EX-99.1 2 drr0033_ex99-1.htm

 

Exhibit 99.1

 

 

  CONTACT
DR. REDDY'S LABORATORIES LTD. Investor relationS Media relationS

8-2-337, Road No. 3, Banjara Hills,

Hyderabad - 500034. Telangana, India.

Saunak Savla

saunaks@drreddys.com

(Ph: +91-40-4900 2135)

Calvin Printer

calvinprinter@drreddys.com

(Ph: +91-40-4900 2121)

 

 

 

Dr. Reddy’s Q4 and FY18 Financial Results

 

Hyderabad, India, May 22, 2018: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY | NYSE: RDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2018 under International Financial Reporting Standards (IFRS).

 

Q4 Performance Summary   FY18 Performance Summary
     
Rs. 3,535 Cr   Rs. 14,203 Cr
Revenue   Revenue
[Down: 7% QoQ; 1% YoY]   [Up: 1% YoY]
     
53.5%   53.7%
Gross Margin   Gross Margin
[Q3 FY18: 56.3%; Q4 FY17: 51.2%]  

[FY17: 55.6%]

 

     
Rs. 1,207 Cr   Rs. 4,691 Cr
SGNA expenses   SGNA expenses
[Up: 10% YoY]   [Up: 1% YoY]
     
Rs. 435 Cr   Rs. 1,826 Cr
R&D expenses   R&D expenses
[12.3% of Revenues]   [12.9% of Revenues]
     
Rs. 375 Cr   Rs. 1,434 Cr
Profit before Tax   Profit before Tax
[10.6% of Revenues]   [10.1% of Revenues]
     
Rs. 302 Cr   Rs. 981 Cr
Profit after Tax   Profit after Tax
[8.5% of Revenues]   [6.9% of Revenues]

 

Note: During FY18, the ‘Tax Cuts and Jobs Act of 2017’ was approved and enacted in the United States. Consequent to this enactment the deferred tax assets and liabilities of the US entity have been re-measured resulting in a charge of Rs. 130 Crores for the full year.

 

Commenting on the results, CEO and Co-chairman, G.V. Prasad said “We concluded a challenging year for Dr. Reddy’s with a relatively muted fourth quarter’s performance. This was mainly on account of continuing headwinds in the U.S markets and a temporary drop in sales in Russia, attributable to a shift in the channel purchasing pattern.

 

Looking ahead, we will continue to work diligently on resolving pending regulatory issues. We will also focus on accelerating new products to market and improving our approval process.”

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 65.11

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

   Q4 FY18   Q4 FY17   YoY   Q3 FY18   QoQ 
Particulars  ($)   (Rs.)   ($)   (Rs.)   Gr %   ($)   (Rs.)   Gr% 
Revenues   543    35,349    546    35,542    (1)   585    38,060    (7)
Cost of Revenues   253    16,454    267    17,360    (5)   256    16,649    (1)
Gross Profit   290    18,895    279    18,182    4    329    21,411    (12)
Operating Expenses                                        
Selling, General & Administrative expenses   185    12,067    169    10,973    10    185    12,048    0 
Research and Development expenses   67    4,348    70    4,579    (5)   72    4,667    (7)
Other operating (income) / expense   (3)   (167)   (8)   (505)   (67)   (5)   (313)   (46)
Results from operating activities   41    2,647    48    3,135    (16)   77    5,009    (47)
Net finance (income) / expense   (16)   (1,032)   1    48         (13)   (851)   21 
Share of (profit) / loss of equity accounted investees   (1)   (69)   (2)   (102)   (32)   (1)   (85)   (18)
Profit before income tax   58    3,748    49    3,189    18    91    5,945    (37)
Income tax expense   11    726    1    64         40    2,601    (72)
Profit for the period   46    3,022    48    3,125    (3)   51    3,344    (10)
                                      
Diluted Earnings Per Share (EPS)   0.28    18.18    0.29    18.83    (3)   0.31    20.13    (10)

 

As % to Revenues  Q4 FY18   Q4 FY17   Q3 FY18 
Gross Profit   53.5    51.2    56.3 
SG&A   34.1    30.9    31.7 
R&D   12.3    12.9    12.3 
PBT   10.6    9.0    15.6 
PAT   8.5    8.8    8.8 

 

EBITDA Computation

 

Particulars  Q4 FY18   Q4 FY17   Q3 FY18 
   ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Profit before Income Tax   58    3,748    49    3,189    91    5,945 
Interest (income) net*   (15)   (1,001)   (1)   (90)   (14)   (881)
Depreciation #   32    2,109    36    2,338    32    2,089 
Amortization #   14    921    13    866    14    902 
EBITDA   89    5,777    97    6,303    124    8,055 

 

* - Includes income from Investments               # includes impairment charge

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 65.11

 

Revenue Mix by Segment

 

   Q4 FY18   Q4 FY17   YoY   Q3 FY18   QoQ 
Particulars  (Rs.)   (Rs.)   Growth %   (Rs.)   Growth % 
Global Generics   27,836    29,138    (4)   30,105    (8)
North America   14,487    15,349    (6)   16,073    (10)
Europe*   1,711    2,066    (17)   2,006    (15)
India   6,138    5,711    7    6,126    0 
Emerging Markets #   5,500    6,012    (9)   5,900    (7)
Pharmaceutical Services and Active Ingredients (PSAI)   6,251    5,401    16    5,436    15 
Proprietary Products & Others   1,262    1,003    26    2,519    (50)
Total   35,349    35,542    (1)   38,060    (7)

 

 

 

* Europe primarily includes Germany and UK

# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 65.11

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement

 

   FY 18   FY 17   Growth 
Particulars  ($)   (Rs.)   %   ($)   (Rs.)   %   % 
Revenues   2,181    1,42,028    100.0    2,163    1,40,809    100.0    1 
Cost of Revenues   1,009    65,724    46.3    959    62,453    44.4    5 
Gross Profit   1,172    76,304    53.7    1,203    78,356    55.6    (3)
Operating Expenses                                   
Selling, General & Administrative expenses   720    46,910    33.0    712    46,372    32.9    1 
Research and Development expenses   281    18,265    12.9    300    19,551    13.9    (7)
Other operating expense / (income)   (12)   (788)   (0.6)   (16)   (1,065)   (0.8)   (26)
Results from operating activities   183    11,917    8.4    207    13,498    9.6    (12)
Finance (income), net   (32)   (2,080)   (1.5)   (12)   (806)   (0.6)   158 
Share of (profit) of equity accounted investees, net of income tax   (5)   (344)   (0.2)   (5)   (349)   (0.2)   (1)
Profit before income tax   220    14,341    10.1    225    14,653    10.4    (2)
Income tax expense   70    4,535    3.2    40    2,614    1.9    73 
Profit for the period   151    9,806    6.9    185    12,039    8.5    (19)
                                    
Diluted Earnings Per Share (EPS)   0.91    59.00         1.11    72.09         (18)

 

EBITDA Computation

 

  FY 18   FY 17 
Particulars  ($)   (Rs.)   ($)   (Rs.) 
Profit before income tax   220    14,341    225    14,653 
Interest (income) / expense net*   (31)   (2,022)   (14)   (880)
Depreciation #   127    8,285    122    7,931 
Amortization #   53    3,477    58    3,791 
EBITDA   370    24,081    392    25,495 
EBITDA (% to revenues)        17.0         18.1 

 

* - Includes income from Investments               # includes impairment charge

 

Key Balance Sheet Items

 

   As on 31st Mar 2018   As on 31st Dec 2017   As on 31st Mar 2017 
Particulars  ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Cash and cash equivalents and current investments   322    20,967    337    21,958    279    18,136 
Trade receivables (current & non-current)   626    40,786    654    42,593    588    38,271 
Inventories   447    29,089    412    26,825    438    28,529 
Property, plant and equipment   889    57,869    894    58,189    878    57,160 
Goodwill and Other Intangible assets   747    48,610    740    48,182    748    48,677 
Loans and borrowings (current & non-current)   779    50,714    843    54,911    755    49,185 
Trade payables   247    16,052    224    14,575    206    13,417 
Equity   1,942    1,26,460    1,900    1,23,685    1,905    1,24,044 

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 65.11

 

Revenue Mix by Segment [Year on year]

 

   FY 18   FY 17   Growth 
Particulars  ($)   (Rs.)   %   ($)   (Rs.)   %   % 
Global Generics   1,751    1,14,014    80%   1,773    1,15,409    82%   (1)
North America        59,822              63,601         (6)
Europe*        8,217              7,606         8 
India        23,322              23,131         1 
Emerging Markets#        22,653              21,071         8 
Pharmaceutical Services and Active Ingredients (PSAI)   338    21,992    16%   327    21,277    15%   3 
Proprietary Products & Others   92    6,022    4%   63    4,123    3%   46 
Total   2,181    1,42,028    100%   2,163    1,40,809    100%   1 

 

 

 

* Europe primarily includes Germany and UK

# Emerging Markets refers to Russia, other CIS countries, Romania and Rest of the World markets including Venezuela

 

 

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 65.11

 

Segmental Analysis [FY18]

 

Global Generics (GG)

 

Revenues from GG segment at Rs. 114 billion. Year-on-year (YoY) decline of 1%

 

Decline primarily on account of lower contribution from North America generics markets due to higher price erosion and unfavorable US dollar conversion

 

-Revenues from North America at Rs. 59.8 billion, YoY decline of 6%. Decline primarily on account of higher price erosions due to channel consolidation and increased competition in some of our key molecules namely valganciclovir, azacitidine, decitabine, etc. The above is partly offset by new products contribution.

 

oRevenues for the 4th Quarter at Rs. 14.5 billion, YoY decline of 6% and sequential decline of 10%. During the 4th Quarter, we launched 3 new products - palonosetron inj, tetrabenazine and OTC levocetrizine

 

As of 31st March 2018, cumulatively 110 generic filings are pending for approval with the USFDA (107 ANDAs and 3 NDAs under 505(b)(2) route). Of these 107 ANDAs, 63 are Para IVs out of which we believe 30 have ‘First to File’ status.

 

·Revenues from Emerging Markets at Rs. 22.7 billion, YoY growth of 8%.

 

oRevenues from Russia at Rs. 12.6 billion. YoY growth of 9%. Adjusted for forex, growth driven by new launches. Revenues for the 4th Quarter at Rs. 2.6 billion, YoY decline of 25% primarily on account of lower off-take by the channel.

 

-Revenues from other CIS countries and Romania at Rs. 3.9 billion. YoY growth of 6%.

 

-Revenues from Rest of World (RoW) territories at Rs. 6.1 billion. YoY growth of 5%.

 

·Revenues from India at Rs. 23.3 billion, YoY growth of 1%. Revenues for 4th Quarter at Rs. 6.1 billion, YoY growth of 7.5%. Normalizing for the GST transition related adjustments, adjusted growth for FY18 is ~8% and Q4 FY18 is ~16%.

 

·Revenues from Europe at Rs. 8.2 billion, YoY growth of 8%. Revenues for the 4th Quarter at Rs. 1.7 billion, YoY decline of 17%, primarily due to higher price erosion and temporary supply disruptions.

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

·Revenues from PSAI at Rs. 22.0 billion, YoY growth of 3%. Growth driven by key molecules. Revenues for the 4th Quarter at Rs. 6.3 billion, YoY growth of 16%

 

·During the quarter, we have filed 5 DMFs in the US.

 

Proprietary Products (PP)

 

·Revenues from PP at Rs. 4.2 billion

 

During the year USFDA approved IMPOYZ™ (clobetasol propionate) Cream 0.025%. In line with the existing out-licensing agreement with Encore Dermatalogy Inc. this approval triggered milestone recognition of Rs. 1.5 billion.

 

 

 

 

Income Statement Highlights [FY18]

 

·Gross profit margin at 53.7%.

 

-Declined by ~190 bps over that of previous year primarily on account of higher price erosions, increased competitive intensity in some of our key molecules in the US and adverse foreign exchange impact.

 

-Gross profit margin for GG and PSAI business segments are at 58.9% and 20.2% respectively.

 

-Gross profit margin for the 4th Quarter at 53.5% (GG: 59.3%, PSAI: 24.2%). Sequential decline is primarily on account of (a) increased competitive intensity in some of our key products in the US (b) lower contribution from Russia and (c) preceding Quarter had out-licensing income in our Proprietary Products business

 

·SG&A expenses at Rs. 46.9 billion, marginal increase of 1%. SG&A expenses for the 4th Quarter at Rs. 12.1 billion, year-on-year increase of 10%.

 

·Research & development (R&D) expenses at Rs. 18.3 billion. As % to Revenues - FY18: 12.9% | FY 17: 13.9%. Focus continues on building complex generics, bio-similars and differentiated products pipeline. R&D expenses for the 4th Quarter stood at Rs. 4.3 billion, as % to revenues at 12.3%.

 

·Net Finance income at Rs. 2.1 billion compared to Rs. 0.8 billion in FY17. The incremental income is primarily on account of increase in profit on sales of investments by Rs. 1,314 million.

 

·Profit after Tax at Rs. 9.8 billion. Profit after tax during the 4th Quarter stood at Rs. 3.0 billion. During the year, the ‘Tax Cuts and Jobs Act of 2017’ was approved and enacted in the United States. Consequent to this enactment the deferred tax assets and liabilities in the US entity have been re-measured resulting in a charge of Rs. 1.3 billion being recorded under tax expense for the full year.

 

·Diluted earnings per share is at Rs. 59.0. Diluted earnings per share during the 4th Quarter at Rs. 18.2

 

·Capital expenditure for FY18 is at Rs. 9.2 billion. Capital expenditure for Q4 FY18 is at Rs. 1.5 billion.

 

The Board has recommended payment of a dividend of Rs. 20 per equity share of face value Rs 5/- each (400% of face value) for the year ended March 31, 2018 subject to approval of members

 

 

 

 

Earnings Call Details (06:30 pm IST, 09:00 am EDT, May 22, 2018)

 

The Company will host an earnings call to discuss the performance and answer any questions from participants. This call will be accessible through an audio dial-in and a web-cast.

 

Audio conference Participants can dial-in on the numbers below

 

Primary number: 91 22 6280 1219
Secondary number: 91 22 7115 8120

 

The numbers listed above are universally accessible from all networks and all countries.

 

Local Access number (India): 91 70456 71221

 

International Toll Free Number USA 18667462133
  UK 08081011573
  Singapore 8001012045
  Hong Kong 800964448

 

Playback of call: 91 22 7194 5757, 91 22 6181 3322  
Conference ID: 375#

 

Web-cast                              More details will be provided through our website, www.drreddys.com

 

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 gastro-intestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, India, Russia and other CIS countries. 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.