Dr Reddy's Laboratories beat street expectations on topline and bottomline front but the operating performance was below estimates. Consolidated net profit of the drug maker fell 7 percent year-on-year to Rs 574.5 crore, impacted by weak operational performance. Higher R&D expenses also affected the profitability. Profit was expected at Rs 534.3 crore on revenue of Rs 3,617 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18. Consolidated revenue grew 8.7 percent to Rs 3,843 crore during October-December quarter from Rs 3,533.8 crore in the year-ago period, driven by PSAI and global generics businesses.
Revenue from its pharmaceutical services and active ingredients business jumped 22 percent on yearly basis to Rs 799.46 crore and global generics business grew 7.8 percent to Rs 3,169.2 crore during the quarter, said the statement. Revenues from North America market grew 4 percent while emerging markets growth was 16 percent and Indian business growth 11 percent during the quarter. In emerging markets, revenues from Russia dropped 9 percent year-on-year due to ruble depreciation but ex-Russia business recorded year-on-year growth of 51 percent primarily driven by strong performance in Venezuela (on the back of continued volume upsides. During the quarter, Dr Reddy's Labs launched 13 new generic products, filed 18 new product registrations and 14 DMFs (drug master file) globally.
Consolidated operating profit plunged 16.4 percent year-on-year to Rs 722.6 crore and margin fell 566 basis points to 18.8 percent in the quarter gone by. Analysts had expected operating profit at Rs 786.4 crore and margin at 22 percent for the quarter. Research and development expenses of the drug major jumped 44.8 percent to Rs 431.6 crore compared to a year-ago quarter, which were 11.2 percent of total revenues (against 8.4 percent of revenues in Q3FY14). Selling, general and administrative expenses increased 12 percent year-on-year to Rs 1,115 crore. Other income doubled to Rs 34.1 crore from Rs 17.7 crore while the company received finance income of Rs 101.3 crore in December quarter (against Rs 1.5 crore in Q3FY14). "The increase in finance income was on account of incremental forex benefit of Rs 60.4 crore, incremental profit on sale of investments of Rs 17.4 crore and interest income of Rs 22.1 crore," the company reasoned.
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