Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) (BSE: 500124) (NSE:DRREDDY) today announced its consolidated financial results for the fourth quarter and full year ended March 31, 2015 under International Financial Reporting Standards (IFRS).

FY15: Key Highlights

  • Three NDAs filed in our Proprietary Products business.
  • Consolidated revenues for FY15 at Rs. 148.2 billion, year-on-year growth of 12%.
  • Gross Profit Margin for FY15 at 57.6% versus 57.4% as in FY14.
  • Research & Development (R&D) expenses for FY15 at Rs. 17.4 billion, year-on-year increase of 41%.
  • Selling, general & administrative (SG&A) expenses for FY15 at Rs. 42.6 billion, year-on-year increase of 10%.
  • EBITDA for FY15 at Rs. 36.2 billion, 24% of revenues; year-on-year growth of 9%.
  • Profit after tax for FY15 at Rs. 22.2 billion, 15% of revenues; year-on-year growth of 3%

Q4 FY15: Key Highlights

  • Consolidated revenues for Q4 FY15 at Rs. 38.7 billion, year-on-year growth of 11%.
  • EBITDA for Q4 FY15 at Rs. 8.1 billion, 21% of revenues. During Q4 FY15 we have recorded a foreign exchange translation loss of Rs. 843 million on certain net monetary assets in Venezuela.
  • Profit after tax for Q4 FY15 at Rs. 5.2 billion, 13% of revenues.

Dr. Reddy’s Co-chairman and CEO, GV Prasad commented, “We are pleased with the progress on our financial and non-financial parameters, which we delivered despite currency volatility in some of our Emerging Market geographies.Our commitment to R&D continues to show results, with the filings of NDAs in our Proprietary Products business during the quarter and continued filings of complex generics assets. Overall, our results demonstrate our commitment to execute on our strategy, across businesses, as we constantly strengthen our focus on patients and providing them access to affordable medicines."

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of 1 USD = Rs. 62.31

 
Dr. Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income Statement
   
Particulars FY15     FY14     Growth %
    ($)     (Rs.)     %       ($)     (Rs.)     %      
Revenues 2,378     148,189     100 2,121     132,170     100 12
Cost of revenues     1,008       62,786       42.4       905       56,369       42.6       11  
Gross profit     1,371       85,403       57.6       1,217       75,801       57.4       13  
Operating Expenses
Selling, general & administrative expenses 683 42,585 28.7 622 38,783 29.3 10
Research and development expenses 280 17,449 11.8 199 12,402 9.4 41
Other operating expense / (income)     (15 )     (917 )     (0.6 )     (23 )     (1,416 )     (1 )     (35 )
Results from operating activities     422       26,286       17.7       418       26,032       19.7       1  
Finance (expense)/income, net 27 1,682 1.1 6 400 0.3 321
Share of profit of equity accounted investees, net of income tax     3       195       0.1       3       174       0.1       12  
Profit before income tax     452       28,163       19.0       427       26,606       20.1       6  
Income tax expense     96       5,984       4.0       82       5,094       3.9       17  
Profit for the year     356       22,179       15.0       345       21,512       16.3       3  
                                           
Diluted EPS     2.08       129.8             2.02       126.0             3  
 
 

EBITDA Computation

 
Particulars     FY15     FY14
    ($)     (Rs.)     ($)     (Rs.)
Profit before tax 452     28,163 427     26,606
Interest (income) / expense net (12 ) (725 ) (0 ) (24 )
Depreciation 92 5,722 77 4,804
Amortization 38 2,381 37 2,292
Impairment / (reversal of impairment) adjustment     10       629       (8 )     (497 )
EBITDA     580       36,170       532       33,180  
EBITDA (% to sales)           24.4             25.1  

Note:

Selling, general & administrative expenses, as above, includes an impairment charge Rs. 510 million [in FY15] and impairment reversal of Rs.497 million [in FY14]

Research & Development expenses, as above, includes an impairment charge of Rs. 119 million in [FY15]

 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate of 1 USD = Rs. 62.31

 

Appendix 1: Key Balance Sheet Items

       
Particulars As on 31st March 15 As on 31st Mar 14
    ($)     (Rs.)     ($)     (Rs.)
Cash and cash equivalents and Other Investments     636       39,654     538       33,534
Trade receivables     654       40,755     530       33,037
Inventories     410       25,529     385       23,992
Property, plant and equipment     772       48,090     713       44,424
Goodwill and Other Intangible assets     264       16,430     236       14,697
Loans and borrowings (current & non-current)     692       43,125     718       44,741
Trade payables     171       10,660     169       10,503
Equity     1,786       111,302     1,457       90,801
 

Appendix 2: Revenue Mix by Segment

 
Particulars     FY15     FY14     Growth %
    ($)     (Rs.)     %     ($)     (Rs.)     %    
Global Generics     1,935       120,556     81     1,688       105,164     80     15  
North America           64,723     54           55,302     53     17  
Europe           7,193     6           6,970     7     3  
India           17,870     15           15,713     15     14  
Russia & Other CIS           17,713     15           19,819     19     (11 )
Rest of World           13,057     11           7,359     7     77  
PSAI     409       25,456     17     385       23,974     18     6  
North America           4,605     18           4,354     18     6  
Europe           10.507     41           8,770     37     20  
India           3,288     13           3,787     16     (13 )
Rest of World           7,056     28           7,063     29     (0 )
Proprietary Products & Others     35       2,177     1     49       3,033     2     (28 )
Total     2,378       148,189     100     2,121       132,170     100     12  
               

Segmental Analysis

Global Generics

Revenues from Global Generics segment for FY15 are at Rs. 120.6 billion, year-on-year growth of 15%, primarily driven by North America, Venezuela and India.

  • Revenues from North America for FY15 at Rs. 64.7 billion, year-on-year growth of 17%.
    • Current year growth is shaped by scale-up of the injectable franchise and market share gains in select molecules
    • 12 new products were launched during the financial year
    • Current year includes three months revenues from Habitrol®
    • 13 new product filings in the US during the year. Cumulatively, 68 ANDAs are pending for approval with the USFDA of which 43 are Para IVs out of which we believe 13 to have ‘First To File’ status.
  • Revenues from Emerging Markets for FY15 at Rs. 30.8 billion, year-on-year growth of 13%.
    • Revenues from Russia at Rs. 14.9 billion, year-on-year growth of 13% in local currency terms despite macro-economic uncertainty. After considering the impact of currency depreciation the rupee revenues declined by 9%.
    • Revenues from CIS markets at Rs. 2.8 billion, year-on-year decline of 20% primarily on account of currency depreciation.
    • Revenues from Rest of World (RoW) territories at Rs. 13.1 billion recorded year-on-year growth of 77%. Of this Venezuela delivered strong growth on the back of continuing volume uptake.
  • Revenues from India for FY15 at Rs. 17.9 billion, year-on-year growth of 14%.
    • Growth is driven by continued focus on new product launches and prescription growth.
  • Revenues from Europe for FY15 at Rs. 7.2 billion, year-on-year of 10% in local currency terms.
  • As per IMS Mar’15, Dr Reddy’s MQT Gr% at 21.4% versus market MQT Gr% of 15.4%.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Revenues from PSAI for FY15 at Rs. 25.5 billion, year-on-year growth of 6%.
  • During the year, 77 DMFs were filed globally, including 12 in the US and 16 in Europe. The cumulative number of DMF filings as of March 31, 2015 is 735.

Income Statement Highlights:

  • Gross profit margin in FY15 stood at 57.6% and registered marginal improvement over previous year. Gross profit margin for Global Generics (GG) and PSAI business segments for FY15 are at 65.2% and 22.4% respectively.
  • Selling, General and Administration (SG&A) expenses at Rs. 42.6 billion, year-on-year increase of 10%. The increase is primarily on account of annual increments, additional manpower deployment in select areas, sales & marketing spend for events specific to the year, marginally offset by currency devaluation in EM markets.
  • Research & development expenses at Rs. 17.4 billion, year-on-year growth of 41%. 11.8% of revenues in FY15 as compared to 9.4% of revenues in FY14. The increase is in line with our planned scale-up in development activities.
  • Net Finance income at Rs. 1,682 million compared to Rs. 400 million in FY15. The increase is on account of:
    • Incremental forex benefit of Rs. 1,430 million
    • During Q4 FY15, pursuant to the modification of the currency exchange systems by the government of Venezuela in February 2015, the Company re-evaluated its economic position and determined that it is appropriate to use the SIMADI rate (which is bolivars 193 per USD) to translate the surplus monetary assets and liabilities, other than those which qualify for the CENCOEX rate of 6.3 bolivars per USD. Accordingly, during the quarter ended 31 March 2015, an amount of Rs. 843 million was recorded as foreign exchange loss.
    • Incremental profit on sales of investments of Rs. 539 million
    • Net increase in interest income of Rs. 158 million primarily due to reduction in Interest expense by Rs. 182 million offset set by decline in interest income by Rs. 24 million.
  • EBITDA for FY15 at Rs. 36.2 billion, year-on-year growth of 9%; 24% of revenues.
  • Profit after Tax in FY15 at Rs. 22.2 billion, year-on-year growth of 3%; 15% of revenues.
  • Diluted earnings per share in FY15 at Rs. 130
  • Capital expenditure for FY15 is Rs. 9.3 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, 2015, subject to approval of members.

 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate as on 31st March, 2015 USD = Rs. 62.31

 

Appendix 3: Q4 FY15 Consolidated Income Statement

 
Particulars     Q4 FY15     Q4 FY14     Growth %
    ($)     (Rs.)     %       ($)     (Rs.)     %      
Revenues 621     38,704     100.0 559     34,809     100.0 11
Cost of revenues     281       17,483       45.2       239       14,887       42.8       17  
Gross profit     341       21,221       54.8       320       19,922       57.2       7  
Operating Expenses
Selling, general & administrative expenses 162 10,082 26.0 165 10,307 29.6 (2 )
Research and development expenses 83 5,144 13.3 64 3,985 11.4 29
Other operating expense / (income)     (2 )     (125 )     (0.3 )     (4 )     (226 )     (0.7 )     (45 )
Results from operating activities     98       6,120       15.8       94       5,857       16.8       4  
Finance (expense)/income, net (4 ) (233 ) (0.6 ) 3 163 0.5 (243 )
Share of profit of equity accounted investees     1       44       0.1       1       48       0.1       10  
Profit before income tax     95       5,931       15.3       97       6,068       17.4       (2 )
Income tax expense     12       742       1.9       20       1,252       3.6       (41 )
Profit for the period     83       5,189       13.4       77       4,816       13.8       8  
                                           
Diluted EPS     0.49       30.35             0.45       28.22             8  
 
 

Appendix 4: EBITDA Computation

       
Particulars Q4 FY15 Q4 FY14
    ($)     (Rs.)     ($)     (Rs.)
Profit before income tax 95     5,931 97     6,068
Interest income (3 ) (194 ) (1 ) (82 )
Depreciation 25 1,533 21 1,308
Amortization 11 699 10 648
Impairment     2       95       -       -  
EBITDA     129       8,064       127       7,942  
 
 

All amounts in millions, except EPS

All US dollar amounts based on convenience translation rate as on 31st March, 2015 USD = Rs. 62.31

 

Appendix 5: Revenue Mix by Segment

 
      Q4 FY15     Q4 FY14     Growth %
    ($)     (Rs.)     %     ($)     (Rs.)     %    
Global Generics     497       30,993     80     438       27,318     78     13  
North America           17,154     55           14,964     55     15  
Europe           2,341     8           1,774     6     32  
India           4,744     15           4,101     15     16  
Russia & Other CIS           3,289     11           4,519     17     (27 )
Rest of World           3,465     11           1,960     7     77  
PSAI     119       7,415     19     107       6,641     19     12  
North America           1,400     19           1,538     23     (9 )
Europe           3,223     43           2,370     36     36  
India           668     9           979     15     (32 )
Rest of World           2,124     29           1,754     26     21  
Proprietary Products & Others     5       296     1     14       851     2     (65 )
Total     621       38,704     100     559       34,809     100     11  
               
 

About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (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 anti-infectives. Dr. Reddy’s operates in markets across the globe. Our major markets include – USA, Russia & CIS, Venezuela and India. 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.