Dr. reddy’s q2 & h1 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 and the half year ended september 30, 2019 under international financial reporting standards (ifrs). h1 performance summary rs. 4,801 cr revenue [up: 25% qoq; 26% yoy] rs. 8,644 cr revenue [up: 15% yoy] 57.5% gross margin [q1 fy20: 51.7%; q2 fy19: 55.0%] 54.9% gross margin [h1 fy19: 55.4%] rs.1,678 cr sgna expenses [up: 39% qoq, 36% yoy] rs. 2,884 cr sgna expenses [up: 18% yoy] rs. 366 cr r&d expenses [7.6% of revenues] rs. 727 cr r&d expenses [8.4% of revenues] rs. 766 cr profit before tax [down: 10% qoq; up: 33% yoy] rs. 1,616 cr profit before tax [up: 50% yoy] commenting on the results, co-chairman and md, gv prasad said, “i am pleased with our performance across the businesses and strong cash generation during the quarter. we are progressing well in execution of our strategy and in our transformation journey on quality and efficiency.” all amounts in millions, except eps all us dollar amounts based on convenience translation rate of i usd = rs. 70.64 dr. reddy’s laboratories limited and subsidiaries consolidated income statement particulars q2 fy20 q2 fy19 yoy gr % q1 fy20 qoq gr% ($) (rs.) ($) (rs.) ($) (rs.) revenues 680 48,009 538 37,978 26 544 38,435 25 cost of revenues 289 20,389 242 17,081 19 263 18,576 10 gross profit 391 27,620 296 20,897 32 281 19,859 39 operating expenses selling, general & administrative expenses 238 16,777 175 12,372 36 171 12,065 39 research and development expenses 52 3,662 58 4,120 (11) 51 3,609 1 other operating (income) -2 -135 -9 -641 (79) -53 -3,759 (96) results from operating activities 104 7,316 71 5,046 45 112 7,944 (8) net finance (income) -3 -231 -9 -625 (63) -6 -393 (41) share of (profit) / loss of equity accounted investees -2 -117 -2 -109 8 -2 -163 (28) profit before income tax 108 7,664 82 5,780 33 120 8,500 (10) income tax expense / (benefit) -46 -3,261 11 742 (539) 26 1,872 (274) profit for the period 155 10,925 71 5,038 117 94 6,628 65 diluted earnings per share (eps) 0.93 65.82 0.43 30.31 117 0.57 39.91 65 as % to revenues q2 fy20 q2 fy19 q1 fy20 gross profit 57.5 55.0 51.7 sg&a 34.9 32.6 31.4 r&d 7.6 10.8 9.4 ebitda 29.9 22.8 29.5 pbt 16.0 15.2 22.1 pat 22.8 13.3 17.2 ebitda computation particulars q2 fy20 q2 fy19 q1 fy20 ($) (rs.) ($) (rs.) ($) (rs.) profit before income tax 108 7,664 82 5,780 120 8,500 interest (income) net* -3 (226) (2) (132) (3) (239) depreciation 33 2,306 29 2,033 30 2,124 amortization 15 1,033 14 965 14 959 impairment 50 3,561 - - (0) (1) ebitda 203 14,338 122 8,646 161 11,343 * includes income from investments key balance sheet items particulars as on 30th sep 2019 as on 30th june 2019 as on 30th sep 2018 ($) (rs.) ($) (rs.) ($) (rs.) cash and cash equivalents and other investments 431 30,446 403 28,439 295 20,837 trade receivables (current & non-current) 597 42,153 537 37,961 656 46,317 inventories 496 35,033 497 35,137 460 32,490 property, plant and equipment 750 53,008 766 54,083 802 56,640 goodwill and other intangible assets 628 44,340 677 47,821 726 51,290 loans and borrowings (current & non-current) 447 31,545 487 34,387 786 55,522 trade payables 218 15,434 210 14,842 199 14,073 equity 2,177 1,53,816 2,070 1,46,208 1,861 1,31,446 revenue mix by segment particulars q2 fy20 q2 fy19 yoy growth % q1 fy20 qoq growth % (rs.) (rs.) (rs.) global generics 32,816 30,536 7% 32,982 -1% north america 14,265 14,265 0% 16,322 -13% europe 2,764 1,915 44% 2,404 15% india 7,511 6,864 9% 6,960 8% emerging markets 8,276 7,492 10% 7,296 13% pharmaceutical services and active ingredients (psai) 7,107 6,029 18% 4,539 57% proprietary products & others 8,086 1,413 472% 914 785% total 48,009 37,978 26% 38,435 25% segmental analysis global generics (gg) revenues from gg segment at rs. 32.8 billion. year-on-year growth of 7%, primarily driven by europe, emerging markets and india. sequentially declined by 1%. revenues from north america at rs. 14.3 billion. year-on-year revenues remained flat. sequential decline of 13%, on account of price erosion and lower volumes. further impact on account of voluntary recall of ranitidine and temporary disruption in supplies due to logistics issues faced during this quarter. we launched eight new products during the quarter, which are carboprost, ramelteon, fosaprepitant, pregabalin, vigabatrin, docetaxel 160mg, bupropion sr and otc guaif / psuedo. as of 30th september 2019, cumulatively 99 generic filings are pending for approval with the usfda (96 andas and 3 ndas under 505(b)(2) route). of these 96 andas, 55 are para ivs out of which we believe 31 have ‘first to file’ status. revenues from europe at rs. 2.8 billion. year-on-year growth of 44%, primarily on account of new products and volume traction in base business partly offset by lower realizations. sequential growth is 15%. revenues from india at rs. 7.5 billion. year-on-year growth of 9%, driven by new products, improved realizations and volume traction in base business. sequential growth is 8%. revenues from emerging markets at rs. 8.3 billion. year-on-year growth is 10%. sequential growth is 13%. revenues from russia at rs. 4.1 billion. year-on-year growth of 8%. growth primarily driven by increase in volumes coupled with better realizations in some of the key molecules. revenues from other cis countries and romania at rs. 1.7 billion. year-on-year growth of 16% largely driven by new products and better realizations in some of the key molecules. revenues from rest of world (row) markets at rs. 2.5 billion. year-on-year growth of 11%, primarily driven by new products, volume traction partly offset by price erosions in some of the key molecules. revenues from russia at rs. 4.1 billion. year-on-year growth of 8%. growth primarily driven by increase in volumes coupled with better realizations in some of the key molecules. revenues from other cis countries and romania at rs. 1.7 billion. year-on-year growth of 16% largely driven by new products and better realizations in some of the key molecules. revenues from rest of world (row) markets at rs. 2.5 billion. year-on-year growth of 11%, primarily driven by new products, volume traction partly offset by price erosions in some of the key molecules. pharmaceutical services and active ingredients (psai) revenues from psai at rs. 7.1 billion. year-on-year growth of 18% and sequential growth of 57%. growth largely driven by increase in volumes from existing products. proprietary products (pp) revenues from pp at rs. 7.4 billion. it includes rs. 7.2 billion towards license fee for selling us and select territory rights for two of our neurology brands zembrace® symtouch® (sumatriptan injection) 3 mg and tosymratm (sumatriptan nasal spray) 10 mg, to upsher-smith laboratories, llc. the costs associated with this transaction are rs. 328 million. income statement highlights: gross profit margin at 57.5%, improved by ~590 bps sequentially and ~250 bps over that of previous year. gross profit margin for gg and psai business segments are at 55.5% and 24.6% respectively. gross margin is benefitted due to revenue recognition of the pp neuro brands partly impacted by certain one-off’s, including but not restricted to the impact of the voluntary recall of ranitidine in the us market adjusted for one-off’s, normalized gross profit margin is ~51.5% on a normalized base, the year on year decline is primarily on account of price erosion in the us. gross margin is benefitted due to revenue recognition of the pp neuro brands partly impacted by certain one-off’s, including but not restricted to the impact of the voluntary recall of ranitidine in the us market adjusted for one-off’s, normalized gross profit margin is ~51.5% on a normalized base, the year on year decline is primarily on account of price erosion in the us. sg&a expenses at rs. 16.8 billion, an increase of 36% on a year-on-year basis and 39% sequentially. this includes an amount of rs. 3.6 billion recognized as an impairment charge on three product related intangibles (viz., ramelteon, tobramycin and imiquimod). there have been certain additional one-offs including but not restricted to the costs associated with the sale of two neurology brands. adjusted for the one-offs, the normalized sg&a expenses are lower compared to the previous quarter. r&d expenses at rs. 3.7 billion. as % to revenues- q2 fy20: 7.6% | q1 fy 20: 9.4% | q2 fy19: 10.8%. we continue to focus on building a healthy development pipeline across all our focused markets. other operating income at rs. 135 million compared to rs. 641 million in q2 fy19 and rs. 3,759 million in q1 fy 20. previous year 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. q1 fy 20 includes rs. 3,457 million 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. 231 million compared to rs. 625 million in q2 fy19 and rs. 393 million in q1 fy 20. the year-on-year decline is primarily on account of lower foreign exchange gain, partly offset by higher profit on sale of investments during the quarter. profit after tax at rs. 10.9 billion. the net tax for the quarter is a benefit of rs. 3.3 billion; due to recognition of deferred tax assets of rs. 5.2 billion, primarily related to the mat credit. diluted earnings per share is at rs. 65.8. capital expenditure is at rs. 1.1 billion. earnings call details (06:30 pm ist, 09:00 am edt, november 1, 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: 31923 transcript of the event will be available at www.drreddys.com. playback will be available after the earnings call, till november 8, 2019. 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.
