Dr. Reddy's Q2 & H1 FY13 Financial Results

Dr. Reddy's Q2 & H1 FY13 Financial Results

Q2 FY13 Revenues at Rs. 28.8 billion(YoY growth of 27%)

Q2 FY13 EBITDA at Rs. 7.7 billion(YoY growth of 47%)


*Adjusted Q2 FY13 PAT at Rs. 4.9 billion(YoY growth of 77%)

H1 FY13 Revenues at Rs. 54.2 billion(YoY growth of 28%)

H1 FY13 EBITDA at Rs. 12.7 billion(YoY growth of 35%)

**Adjusted H1 FY13 PAT at Rs. 7.8 billion(YoY growth of 56%)

HYDERABAD, India--(BUSINESS WIRE)-- Dr. Reddy's Laboratories Ltd. (NYS: RDY) today announced its unaudited consolidated financial results for the quarter ended September 30, 2012 under International Financial Reporting Standards (IFRS).

Key Highlights (Q2 FY13)

  • Consolidated revenues for Q2 FY13 at Rs. 28.8 billion, recorded YoY growth of 27%. Consolidated revenues for H1 FY13 at Rs. 54.2 billion, recorded YoY growth of 28%.

    • Revenues from the Global Generics segment for Q2 FY13 at Rs. 20.1 billion, recorded YoY growth of 25% primarily driven by North America, India and other emerging markets.

    • Revenues from the PSAI segment for Q2 FY13 at Rs. 7.9 billion, recorded YoY growth of 33%.

  • EBITDA for Q2 FY13 at Rs. 7.7 billion, 27% of revenues, recorded YoY growth of 47%. EBITDA for H1 FY13 at Rs. 12.7 billion, 23% of revenues, recorded YoY growth of 35%.

  • PAT for Q2 FY13 at Rs. 4.1 billion, 14% of revenues, recorded YoY growth of 32%. PAT for H1 FY13 at Rs. 7.4 billion, 14% of revenues, recorded YoY growth of 30%.

  • *Adjusted PAT for Q2 FY13 at Rs. 4.9 billion, 17% of revenues, recorded YoY growth of 77%.

  • During the quarter, the company launched 18 new generic products, filed 11 new product registrations and filed 10 DMFs globally.

* Adjusted for (a) impairment charges in Q2 FY13 (b) the benefit on reversal of provision for voluntary retirement scheme ('VRS') in Q2 FY12 and (c) tax normalization on account of the annual effective tax rate and the aforementioned adjustments

** Adjusted for (a) impairment charges in Q2 FY13 (b) net charge for voluntary retirement scheme('VRS') and (c) tax normalization on account of the annual effective tax rate and the aforementioned adjustments

All figures in millions, except EPS

All US dollar figures based on convenience translation rate of 1USD = Rs. 52.92

Dr. Reddy's Laboratories Limited and Subsidiaries

Unaudited Consolidated Income Statement

Particulars

Q2 FY13

Q2 FY12

($)

(Rs.)

%

($)

(Rs.)

%

Growth %

Revenues

544

28,809

100

429

22,678

100

27

Cost of revenues

255

13,504

47

198

10,473

46

29

Gross profit

289

15,305

53

231

12,205

54

25

Operating Expenses

Selling, general and administrative expenses

151

8,013

28

136

7,217

32

11

Research and development expenses

33

1,759

6

28

1,459

6

21

Impairment loss on goodwill and intangible assets

13

688

2

Other operating (income) / expense

(8

)

(397

)

(1

)

(4

)

(216

)

(1

)

85

Results from operating activities

99

5,242

18

71

3,745

17

40

Net finance (income) / expense

(7

)

(371

)

(1

)

1

50

0

(849

)

Share of (profit) / loss of equity accounted investees

(1

)

(28

)

(0

)

(0

)

(13

)

(0

)

115

Profit before income tax ('PBT')

107

5,641

20

70

3,708

16

52

Income tax expense

30

1,567

5

12

630

3

148

Profit for the period

77

4,074

14

58

3,078

14

32

Diluted EPS

0.5

23.9

0.3

18.1

32

Profit Computation:

EBITDA Computation

Q2 FY13

Q2 FY12

($)

(Rs.)

($)

(Rs.)

PBT

107

5,641

70

3,708

Net Interest Expenses / (Income)

(1

)

(32

)

4

225

Depreciation

18

943

17

879

Amortization

8

433

7

389

Impairment

13

688

Reported EBITDA

145

7,673

98

5,201

Adjustments of exceptional items:

Part reversal of provision booked in Q1 FY12 for VRS

(2

)

(94

)

Adjusted EBITDA

145

7,673

97

5,107

PAT Computation

Q2 FY13

Q2 FY12

($)

(Rs.)

($)

(Rs.)

PAT

77

4,074

58

3,078

Adjustments:

Part reversal of provision booked in Q1 FY12 for VRS

(2

)

(94

)

Impairment loss on goodwill and intangible assets

13

688

Tax adjustment*

3

175

(4

)

(192

)

Adjusted PAT

93

4,937

53

2,792

* Q2 FY13 normalized to the FY13 annual effective tax rate and Q2 FY12 normalized to the FY12 annual effective tax rate and the effect of the aforementioned adjustments

Segmental Analysis

Global Generics

Revenues from Global Generics segment for Q2 FY13 at Rs. 20.1 billion, recorded YoY growth of 25% driven by key markets of North America, India and other emerging markets.

  • Revenues from North America for Q2 FY13 at Rs. 9.3 billion, recorded YoY growth of 47%.

    • Growth is largely driven by key limited competition products of ziprasidone, tacrolimus, fondaparinux, clopidogrel, ramp-up in antibiotics portfolio and products from Shreveport facility.

    • 4 new products were launched during the quarter - atorvastatin, metoprolol, montelukast family and amoxicillin.

    • 30 products from the prescription portfolio are ranked among the Top 3 in their respective market shares. (Source: IMS Health Volumes, August 2012)

    • During the quarter, 4 ANDAs were filed. Cumulatively, 63 ANDAs are pending for approval with the USFDA of which 33 are Para IVs and 7 have 'First To File' status.

  • Revenues from Russia and Other CIS markets for Q2 FY13 at Rs. 3.8 billion recorded YoY growth of 14%.

    • Revenues from Russia for Q2 FY13 are at Rs. 3.2 billion.

    • Revenues from Other CIS markets for Q2 FY13 at Rs. 0.62 billion recorded YoY growth of 31%.

  • Revenues from India forQ2 FY13 at Rs. 3.9 billion recorded YoY growth of 12%.

    • Growth driven by volume increase across most key brands.

    • Biosimilars portfolio grew YoY by 24% during the quarter.

    • 4 new brands were launched during the quarter.

  • Revenues from Europe for Q2 FY13 at Rs. 1.8 billion declined YoY by 16%.

    • Revenues from Germany forQ2 FY13 at Rs. 1.1 billion declined YoY by 11%.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI for Q2 FY13 at Rs. 7.9 billion, recorded YoY growth of 33%.

  • During the quarter, 10 DMFs were filed globally, including 2 in Europe. The cumulative number of DMF filings as of September 30, 2012 is 552.

Income Statement Highlights:

  • Gross profit margin at 53.1% in Q2 FY13 marginally dropped by 0.7% versus Q2 FY12. Gross profit margin for Global Generics and PSAI business segments are at 59.4% and 35.8% respectively.

  • Selling, General and Administration (SG&A) expenses including amortization at Rs. 8 billion increased YoY by 11%.

  • Research & development expenses for Q2 FY13 at Rs. 1.8 billion is at 6% of revenues.

  • During the quarter, a non-recurring and non-cash impairment charge of Rs. 688 million pertaining to product intangibles in generics portfolio and a goodwill charge wrt Italian operations has been considered.

  • Net Finance income is at Rs. 371 million, in Q2 FY13 compared to the net finance cost of Rs. 50 million in Q2 FY12. The change is on account of:

    • Net incremental forex gain of Rs. 187 million, primarily on account of reversal of the loss on time value of options recorded in Q1 FY13, due to the recent appreciation in the rupee.

    • Net interest income of Rs. 33 million in Q2 FY13 compared to net interest expense of Rs. 225 million in Q2 FY12 primarily on account of higher interest income from Fixed Deposit and mutual funds.

  • EBITDA for Q2 FY13 is Rs. 7.7 billion, 27% of revenues and recorded YoY growth of 47%. This growth is supported by the increased operating leverage.

  • Profit after Tax in Q2 FY13 at Rs. 4.1 billion recorded YoY growth of 32%.

  • *Adjusted Profit after tax in Q2 FY13 at Rs. 4.9 billion recorded YoY growth of 77%.

  • Diluted earnings per share in Q2 FY13 are Rs. 23.9.

  • Capital expenditure for Q2 FY13 is Rs. 1.8 billion.

* Adjusted for (a) impairment charges in Q2 FY13 (b) the benefit on reversal of provision for voluntary retirement scheme ('VRS') in Q2 FY12 and (c) tax normalization on account of the annual effective tax rate and the aforementioned adjustments

All US dollar figures based on convenience translation rate of 1USD = Rs. 52.92

Appendix 1:Key Balance Sheet Items

(in millions)

Particulars

As on 30th Sep 12

As on 30th Jun 12

($)

(Rs.)

($)

(Rs.)

Cash and cash equivalents

390

20,641

403

21,353

Trade receivables

496

26,247

472

24,975

Inventories

414

21,885

389

20,580

Property, plant and equipment

667

35,300

653

34,550

Goodwill and Other Intangible assets

233

12,297

257

13,597

Loans and borrowings (current & non current)

660

34,901

670

35,430

Trade payables