Dr. Reddy’s Q1 Results: Profit Slumps 32% On One-Time Settlement; Stock Drops 10%
The company's net profit fell 32% sequentially to Rs 380.4 crore in the quarter ended June.
Dr. Reddy’s Laboratories Ltd.’s quarterly profit fell, missing estimates, because of a one-time settlement pertaining to an international acquisition and higher spends on marketing and research.
Net profit fell 32% over the preceding quarter to Rs 380.4 crore, according to the company's exchange filing. That compares with the Rs 668.5-crore profit estimate of analysts tracked by Bloomberg.
The Hyderabad-based company incurred an expense of Rs 183.8 crore towards a settlement order awarded in favour of Australia-based Hatchtech Pty. Ltd. Marketing expenditure rose 5% sequentially to Rs 1,500 crore on account of investments towards brand building, digitalisation and annual increments because of the integration of Wockhardt portfolio with it. Its research and development spend rose 0.5% over the preceding quarter to Rs 450 crore.
Revenue rose 4% sequentially to Rs 4,945.1 crore. Analysts' estimates compiled by Bloomberg pegged it at Rs 5,117.8 crore.
Ebidta fell 30% quarter-on-quarter to Rs 734.5 crore, against the estimated Rs 1,154.5 crore.
Margin declined to 14.9% compared to 22.1% in the preceding quarter. Analysts projected it at 22.6%.
Earnings per share fell to Rs 22.95 from Rs 33.61 a quarter ago. The consensus was Rs 40.21 apiece.
Revenue from the company's mainstay North America market, which contributes around 35% of sales, fell 1% amid price erosion in some products that was partially offset by higher volumes in other products and new launches. The company's Europe business grew 1% over the preceding quarter.
Its revenue from India grew 26% sequentially led by sale of Covid-19 drugs and new launches. Emerging market sales rose 3% quarter-on-quarter.
Market conditions for certain products have witnessed significant changes over the past one year due to launches by competitors of generic version of the products, decrease in market potential of products amid higher-than-expected price erosion and increased competition, and higher than expected value erosion, the company said in its exchange filing.
“I'm confident about improving our margins in the upcoming quarters which will be led by the scale up of recent launches, new product launches and productivity,” GV Prasad, the company's co-chairman and managing director, was quoted as saying in a statement.
He said they're also conducting pilots in segments like nutrition and health and wellness, which could be their future growth drivers.
Shares of the drugmaker closed 10.4% lower on Tuesday, compared with the benchmark S&P BSE Sensex's 0.5% decline.