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Hyderabad, India, May 11th, 2012  
 


Dr. Reddy’s Q4 FY12 & FY12 Financial Results
Dr. Reddy’s revenues cross $2 billion milestone[#] in FY12
FY12 Revenues at ₹96.7 billion, YoY growth of 30%
FY12 PAT* at ₹15.3 billion, YoY growth of 42%
Q4 FY12 Revenues at ₹26.6 billion, YoY growth of 32%
Q4 FY12 PAT* at ₹4.2 billion, YoY growth of 38%

Hyderabad, India, May 11th, 2012: Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) today announced its unaudited consolidated financial results for the quarter and full year ended March 31, 2012 under International Financial Reporting Standards (IFRS).

Key Highlights

  • Consolidated revenues at ₹ 96.7 billion in FY12, year-on-year growth of 30%, driven by key markets of North America & Russia in Global Generics segment and Pharmaceutical Services & Active Ingredients segment.
    • Consolidated revenues of ₹26.6 billion in Q4 FY12, year-on-year growth of 32%.
  • EBITDA of ₹25.4 billion in FY12, 26% of revenues and recorded year-on-year growth of 51%.
    • EBITDA of ₹6.8 billion in Q4 FY12, 26% of revenues and recorded year-on-year growth of 34%.
  • Profit after Tax* in FY12 of ₹15.3 billion, year-on-year growth of 42%.
    • PAT* of ₹4.2 billion in Q4 FY12, year-on-year growth of 38%.
  • During the year, the company launched 141 new generic products, filed 88 new product registrations and filed 68 DMFs globally.
  • The Board of Directors of the Company has proposed a dividend of ₹ 13.75 (275%) per equity share of ₹ 5/- face value, subject to the approval of shareholders.

[#] Revenues based on the average billed dollar rate of ₹47.91
*Note: PAT adjusted for a) interest on bonus debentures b) Impairment of intangibles & C) corresponding tax adjustment.

 All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = ₹ 50.89

Dr. Reddy's Laboratories Ltd. and Subsidiaries
Audited Consolidated Income Statement

Particulars FY12 FY11 Growth %
($) (₹) % ($) (₹) (%)
Revenue 1,901 96,737 100 1,468 74,693 100 30
Cost of revenues 853 43,432 45 677 34,430 46 26
Gross profit 1,048 53,305 55 791 40,263 54 32
Operating Expenses              
Selling, general & administrative expenses 567 28,868 30 466 23,690 32 22
Research and development expenses 116 5,911 6 99 5,060 7 17
Write down of intangible assets 20 1,040 1 - - - -
Other operating (income) / expense (15) (765) (1) (22) (1,115) (1) (31)
Results from operating activities 360 18,252 19 248 12,628 17 45
Net finance (income) / expense (3) (160) (0) 4 188 0 (185)
Share of (profit) / loss of equity accounted investees (1) (54) (0) (0) (3) (0) 1700
Profit / (loss) before income tax 364 18,466 19 244 12,443 17 48
Income tax (benefit) / expense 83 4,204 4 28 1,403 2 200
Profit / (loss) for the period 281 14,262 15 216 11,040 15 29

Diluted EPS 1.6 83.8   1.3 65.0   29


Profit Computation:

EBITDA Computation FY12 FY11
($) (₹) ($) (₹)
PBT 363 18,466 245 12,443
Interest 14 690 4 199
Depreciation 71 3,628 58 2,961
Amortization and Impairment 52 2,626 23 1,186
Reported EBITDA 500 25,409 330 16,789
Adjustments of exceptional items:        
Profit on sale of land and negative goodwill - - (7) (356)
Adjusted EBITDA 500 25,409 323 16,424

PAT Computation FY12 FY11
($) (₹) ($) (₹)
PAT 280 14,262 217 11,040
Adjustments of exceptional items:        
Interest on Bonus Debentures 9 470 - -
Profit on sale of land and negative goodwill - - (7) (365)
Impairment 20 1,040 - -
Tax adjustment (9) (466) 2 88
Adjusted PAT 300 15,306 212 10,763


(in millions)Appendix 1: Key Balance Sheet Items

Particulars As on 31st Mar 12 As on 31st Mar 11
($) (₹) ($) (₹)
Cash and cash equivalents 357 18,152 113 5,831
Trade receivables 498 25,339 346 17,615
Inventories 380 19,352 316 16,059
Property, plant and equipment 653 33,246 582 29,642
Goodwill and other intangible assets 265 13,529 300 15,246
Loans and borrowings (current & non-current) 633 32,210 463 23,503
Trade payables 187 9,503 167 8,480
Equity 1,129 57,443 904 45,990


(in millions)Appendix 2: FY12 Revenue Mix by Segment

  FY12 FY11 Growth %
($) (₹) as a % ($) (₹) as a %
Global Generics 1,380 70,243 73 1,048 53,340 71 32
North America   31,888 45   18,996 36 68
Europe   8,259 12   8,431 16 (2)
India   12,931 18   11,690 22 11
Russia & Other CIS   13,260 19   10,858 20 22
RoW   3,904 6   3,366 6 16
PSAI 468 23,812 25 386 19,648 26 21
North America   4,272 18   3,170 16 35
Europe   8,424 35   7,020 36 20
India   3,586 15   2,619 13 37
RoW   7,531 32   6,838 35 10
Proprietary Products and Others 53 2,682 3 34 1,705 2 57
Total 1,901 96,737 100 1,468 74,693 100 30

SEGMENTAL ANALYSIS

Global Generics
Revenues from Global Generics segment at ₹70.2 billion in FY12, year-on-year growth of 32% driven by key markets of North America and Russia.

    • Revenues from North America at ₹31.9 billion in FY12 grew by 62% in local currency over previous year. Revenues in Q4 FY12 at ₹8.7 billion represented year-on-year growth of 36% in local currency. In Q4 FY12, revenue share of olanzapine was below $2 million due to lower generic substitution and shelf stock adjustment.
      • Growth was largely driven by new product launches of ziprasidone, fondaparinux, amoxicillin clavulanic acid, products from Shreveport facility and market share expansion in existing products of lansoprazole and omeprazole Mg OTC.
      • 16 new products were launched during the year.
      • 26 products of prescription portfolio feature among the Top 3 ranks in market shares
        (Source: IMS Health Volumes February 2012).
      • During the year, 17 ANDAs were filed. Cumulatively 80 ANDAs are pending for approval with the USFDA of which 41 are Para IVs and 7 are with FTF status.
    • Revenues in Russia & Other CIS markets at ₹13.3 billion in FY12 represented year-on-year growth of 22%.
      • Revenues in Russia at ₹11.0 billion in FY12 represented year-on-year growth of 15% in local currency. Revenues in Q4 FY12 at ₹2.9 billion represented year-on-year growth of 23% in local currency.
        • Growth driven by volume increase across key brands and OTC portfolio.
        • OTC portfolio grew by 32% over previous year.
        • Based on market research, Dr. Reddy’s year-on-year rouble growth at 21% versus industry’s growth of 17%; Dr. Reddy’s is ranked 13th by market share (Source: Pharmexpert March 2012)
      • Revenues in Other CIS markets at ₹2,236 million in FY12, grew by 17% over previous year.
    • Revenues in India at ₹12.9 billion in FY12 grew by 11% over previous year. Revenues in Q4 FY12 at ₹3.2 billion represented year-on-year growth of 16%.
      • Growth driven by volume increase across key brands and oncology portfolio.
      • Biosimilars portfolio grew by 33% over previous year.
      • 23 new products were launched during the year.
    • Revenues from Europe at ₹8.3 billion in FY12 declined by 2% over previous year.
      • Revenues from Germany at ₹5.1 billion in FY12 declined by 15% in local currency over previous year. This decline was largely due to the continued tenderization of the German market.

Pharmaceutical Services and Active Ingredients (PSAI)

Revenues from PSAI are at ₹23.8 billion in FY 12, year-on-year growth of 21%. Revenues in Q4 FY12 at ₹7.5 billion represented year-on-year growth of 35%.

    • The growth in Active Ingredients business was led by sales to generic customers to support their generic product launches in line with patent expiries in the near term.
    • The growth in Pharmaceutical Services business was led by new customer orders.
    • During the year, 68 DMFs were filed globally, with 14 each in the US and Europe. The cumulative DMF filings as of 31st March 2012 are 543.

Income Statement Highlights:

  • Gross profit margin at 55% in FY12 marginally improved versus 54% in FY11. Gross profit margin for Global Generics and PSAI business segments were at 63% and 32% respectively.
  • Selling, General & Administration (SG&A) expenses including amortization at ₹28.9 billion increased by 22% over previous year. This increase is on account of higher manpower and distribution costs and the effect of rupee depreciation against multiple currencies.
  • In Q4 FY12, there were triggering events in the German market relating to reduction in the reference prices and additional tenders at low bid prices. As a result, a non-cash impairment charge of ₹1,040 million was recorded in the books. Impairment charge after effecting the related tax benefit was ₹730 million.
  • Net Finance income was at ₹160 million in FY 12 versus net Finance expense of ₹188 million in FY11. The change is on account of :
    • Net forex gain of ₹689 million versus net forex loss of ₹57 million in FY11.
    • Net interest expense of ₹690 million in FY12 versus ₹199 million in FY11. This increase is largely on account of the interest on bonus debentures of ₹470 million recorded in FY12.
    • Profit on sale of investments of ₹161 million in FY12 versus ₹68 million in FY11.
  • EBITDA of ₹25.4 billion in FY12, 26% of revenues and recorded year-on-year growth of 51%.
  • Profit after Tax* in FY12 of ₹15.3 billion recorded year-on-year growth of 42%.
  • Earnings* per share in FY 12 were ₹89.9.
  • Capital expenditure in FY12 was ₹8.6 billion.

*Note: Adjustments include: a) interest on bonus debentures b) Impairment of intangibles & C) corresponding tax adjustment

Appendix 3: Q4 FY12 Consolidated Income Statement

All figures in millions, except EPS
All dollar figures based on convenience translation rate of 1USD = ₹ 50.89
Particulars Q4FY12 Q4FY11 Growth %
($) (₹) % ($) (₹) (%)
Revenue 522 26,584 100 396 20,173 100 32
Cost of revenues 248 12,613 47 181 9,224 46 37
Gross profit 274 13,971 53 215 10,949 54 28
Operating Expenses              
Selling, general & administrative expenses 142 7,217 27 120 6,127 30 18
Research and development expenses 34 1,741 7 29 1,491 7 17
Write down of intangible assets 20 1,040 4 - - - -
Other operating (income) / expense (4) (198) (1) (10) (512) (3) (61)
Results from operating activities 82 4,171 16 76 3,843 19 9
Net finance (income) / expense (2) (82) (0) (1) (74) (0) 14
Share of (profit) / loss of equity accounted investees (0) (12) (0) 0 4 0 -
Profit / (loss) before income tax 84 4,265 16 77 3,913 19 9
Income tax (benefit) / expense 16 838 3 11 567 3 48
Profit / (loss) for the period 68 3,427 13 66 3,346 17 2

Diluted EPS 0.4 20.1   0.4 19.7   2



(in millions)Appendix 4: Q4 FY12 Profit Computation

EBITDA Computation Q4FY12 Q4FY11
($) (₹) ($) (₹)
PBT 84 4,265 77 3,913
Interest 2 88 2 104
Depreciation 20 1,020 15 787
Amortization and Impairment 28 1,424 5 274
EBITDA 134 6,797 99 5,078
Adjustments of exceptional items:        
Profit on sale of land and negative goodwill - - (7) (365)
Adjusted EBITDA 134 6,797 92 4,713

PAT Computation Q4FY12 Q4FY11
($) (₹) ($) (₹)
PAT 67 3,427 66 3,346
Adjustments of exceptional items:        
Interest on Bonus Debentures 2 116    
Profit on sale of land and negative goodwill     (7) (365)
Impairment 20 1,040    
Tax Adjustment (7) (349) 2 88
Adjusted PAT 82 4,234 61 3,069

 

About Dr. Reddy's
Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) is an integrated global pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three business segments - Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products – Dr. Reddy’s offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars, differentiated formulations and NCEs. Therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management, anti-infective and pediatrics. Focus markets include India, USA, Russia and CIS, Germany, UK, Venezuela, S. Africa, Romania, Australia and New Zealand. For more information, log on to: www.drreddys.com
 
Disclaimer
This press release includes forward-looking statements, as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such factors include, but are not limited to, changes in local and global economic conditions, our ability to successfully implement our strategy, the market acceptance of and demand for our products, our growth and expansion, technological change and our exposure to market risks. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future.

Contact Information

Investors and Financial Analysts:

Kedar Upadhye at kedaru@drreddys.com / +91-40-66834297
Raghavender R at raghavenderr@drreddys.com or on +91-40-49002135
Saunak Savla at saunaks@drreddys.comm / +91-40-49002135
Milan Kalawadia (North America) at mkalawadia@drreddys.com / +1 908-203-4931

Media

S Rajan at rajans@drreddys.com / +91-40- 49002445

Note: All discussions in this release are based on audited consolidated IFRS financials.