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TMCNet:  Dr. Reddy's Q4 & FY14 Financial Results

[May 13, 2014]

Dr. Reddy's Q4 & FY14 Financial Results

HYDERABAD, India --(Business Wire)--

Dr. Reddy's Laboratories Ltd. (NYSE: RDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2014 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues for FY 14 at Rs. 132.2 billion, year-on-year growth of 14%.
    • Consolidated revenues for Q4 FY14 at Rs. 34.8 billion, year-on-year growth of 4%.
  • Gross Profit Margin for FY 14 at 57.4% versus 52.1% as in FY 13.
    • Gross Profit Margins for Q4 FY14 at 57.2% versus 50.4% as in Q4 FY 13.
  • Research & Development (R&D) expenses for FY 14 at Rs. 12.4 billion, year-on-year increase of 62%. Expenses at 9.4% to revenues versus 6.6% to revenues as in FY13.
    • Research & Development (R&D) expenses for Q4 FY14 of Rs. 4.0 billion.
  • Selling, general & administrative (SG&A) expenses for FY 14 at Rs. 38.8 billion, year-on-year increase of 13%. Expenses at 29.3% to revenues versus 29.5% to revenues as in FY13.
    • Selling, general & administrative (SG&A) expenses for Q4 FY14 at Rs. 10.3 billion.
  • EBITDA for FY 14 of Rs. 33.2 billion, 25% of revenues; year-on-year growth of 19%.
    • EBITDA for Q4 FY14 of Rs. 7.9 billion, 23% of revenues. Q4 FY 13 included one time settlement income of Rs. 1.2 billion received from Nordian Inc (formerly MDS Inc).
  • Profit after tax for FY14 at Rs. 21.5 billion, 16% of revenues; year-on-year growth of 28%
    • Profit after tax for Q4 FY14 at Rs. 4.8 billion, 14% of revenues.
  • The company launched 54 new generic products, filed 51 new product registrations and 61 DMFs globally in FY 14.
    • The company launched 13 new generic products, filed 22 new product registrations and 29 DMFs globally in Q4 FY14.



 

All amounts in millions, except EPS

 All US dollar amounts based on convenience translation rate of I USD = Rs. 60.00

 

Dr. Reddy's Laboratories Limited and Subsidiaries

Consolidated Income Statement

 
Particulars       FY14   FY13   Growth %
    ($)   (Rs.)   % ($)   (Rs.)   %
Revenues 2,203 132,170 100 1,938 116,266 100 14
Cost of revenues     939   56,369   42.6   928   55,687   47.9   1  
Gross profit     1,263   75,802   57.4   1,010   60,579   52.1   25  
Operating Expenses
Selling, general & administrative expenses 646 38,783 29.3 571 34,271 29.5 13
Research and development expenses 207 12,402 9.4 128 7,673 6.6 62
Other operating expense / (income)     (24 ) (1,416 ) (1 ) (41 ) (2,479 ) (2 ) (43 )
Results from operating activities     434   26,032   19.7   352   21,112   18.2   23  
Net finance income 7 400 0 8 460 0 (13 )
Share of profit of equity accounted investees, net of income tax     3   174   0   2   104   0   67  
Profit before income tax     443   26,606   20.1   361   21,676   18.6   23  
Income tax expense     85   5,094   3.9   82   4,900   4.2   4  
Profit for the year     359   21,512   16.3   280   16,776   14.4   28  
                   
Diluted EPS     2.10   126.04     1.64   98.4     28  
 

EBITDA Computation

 
Particulars       FY14   FY13
    ($)   (Rs.) ($)   (Rs.)
Profit before income tax 443 26,606 361 21,676
Interest income (0 ) (24 ) (2 ) (94 )
Depreciation 80 4,804 64 3,859
Amortization & Impairment     30   1,794   40   2,378  
EBITDA     553   33,180   464   27,819  
 

Note:

Selling, general & administrative expenses, as above, includes an impairment reversal of Rs. 497 million [FY 14] and impairment charge of Rs. 688 million [FY 13]

       

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of 1 USD = Rs. 60.00

 

Appendix 1: Key Balance Sheet Items

 
Particulars As on 31st March 14 As on 31st March 13
    ($)   (Rs.) ($)   (Rs.)
Cash and cash equivalents and Other Investment     559   33,534 368   22,099
Trade receivables     551   33,037 533   31,972
Inventories     400   23,992 360   21,600
Property, plant and equipment     740   44,424 630   37,814
Goodwill and Other Intangible assets     245   14,697 234   14,021
Loans and borrowings (current & non-current)     746   44,742 613   36,760
Trade payables     175   10,503 198   11,862
Equity     1,513   90,801 1,213   72,785
 
 

Appendix 2: Revenue Mix by Segment

 
Particulars       FY14   FY13   Growth %
    ($)   (Rs.)   % ($)   (Rs.)   %
Global Generics     1,753   105,164 80 1,376   82,563 71 27  
North America       55,303 53   37,846 46 46  
Europe       6,970 7   7,716 9 (10 )
India       15,713 15   14,560 18 8  
Russia & Other CIS       19,819 19   16,908 20 17  
Rest of World       7,359 7   5,533 7 33  
PSAI     400   23,974 18 512   30,702 26 (22 )
North America       4,354 18   5,744 19 (24 )
Europe       8,770 37   12,007 39 (27 )
India       3,787 16   4,638 15 (18 )
Rest of World       7,063 29   8,313 27 (15 )
Proprietary Products & Others     51   3,032 2 50   3,001 3 1  
Total     2,203   132,170 100 1,938   116,266 100 14  
 

Segmental Analysis

Global Generics

Revenues from Global Generics segment for FY14 are at Rs. 105.2 billion, year-on-year growth of 27%, primarily driven by North America and Emerging Markets.

  • Revenues from North America for FY14 at Rs. 55.3 billion, year-on-year growth of 46%.
    • Growth was largely driven by key launches in limited competition space. 9 new products were launched during the year, major being azacitidine, decitabine, zoledronic acid, donepezil 23mg and divalproex ER.
    • Progress on market share expansion of key molecules namely metoprolol succinate and atorvastatin.
    • 13 product filings in the US during the year. Cumulatively, 62 ANDAs are pending for approval with the USFDA of which 39 are Para IVs out of which 9 to have 'First To File' status.
  • Revenues from Emerging Markets for FY14 at Rs. 27.2 billion, year-on-year growth of 21%.
    • Revenues from Russia at Rs. 16.3 billion, year-on-year growth of 16%, largely driven by higher volumes of the top brands and the OTC portfolio.
    • Revenues from CIS markets at Rs. 3.5 billion, year-on-year growth of 22%. Continuing momentum in existing products coupled with select launches from in-licensed portfolio.
    • Revenues from Rest of World (RoW) territories at Rs. 7.4 billion recorded year-on-year growth of 33%. Of this Venezuela has shown strong growth despite currency devaluation in FY14.
  • Revenues from India for FY14 at Rs. 15.7 billion, year-on-year growth of 8%.
    • Growth driven by brands in chronic therapy, volume increase across NLEM covered portfolio and new product launches.
    • IMS Mar '14, Dr Reddy's MAT Gr% 12.27% versus IPM MAT Gr% of 9.9%. (Source (News - Alert): IMS).
    • Biosimilars portfolio stable at Rs. 1.13 billion in FY14

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI for FY14 at Rs. 24 billion, year-on-year decline of 22%.
  • Challenging year on the external market front due to lower demand from key customers coupled with lesser number of launches as compared to the previous year.
  • During the year, 61 DMFs were filed globally, including 12 in the US and 13 in Europe. The cumulative number of DMF filings as of March 31, 2014 is 631.

Income Statement Highlights:

  • Gross profit margin at 57.4% in FY14 registered strong 530 basis points improvement over the last year. Gross profit margin for Global Generics (GG) and PSAI business segments are at 65.8% and 20.2% respectively for FY14.

    GG gross margin improvement primarily on account improved mix of high margin new product launches in North America.
  • Selling, General and Administration (SG&A) expenses at Rs. 38.8 billion, year-on-year increase of 13%. The increase is primarily on account of annual increments, additional manpower deployment in select areas, sales & marketing spend for events specific to the year and the effect of rupee depreciation against multiple currencies.
  • Research & development expenses at Rs. 12.4 billion, year-on-year growth of 62%. 9.4% of revenues in FY14 as compared to 6.6% of revenues in FY13. The increase is in line with our planned scale-up in development activities.
  • Net Finance income at Rs. 400 million compared to Rs. 460 million in FY13. The change is on account of :
    • Net incremental forex benefit of Rs. 7 million
    • Incremental net interest expense of Rs. 71 million
  • EBITDA for FY14 at Rs. 33.2 billion, year-on-year growth of 19%; 25% of revenues.
  • Profit after Tax in FY14 at Rs. 21.5 billion, year-on-year growth of 28%; 16% of revenues.
  • Diluted earnings per share in FY 14 at Rs. 126.04
  • Capital expenditure for FY14 is Rs. 10.2 billion.

The Board has recommended payment of a dividend of Rs. 18 per equity share of face value Rs. 5/- each (360% of face value) for the year ended March 31, 2014, subject to approval of members.

         

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate as on 31st March, 2014 USD = Rs. 60.00

 

Appendix 3: Q4 FY4 Consolidated Income Statement

 
Particulars Q4 FY14 Q4 FY13 Growth %
    ($)   (Rs.)   % ($)   (Rs.)   %
Revenues 580 34,809 100.0 557 33,400 100.0 4
Cost of revenues     248   14,887   42.8   276   16,554   49.6   (10 )
Gross profit     332   19,922   57.2   281   16,846   50.4   18  
Operating Expenses
Selling, general & administrative expenses 172 10,307 29.6 145 8,722 26.1 18
Research and development expenses 66 3,985 11.4 39 2,326 7.0 71
Other operating expense / (income)     (4 ) (226 ) (0.7 ) (27 ) (1,631 ) (4.9 ) (86 )
Results from operating activities     98   5,857   16.8   124   7,427   22.2   (21 )
Net finance income 3 163 0.5 7 397 1.2 (59 )
Share of profit of equity accounted investees     1   48   0.1   0   26   0.1   91  
Profit before income tax     101   6,068   17.4   131   7,850   23.5   (23 )
Income tax expense     21   1,252   3.6   36   2,141   6.4   (42 )
Profit for the period     80   4,816   13.8   95   5,709   17.1   (16 )
                   
Diluted EPS     0.47   28.22     0.56   33.51     (16 )
 
 

Appendix 4: EBITDA Computation

 
Particulars       Q4 FY14   Q4 FY13
    ($)   (Rs.) ($)   (Rs.)
Profit before income tax 101 6,068 131 7,851
Interest income (1 ) (82 ) (1 ) (52 )
Depreciation 22 1,308 17 1,049
Amortization     11   648   7   446  
EBITDA     132   7,942   155   9,292  
 
 

Appendix 5: Revenue Mix by Segment

 
        Q4 FY14   Q4 FY13   Growth %
    ($)   (Rs.)   % ($)   (Rs.)   %
Global Generics     455   27,318 78 376   22,566 68 21  
North America       14,964 55   11,413 51 31  
Europe       1,774 6   1,831 8 (3 )
India       4,101 15   3,481 15 18  
Russia & Other CIS       4,519 17   4,519 20 (0 )
Rest of World       1,960 7   1,322 6 48  
PSAI     111   6,641 19 170   10,173 30 (35 )
North America       1,538 23   2,061 20 (25 )
Europe       2,370 36   4,396 43 (46 )
India       979 15   1,612 16 (39 )
Rest of World       1,754 26   2,105 21 (17 )
Proprietary Products & Others     14   851 2 11   661 2 29  
Total     580   34,809 100 557   33,400 100 4  
 

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 consolidated IFRS financials.


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