  • R&D expenses at Rs.3.6 billion. As % to Revenues- Q1 FY20: 9.4% | Q4 FY 19: 9.1% | Q1 FY19: 11.2%. Focus continues on building complex generics, bio-similars and differentiated products pipeline.
  • Other operating income at Rs.3.8 billion; includes Rs.3.5 billion received from Celgene pursuant to an agreement entered towards settlement of any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company’s ANDS for a generic version of REVLIMID brand capsules, (Lenalidomide) pending before Health Canada.
  • Net Finance income at Rs.393 million compared to Rs.156 million in Q1 FY19. The increase is primarily on account of higher profit on sales of investments by Rs.202 million during the quarter.
  • Profit after Tax at Rs.6.6 billion. The effective tax rate is around 22% for the quarter.
  • Diluted earnings per share is at Rs.39.91
  • Capital expenditure is at Rs.1.1 billion.

Organizational Update:

With effect from August 1, 2019, Erez Israeli will be elevated as Chief Executive Officer (CEO) of Dr. Reddy’s Laboratories Limited. GV Prasad will continue as the Co-Chairman and Managing Director and Erez Israeli will continue to report to him.

Since joining Dr. Reddy’s as Chief Operating Officer (COO) in April 2018, Erez has spear-headed the transformation agenda of the organization by ensuring clear focus and strategy, setting foundations for a sustainable financial growth and leading business delivery. His appointment will help to propel the organization’s growth agenda forward.

Earnings Call Details (06:30 pm IST, 09:00 am EDT, July 29, 2019)

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:

Universal Access Number:

 

 

 

 

 

+91 22 6280 1219

Secondary number:

 

 

 

 

 

+91 22 7115 8120

 

 

 

 

 

 

 

Local Access number:

 

 

 

 

 

+91 70456 71221

(Available all over India)

 

 

 

 

 

 

 

 

 

 

 

 

 

International Toll Free Number

 

 

 

USA

 

1 866 746 2133

 

 

 

 

 

UK

 

0 808 101 1573

 

 

 

 

 

 

Singapore

 

800 101 2045

 

 

 

 

 

 

Hong Kong

 

 

800 964 448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Playback of call:

 

+91 22 7194 5757, +91 22 6663 5757

 

 

 

 

Conference ID:

 

20718

 

 

 

 

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.

Contacts

INVESTOR RELATIONS
AMIT AGARWAL
amita@drreddys.com
(Ph: +91-40-4900 2135)

MEDIA RELATIONS
MITALI SARKAR
(Ph: +91-40-4900 2121)
mitali.sarkar@drreddys.com

 
 

Source: Dr. Reddy’s Laboratories Ltd.

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