Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY |
NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated
financial results for the quarter ended June 30, 2023. The
information mentioned in this release is based on consolidated
financial statements under International Financial Reporting
Standards (IFRS).
Revenues
Rs. 67,384 Mn
[Up: 29%* YoY; Up: 7%* QoQ]
Gross Margin
58.7%
[Q1 FY23: 49.9%; Q4 FY23: 57.2%]
SG&A Expenses
Rs. 17,702 Mn
[Up: 14% YoY; Down: 2% QoQ]
R&D Expenses
Rs. 4,984 Mn [7.4% of Revenues]
EBITDA
Rs. 21,372 Mn
[31.7% of Revenues]
Profit before Tax
Rs. 18,463 Mn
[Up: 26%^ YoY; Up: 39%^ QoQ]
Profit after Tax
Rs. 14,025 Mn
[Up: 18% YoY; Up: 46% QoQ]
* Excluding brand divestment income during the previous periods,
Q1 FY24 Sales YoY growth is 35% and QoQ growth is 12% ^ Excluding
one offs (settlement income during the current and previous year
and brand divestment income during the previous periods), Q1 FY24
PBT YoY growth is 165% and QoQ growth is 68%
Commenting on the results, Co-Chairman & MD, G V Prasad
said: “We delivered strong sales growth and witnessed robust
margin expansion in Q1FY24 driven by market share gains & new
product momentum in our US generics business and superior
performance in Russia. We are on track in executing our strategy,
delivering growth while continuing to invest in future growth
drivers and innovation to create sustainable value.”
All amounts in millions, except EPS. All US dollar amounts based
on convenience translation rate of 1 USD = Rs. 82.06
Dr.
Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income
Statement
Particulars
Q1 FY24
Q1 FY23
YoY Gr %
Q4 FY23
QoQ Gr%
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Revenues
821
67,384
636
52,154
29
767
62,968
7
Cost of Revenues
339
27,831
319
26,148
6
329
26,971
3
Gross Profit
482
39,553
317
26,006
52
439
35,997
10
Operating Expenses
Selling, General & Administrative
expenses
216
17,702
189
15,493
14
219
17,992
(2
)
Research and Development expenses
61
4,984
53
4,325
15
65
5,366
(7
)
Impairment of non-current assets
0
11
0
0
7
540
(98
)
Other operating (income)/expense
(10
)
(780
)
(73
)
(6024
)
(87
)
(3
)
(281
)
178
Results from operating
activities
215
17,636
149
12,212
44
151
12,380
42
Net finance (income)/expense
(10
)
(784
)
(29
)
(2349
)
(67
)
(10
)
(799
)
(2
)
Share of profit of equity accounted
investees
(1
)
(43
)
(1
)
(94
)
(54
)
(1
)
(76
)
(43
)
Profit before income tax
225
18,463
179
14,655
26
162
13,255
39
Income tax expense
54
4,438
34
2779
60
45
3,663
21
Profit for the period
171
14,025
145
11,876
18
117
9,592
46
Diluted Earnings Per Share
(EPS)
1.03
84.22
0.87
71.40
18
0.70
57.62
46
As % to revenues
Q1 FY24
Q1 FY23
Q4 FY23
Gross Profit
58.7
49.9
57.2
SG&A
26.3
29.7
28.6
R&D
7.4
8.3
8.5
EBITDA
31.7
34.1
25.9
PBT
27.4
28.1
21.1
PAT
20.8
22.8
15.2
EBITDA Computation
Particulars
Q1 FY24
Q1 FY23
Q4 FY23
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Profit before Income Tax
225
18,463
179
14,655
162
13,255
Interest (income) / expense - Net*
(8)
(685)
1
84
(8)
(673)
Depreciation
28
2,281
25
2,050
27
2,213
Amortization
16
1,302
12
1,000
12
977
Impairment
0
11
0
0
7
540
EBITDA
260
21,372
217
17,789
199
16,312
* Includes income from Investments
All amounts in millions, except EPS. All US dollar amounts based
on convenience translation rate of 1 USD = Rs. 82.06
Key Balance Sheet
Items
Particulars
As on 30th Jun 2023
As on 31st Mar 2023
As on 30th Jun 2022
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Cash and cash equivalents and other
investments
745
61,162
761
62,456
432
35,468
Trade receivables
939
77,095
883
72,486
893
73,274
Inventories
639
52,398
593
48,670
631
51,810
Property, plant and equipment
819
67,207
810
66,462
778
63,826
Goodwill and Other Intangible assets
516
42,306
428
35,094
441
36,213
Loans and borrowings (current &
non-current)
153
12,520
164
13,472
301
24,666
Trade payables
337
27,682
322
26,444
305
25,052
Equity
2,989
2,45,259
2,815
2,30,991
2,442
2,00,389
Revenue Mix by Segment
Segment
Q1 FY24
Q1 FY23
YoY Gr %
Q4 FY23
QoQ Gr %
(Rs.)
(Rs.)
(Rs.)
Global Generics
60,083
44,324
36%
54,257
11%
North America
31,978
17,815
79%
25,321
26%
Europe
5,071
4,141
22%
4,960
2%
India
11,482
13,324
-14%
12,834
-11%
Emerging Markets
11,552
9,043
28%
11,142
4%
Pharmaceutical Services and Active
Ingredients (PSAI)
6,709
7,090
-5%
7,787
-14%
Others
592
740
-20%
924
-36%
Total
67,384
52,154
29%
62,968
7%
Revenue Analysis [Q1 FY24]
Global Generics (GG)
- Q1 FY24 revenue at Rs. 60.1 billion, YoY growth of 36%
and QoQ growth of 11%. The growth was driven by North America,
Emerging Markets and Europe.
North America
- Q1 FY24 revenue at Rs. 32 billion, YoY growth of 79% and
QoQ growth of 26%. The growth was primarily on account of new
product launches, continued momentum in existing products,
favorable forex rates movement, partly offset by price
erosion.
- During the quarter, we launched six new products in US and two
in Canada. We also commercialized the generic prescription
portfolio acquired from Mayne Pharma.
- During the quarter, we filed four new Abbreviated New Drug
Applications (ANDAs) with the US Food and Drug Administration
(USFDA). As of 30th June 2023, cumulatively 85 generic filings are
pending for approval with the USFDA (82 ANDAs and 3 NDAs under
505(b)(2) route). Out of the pending 85 ANDAs, 43 are Para IVs, and
we believe 17 have ‘First to File’ status.
Europe
- Q1 FY24 revenue at Rs. 5.1 billion, YoY growth of 22%
and QoQ growth of 2%. The growth was driven by momentum in the base
business, new product launches and favorable forex rates movement,
partly offset by price erosion.
India
- Q1 FY24 revenue at Rs. 11.5 billion, YoY decrease of 14%
and QoQ decline of 11%. Excluding brand divestment income, sales of
divested portfolio from base and NLEM related price reduction
impact, India business registered a high single digit growth. This
growth was mainly on account of increase in base business
volumes.
Emerging Markets
- Q1 FY24 revenue from Emerging Markets at Rs. 11.6
billion, YoY growth of 28% and QoQ growth of 4%.
- Revenue from Russia for the quarter
at Rs. 5.6 billion, YoY growth of 75% and QoQ growth of 9%. YoY
growth was driven by uptick in base business, price increase and
biosimilars. This was further aided by low base in previous year.
QoQ growth was primarily driven by increase in volumes of existing
products.
- Revenue from other CIS countries and
Romania for the year at Rs. 2.0 billion, YoY growth of 2% and
QoQ decline of 14%. YoY growth, primarily on account of price
increases on certain products, was offset with decline in base
business volumes. QoQ decline was mainly on account of decline in
volumes of existing products.
- Revenue from Rest of World (RoW)
territories for the year at Rs. 4.0 billion, YoY growth of 1% and
QoQ growth of 8%. YoY growth, led by new product launches, was
offset by price erosion and lower base business volumes. QoQ growth
was mainly driven by new product launches and increase in volumes
of existing products.
Pharmaceutical Services and Active
Ingredients (PSAI)
- Q1 FY24 revenue at Rs. 6.7 billion, with a decline of 5%
YoY and 14% QoQ. YoY decline was mainly attributable to lower
volume pick up by customers for some of our existing products,
partly offset with favourable forex rate movement. QoQ decline was
mainly attributable to decrease in sales volumes of certain of our
existing products.
Income Statement Highlights:
- Q1 FY24 gross margin at 58.7% (GG: 63.9%, PSAI: 15.0%).
Gross margin increased by ~880 bps YoY and by ~150 bps QoQ. The
improvement in gross margin was primarily driven by favorable
product mix and higher manufacturing leverage partly offset by
benefit from brand divestment income during previous year and price
erosion in certain products. QoQ growth was primarily on account of
favourable product mix partly offset by brand divestment income
benefit during preceding quarter.
- Selling, general & administrative (SG&A) expenses
for Q1 FY24 at Rs. 17.7 billion, YoY increase of 14% and
declined by 2% QoQ. The YoY SG&A spend increase is in-line with
business growth and is largely on account of investment in sales
& marketing, digitalization and other business
initiatives.
- Research & development (R&D) expenses in Q1 FY24
at Rs. 5.0 billion. As % to Revenues – Q1FY24: 7.4% | Q4FY23: 8.5%
| Q1FY23: 8.3%. We continue our focus on investing in R&D to
build a healthy pipeline of new products across our markets for
both small molecules and biosimilars.
- Other operating income for Q1 FY24 at Rs. 0.8 billion
compared to Rs. 6 billion in Q1 FY23. Other operating income during
the current quarter included settlement income of Rs. 0.5 billion
in Canada relating to the generic abiraterone. The net other income
in previous year included settlement income of Rs. 5.6 billion
relating to the generic buprenorphine and naloxone sublingual
film.
- Net Finance income for Q1 FY24 at Rs.0.8 billion
compared to Rs. 2.3 billion in Q1 FY24. The higher income during
previous year was primarily on account of higher foreign exchange
gain.
- Profit before Tax for Q1 FY24 at Rs. 18.5 billion, YoY
growth of 26%. QoQ growth of 39%
- Profit after Tax for Q1 FY24 at Rs. 14.0 billion. The
effective tax rate for the quarter has been 24.0% as compared to
19.0% in Q1 FY23. The tax rate was lower in pervious year primarily
on account of recognition of unrecognized deferred tax assets on
operating tax losses.
- Diluted earnings per share for Q1 FY24 is Rs.
84.22.
Other Highlights:
- EBITDA for Q1 FY24 at Rs. 21.4 billion and the EBITDA
margin is 31.7%.
- Capital expenditure for Q1 FY24 at Rs. 3.6 billion.
- Free cash-flow for Q1 FY24 at Rs. 6.7 billion (before
acquisition payout).
- Net cash surplus for the company at Rs. 49.8 billion as
on June 30, 2023.
All amounts in millions, except EPS
About key metrics and non-GAAP Financial Measures
This press release contains non-GAAP financial measures within
the meaning of Regulation G and Item 10(e) of Regulation S-K. Such
non-GAAP financial measures are measures of our historical
performance, financial position or cash flows that are adjusted to
exclude or include amounts, as the case may be, from the most
directly comparable financial measure calculated and presented in
accordance with IFRS.
The presentation of this financial information is not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with IFRS. Our non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. These measures
may be different from non-GAAP financial measures used by other
companies, limiting their usefulness for comparison purposes.
We believe these non-GAAP financial measures provide investors
with useful supplemental information about the financial
performance of our business, enable comparison of financial results
between periods where certain items may vary independent of
business performance, and allow for greater transparency with
respect to key metrics used by management in operating our
business.
For more information on our non-GAAP financial measures and a
reconciliation of GAAP to non-GAAP measures, please refer to
"Reconciliation of GAAP to Non-GAAP
Results" table in this press release.
All amounts in millions, except EPS
Reconciliation of GAAP
measures to Non-GAAP measures
Free Cash Flow
Three months Ended June 30,
2023
Net cash generated from operating
activities
13,634
Less:
Taxes
(2,384
)
Investments in PPE and Intangibles
(4,512
)
Free Cash Flow before
acquisition
6,738
Less:
Acquisitions related pay-out
(7,640
)
Free Cash Flow
(902
)
Operating working capital
Quarter Ended
June 30, 2023
Inventories
52,398
Trade Receivables
77,095
Less:
Trade Payables
(27,682
)
Operating Working Capital
101,811
Net cash surplus
Quarter Ended
June 30, 2023
Cash and cash equivalents
7,228
Investments
53,934
Short-term borrowings
(6,468
)
Long-term borrowings, non-current
(4,930
)
Less:
Restricted cash balance – Unclaimed
dividend
84
Lease liabilities (included in
Long-term
borrowings, non-current)
(1,130
)
Equity Investments
(included in Investments)
957
Net Cash Surplus
49,853
All amounts in millions, except EPS
Computation of Return on Capital
Employed
Year Ended
June 30, 2023
Profit before tax
18,463
Less:
Interest and Investment Income
(Excluding forex gain/loss)
685
Earnings Before Interest and taxes
[A]
17,778
Average Capital Employed [B]
1,84,327
Return on Capital Employed (A/B)
(Ratio)
38.6%
Computation of capital employed
Year Ended June 30,
2023
Year Ended March 31,
2023
Property Plant and Equipment
67,207
66,462
Intangibles
38,068
30,849
Goodwill
4,238
4,245
Investment in equity accounted
associates
4,002
4,702
Other Current Assets
18,511
20,069
Other investments
902
660
Other non-current assets
821
800
Inventories
52,398
48,670
Trade Receivables
77,095
72,485
Derivative Financial Instruments
1,760
1,095
Less:
Other Liabilities
38,973
42,320
Provisions
5,451
5,513
Trade payables
27,682
26,444
Operating Capital Employed
1,92,896
1,75,760
Average Capital Employed
1,84,327
Computation of EBITDA
Refer page no. 2 for EBITDA computations.
Earnings Call Details (07:30 pm IST, 10:00 am EDT, July 26,
2023)
The management of the Company will host an Earnings call to
discuss the Company’s financial performance and answer any
questions from the participants.
Conference Joining Information
Option 1: Express Join with
DiamondPass™
Pre-register with the below link and join without waiting for
the operator.
https://services.choruscall.in/DiamondPassRegistration/register?confirmationNumber=5910688&linkSecurityString=1f874b8ec0
Option 2: Join through below Dial-In
Numbers
Universal Access Number:
+91 22 6280 1219
+91 22 7115 8120
International Toll Free Number:
USA: 1 866 746 2133
UK: 0 808 101 1573
Singapore: 800 101 2045
Hong Kong: 800 964 448
No password/pin number is necessary to dial in to any of the
above numbers. The operator will provide instructions on asking
questions before and during the call.
Play Back: The play back will be available after the
earnings call, till Aug 2nd, 2023. For play back dial in phone No:
+91 22 7194 5757, and Playback Code is 75822.
Transcript: Transcript of the Earnings call will be
available on the Company’s website: www.drreddys.com
About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE:
500124, NSE: DRREDDY, NYSE: RDY, NSEIFSC: DRREDDY) is a global
pharmaceutical company headquartered in Hyderabad, India.
Established in 1984, we are committed to providing access to
affordable and innovative medicines. Driven by our purpose of ‘Good
Health Can’t Wait’, we offer a portfolio of products and services
including APIs, generics, branded generics, biosimilars and OTC.
Our major therapeutic areas of focus are gastrointestinal,
cardiovascular, diabetology, oncology, pain management and
dermatology. Our major markets include – USA, India, Russia &
CIS countries, China, Brazil and Europe. As a company with a
history of deep science that has led to several industry firsts, we
continue to plan ahead and invest in businesses of the future. As
an early adopter of sustainability and ESG actions, we released our
first Sustainability Report in 2004. Our current ESG goals aim to
set the bar high in environmental stewardship; access and
affordability for patients; diversity; and governance. 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 reorganization,
including related integration issues, (vi) the susceptibility of
our industry and the markets addressed by our, and our customers’,
products and services to economic downturns as a result of natural
disasters, epidemics, pandemics or other widespread illness,
including coronavirus (or COVID-19), and (vii) other risks and
uncertainties identified in our public filings with the Securities
and Exchange Commission, including those listed under the "Risk
Factors" and "Forward-Looking Statements" sections of our Annual
Report on Form 20-F for the year ended March 31, 2023. The company
assumes no obligation to update any information contained
herein.”
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726055989/en/
INVESTOR RELATIONS RICHA PERIWAL
richaperiwal@drreddys.com
MEDIA RELATIONS USHA IYER ushaiyer@drreddys.com
Dr Reddys Laboratories (NYSE:RDY)
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