Try our mobile app

Published: 2022-07-28 15:21:03 ET
<<<  go to RDY company page
EX-99.1 2 drr0414_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

  

 

                                   CONTACT  
DR. REDDY'S LABORATORIES LTD.   Investor relationS Media relationS  
8-2-337, Road No. 3, Banjara Hills,   AMIT AGARWAL USHA iyer  
Hyderabad - 500034. Telangana, India.   amita@drreddys.com ushaiyer@drreddys.com  

 

Dr. Reddy’s Q1 FY23 Financial Results

 

Hyderabad, India, July 28, 2022: 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, 2022. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).

 

Revenues Rs. 5,215 Cr
  [Up: 6% YoY; Down: 4% QoQ]
   
Gross Margin 49.9%
  [Q1 FY22: 52.2%; Q4 FY22: 52.9%]
   
SG&A Expenses Rs. 1,549 Cr
  [Up: 3% YoY; Down: 1% QoQ]
   
R&D Expenses Rs. 433 Cr
  [8.3% of Revenues]
   
EBITDA Rs. 1,779 Cr
  [34.1% of Revenues]
   
Profit before Tax Rs. 1,466 Cr
  [Up: 97% YoY; Up: 490% QoQ]
   
Profit after Tax Rs. 1,188 Cr
  [Up: 108% YoY; Up: 1,257% QoQ]

 

Commenting on the results, Co-Chairman & MD, G V Prasad said “Our underlying business revenues adjusted for covid products contribution during last year have grown well. The profits were aided by a few non-recurring incomes, offsetting the near term headwinds. We continue to improve the health of our core businesses through productivity improvement and robust product pipelines”.

 

  1

 

 

All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02

 

Dr. Reddy’s Laboratories Limited and Subsidiaries

 

Consolidated Income Statement

 

   Q1 FY23   Q1 FY22   YoY   Q4 FY22   QoQ 
Particulars  ($)   (Rs.)   ($)   (Rs.)   Gr %   ($)   (Rs.)   Gr% 
Revenues   660    52,154    623    49,194    6    688    54,368    (4)
Cost of Revenues   331    26,148    297    23,495    11    324    25,625    2 
Gross Profit   329    26,006    325    25,699    1    364    28,743    (10)
Operating Expenses                                        
Selling, General & Administrative expenses   196    15,493    190    15,045    3    198    15,674    (1)
Research and Development expenses   55    4,325    57    4,534    (5)   55    4,326    (0)
Impairment of non-current assets   -    -    -    -         95    7,515    (100)
Other operating income   (76)   (6,024)   (6)   (487)   1,137    (4)   (291)   1,970 
Results from operating activities   155    12,212    84    6,607    85    19    1,519    704 
Net finance income   (30)   (2,349)   (8)   (652)   260    (11)   (859)   173 
Share of profit of equity accounted investees   (1)   (94)   (2)   (166)   (43)   (1)   (105)   (10)
Profit before income tax   185    14,655    94    7,425    97    31    2,483    490 
Income tax expense   35    2,779    22    1,717    62    20    1,608    73 
Profit for the period   150    11,876    72    5,708    108    11    875    1,257 
                                         
Diluted Earnings Per Share (EPS)   0.90    71.40    0.43    34.34    109    0.07    5.26    1,261 

 

As % to revenues  Q1 FY23   Q1 FY22   Q4 FY22 
Gross Profit   49.9    52.2    52.9 
SG&A   29.7    30.6    28.8 
R&D   8.3    9.2    8.0 
EBITDA   34.1    20.7    23.9 
PBT   28.1    15.1    4.6 
PAT   22.8    11.6    1.6 

 

EBITDA Computation

 

   Q1 FY23   Q1 FY22   Q4 FY22 
Particulars  ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Profit before Income Tax   185    14,655    94    7,425    31    2,483 
 Interest (income) / expense (net)*   1    84    (2)   (142)   0    24 
 Depreciation   26    2,050    25    1,973    26    2,039 
 Amortization   13    1,000    12    932    12    920 
 Impairment   -    -    -    -    95    7,515 
 EBITDA   225    17,789    129    10,188    164    12,980 

 

* Includes income from Investments

 

  2

 

 

All amounts in millions, except EPS    All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02

 

Key Balance Sheet Items

 

    As on 30th Jun
2022 		    As on 31st Mar
2022 		    As on 30th  Jun
2021		 
Particulars  ($)   (Rs.)   ($)   (Rs.)   ($)   (Rs.) 
Cash and cash equivalents and other investments   449    35,467    608    48,033    435    34,356 
Trade receivables   927    73,274    846    66,818    774    61,148 
Inventories   656    51,810    644    50,884    643    50,771 
Property, plant and equipment   808    63,826    787    62,169    742    58,636 
Goodwill and Other Intangible assets   458    36,213    401    31,664    503    39,746 
Loans and borrowings (current & non-current)   312    24,666    428    33,845    422    33,373 
Trade payables   317    25,052    324    25,572    362    28,607 
Equity   2,531    2,00,039    2,411    1,90,527    2,254    1,78,114 

   

Revenue Mix by Segment

 

   Q1 FY23   Q1 FY22   YoY   Q4 FY22   QoQ 
Segment  (Rs.)   (Rs.)   Gr %   (Rs.)   Gr % 
Global Generics   44,324    41,113    8    46,118    (4)
    North America   17,815    17,390    2    19,971    (11)
    Europe   4,141    3,994    4    4,444    (7)
    India   13,339    10,600    26    9,689    38 
Emerging Markets   9,028    9,129    (1)   12,013    (25)
Pharmaceutical Services and Active Ingredients (PSAI)   7,090    7,540    (6)   7,557    (6)
Others   740    541    37    693    7 
 Total   52,154    49,194    6    54,368    (4)

 

 

 

  3

 

 

Revenue Analysis

 

Global Generics (GG)

 

Revenues from GG segment at Rs. 44.3 billion:

 

ØYear-on-year growth of 8% was driven by new product launches across most of our businesses and divestment of a few non-core brands in India, partly offset by price erosion in our generic markets, and higher base due to covid product sales in previous year.

 

ØSequential decline of 4% was due to sales decline in North America (incremental competition on key products and price erosion) and Emerging Markets (normalization of channel inventory in Russia). This was partly offset by new product launches.

 

North America

 

Revenues from North America at Rs. 17.8 billion:

 

ØYear-on-year growth of 2%, driven by launch of new products and favorable forex rates, which was offset by price erosion in some of our key molecules.

 

ØSequential decline of 11% was primarily on account of price erosion and decline in volumes for few products due to incremental competition.

 

ØDuring this quarter, we launched 7 new products. This includes launch of Ketorolac, OTC Nicotine Lozenges Original, Methylprednisolone Sodium Succinate, Pemetrexed Injection, Posaconazole Tabs and Sorafenib in the US and Pemetrexed Inj. in Canada.

 

ØWe filed three ANDAs during the quarter. As of 30th June 2022, cumulatively 86 generic filings are pending for approval with the USFDA (83 ANDAs and 3 NDAs under 505(b)(2) route). Out of these 86 pending filings, 44 are Para IVs and we believe 24 have ‘First to File’ status.

 

Europe

 

Revenues from Europe at Rs. 4.1 billion:

 

ØYear-on-year growth of 4%, driven by launch of new products and scale up of base business, which was partly offset by price erosion in some molecules and adverse forex rates during the quarter.

 

ØSequential decline of 7% was primarily on account of price erosion and adverse forex rates, which was partly offset by volume traction in base business.

 

India

 

Revenues from India at Rs. 13.3 billion:

 

ØYear-on-year growth of 26% was driven by divestment of a few non-core brands, revenue contribution from the products acquired / in-licensed from Novartis, growth in base business and new products contribution. The growth was partially offset due to covid product sales in Q1 FY22 which was not there in the current quarter.
ØSequential growth of 38% was primarily driven by divestment of a few non-core brands, revenue contribution from the products acquired / in-licensed from Novartis, new products contribution and growth in base business.
ØWe launched five new products during the quarter.

 

  4

 

 

Emerging Markets

 

Revenues from Emerging Markets at Rs. 9.0 billion. Year-on-year decline of 1% and sequential decline of 25%:

 

ØRevenues for Russia at Rs. 3.2 billion. Year-on-year decline of 9% is primarily due to channel inventory normalization post stocking up in Q4 FY22, which was partly offset with launch of new products. Sequential decline of 53% was due to higher base in Q4 FY22 from brand divestment income and channel inventory normalization in the current quarter.

 

ØRevenues from other CIS countries and Romania at Rs. 1.9 billion. Year-on-year growth of 33% driven by volume traction in base business, favorable price benefits in some of our products and launch of new products. Sequential decline of 16% was primarily on account of reduction in volumes.

 

ØRevenues from Rest of World (RoW) territories at Rs. 3.9 billion. Year-on-year decline of 6% primarily on account of higher base in Q1 FY22 due to covid product sales and price decline in current quarter, partly offset by new product launches. Sequential growth of 36% was largely attributable to volume traction in our base business, price benefits in some of our markets and launch of new products.

 

Pharmaceutical Services and Active Ingredients (PSAI)

 

Revenues from PSAI at Rs. 7.1 billion. Year-on-year and sequential decline of 6% each.

 

ØYear-on-year decline was primarily on account of higher base in Q1 FY22 with covid product sales, partly offset by new products launched and favorable forex rates.

 

ØSequential decline was primarily due to lower volumes of base business, partly offset by new product launches.

 

  5

 

 

Income Statement Highlights:

 

ØGross profit margin at 49.9%:

 

-Decreased by ~230 bps over previous year and by ~300 bps sequentially, primarily on account of higher commodity prices, adverse leverage on manufacturing overheads, price erosion and forex related impact, which was partially benefited from brand divestment income.

 

-Gross profit margin for GG and PSAI business segments are at 55.0% and 15.7% respectively.

 

ØSelling, general & administrative (SG&A) expenses at Rs. 15.5 billion, increased by 3% on a year-on-year basis and declined by 1% sequentially. Year-on-year increase was primarily attributable to investments being done towards marketing of some of our key brands, investments in digitalization and annual increments, which was partially offset with lower legal and professional expenses. On sequential basis, the expenses have been largely flat.

 

ØResearch & development (R&D) expenses at Rs. 4.3 billion. As % to revenues – Q1 FY23: 8.3% | Q4 FY22: 8.0% | Q1 FY22: 9.2%. Our focus continues on building a global pipeline of products across our markets.

 

ØOther operating income at Rs. 6.0 billion compared to Rs. 0.5 billion in Q1 FY22. The increase was mainly on account of recognition of income from settlement agreement, with Indivior Inc., Indivior UK Limited and Aquestive Therapeutics, Inc., resolving all claims between the parties relating to the generic buprenorphine and naloxone sublingual film.

 

ØNet Finance income at Rs. 2.3 billion compared to Rs. 0.7 billion in Q1 FY22. The increase was primarily on account of foreign exchange gains due to favorable ruble rates.

 

ØProfit before Tax at Rs. 14.7 billion, increased by 97% year-on-year and increased by 490% sequentially.

 

ØProfit after Tax at Rs. 11.9 billion. The effective tax rate is 19.0% for the quarter.

 

ØDiluted earnings per share is at Rs. 71.40.

 

Other Highlights:

 

ØEBITDA is at Rs. 17.8 billion and the EBITDA margin is 34.1%.

 

ØCapital expenditure is at Rs. 3.3 billion.

 

ØFree cash-flow is a net outflow of Rs. 2.3 billion.

 

ØNet cash surplus for the company is at Rs. 12.8 billion as on June 30, 2022. Consequently, net debt to equity ratio is (0.06).

 

  6

 

 

Earnings Call Details (06:30 pm IST, 09:00 am EDT, July 28, 2022)

 

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=3962534&linkSecurityString=119134f0e6

 

  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 August 3rd, 2022. For play back dial in phone No: +91 22 7194 5757 | +91 22 6663 5757, and Playback Code is 96436.

 

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 an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its businesses, 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 gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Dr Reddy’s operates in markets across the globe. Our Major markets include – USA, India, Russia & CIS countries, and Europe. 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, and (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, 2022. The company assumes no obligation to update any information contained herein.”

 

  7