Dr Reddy’s Q2 profit sinks 60%, US & EMs biz drag revenue 10%


Pharma major Dr Reddy’s Laboratories ‘ second quarter consolidated net profit plunged 60.1 percent year-on-year to Rs 309 crore on weak operational performance but sequential performance was quite strong. Revenue during the quarter declined 10.1 percent to Rs 3,616.3 crore on yearly basis, dented by US and emerging markets business. However, sequentially the same grew by 11.5 percent. “All major businesses have shown sequential improvement over the previous quarter with revenues growing 11 percent and EBITDA by 61 percent. We have made considerable progress in our remediation efforts and continue to work on addressing concerns of the regulators,” GV Prasad, co-chairman and CEO said in its filing. Earnings were more or less expected to be weak. Profit was estimated at Rs 298 crore on revenue of Rs 3,426 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18. Dr Reddy’s Labs global generics business declined 12 percent YoY due to lower contribution from North America and loss of sales from Venezuela. North America, which contributes 45 percent to total business, showed a 13 percent degrowth (but up 4 percent QoQ), Europe business fell 16 percent (up 10 percent QoQ) and emerging markets declined 27 percent. PSAI (pharmaceuticals services and active ingredients) business also recorded a fall of 2 percent during the quarter (up 23 percent QoQ) but within that only North America showed a 64 percent growth. India business outperformed, growing 14 percent in Q2 on yearly basis and 20 percent sequentially. During the quarter, Dr Reddy’s Labs launched 4 new products, it said, adding 85 generic filings are pending for approval with the US Food & Drug Administration. EBITDA (earnings before interest, tax, depreciation and amortisation) fell 43.9 percent to Rs 640 crore and margin contracted by 1050 basis points to 17.9 percent compared with year-ago period. Gross profit margin at 56 percent, declined by 530 basis points over a year-ago period due to lower sales on account of increased competitive intensity in some key molecules in US, the company said. Other income too was down at Rs 43.8 crore in July-September quarter against Rs 72.4 crore in year-ago period. At 11:38 hours IST, the stock was quoting at Rs 3,122.10, up Rs 32.50, or 1.05 percent on the BSE.