Dr Reddy’s Laboratories (DRL) has reported a 53% decline in net profit to Rs 59.1 crore for the June quarter this fiscal, primarily due to price erosion in its US market.
Dr Reddy’s Laboratories (DRL) has reported a 53% decline in net profit to Rs 59.1 crore for the June quarter this fiscal, primarily due to price erosion in its US market. During the same quarter in FY17, the pharma major had recorded a profit of Rs 126.3 crore. The consolidated revenue was up by 3% at Rs 3,316 crore for the quarter under review against Rs 3,235 crore recorded a year ago. Its share price slipped 3.29% to close at Rs 2,621.45 on the BSE on Thursday. The Ebitda for the quarter declined 18% on a year-on-year basis to end at Rs 322.5 crore, with margins dropping 230 basis points (y-o-y) to 9.7%.
“Our first quarter results of FY18 have been below expectations. While headwinds in the form of price erosion due to the US customer consolidation continue, a lower contribution from new product launches in the US and the GST implementation in India also impacted our performance,” GV Prasad, co-chairman and CEO, said.
The company has reported an R&D spend of Rs 510 crore during the first quarter. “The gross profit margin at 51.6% declined by about 450 basis points over that of the previous year on account of lower contribution from domestic formulations business consequent to GST transition. Further, there was lower realisations in our North American generic business,” Saumen Chakraborty, CFO, said. “We could not realise even 50% sales in the domestic market due to GST implementation,” he added.
Revenues through global generics from North America was down by 4% to Rs 1,495 crore against Rs 1,552 crore in a year ago. This was primarily on account of higher price erosion and increased competition in its key products. Revenues from the emerging markets grew by 34% y-o-y. Sales from the Indian market declined by 10% to Rs 469 crore primarily on account of channel destocking during the transition to the GST regime, the company added.