Pharma major Dr Reddy's Laboratories has reported a consolidated profit of Rs 570.8 crore for the quarter ended June 2021, a 1.5 percent drop from the year-ago period, hit by lower operating profit and income. Profit in the June 2020 quarter stood at Rs 579.3 crore.
The Hyderabad-based company's revenue from operations grew by 11.4 percent year-on-year to Rs 4,919.4 crore in Q1FY22.
"The financial performance of the quarter has been driven by healthy sales growth," said GV Prasad, Co-Chairman & MD.
He is confident of improving margins in the upcoming quarters, which will be led by scaling up of recent launches and productivity.
"While we continue to sharpen execution in our core business, we are also conducting pilots in areas such as nutrition, Di tamer, and digital health and wellness, which can be future growth drivers," Prasad said.
At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 12.3 percent to Rs 1,019 crore and the margin declined 560 bps to 20.7 percent from the year-ago quarter as operating expenses increased 14.7 percent to Rs 1,909.2 crore in the same period.
Overall, earnings missed analysts' expectations. Profit was estimated at Rs 700 crore on revenue of Rs 4,991.4 crore and operating profit was expected at Rs 1,168.5 crore with the margin at 23.4 percent for the quarter by a CNBC-TV18 analysts' poll.
Gross profit rose 3.8 percent year-on-year to Rs 2,569.9 crore in the quarter ended June 2021.
Global generics business registered a healthy 17 percent year-on-year growth at Rs 4,111.3 crore in Q1FY22, the European region reported a growth of 12 percent at Rs 399.4 crore and the Emerging Markets business grew by 14 percent to Rs 912.9 crore.
India's operations were strong, growing 69 percent year-on-year to Rs 1,060 crore North American remained tepid, rising 1 percent to Rs 1,739 crore in Q1FY22.
"The overall growth in global generics was on account of new product launches and volume traction in the base business, partly offset by price erosion in some of our products and adverse forex rates," Dr Reddy's Labs said in its BSE filing.
India's revenue growth was driven by an increase in sales volumes of existing products, led by the sale of Covid drugs due to the severe second wave in India, the company added.
The North American business was driven by the launch of new products and an increase in volumes of certain products, which was offset by price erosion in some molecules and adverse forex rates.
The pharmaceutical services and active ingredients segment reported a 12 percent year-on-year decline at Rs 754 crore during the quarter ended June 2021.
SEC summons
The company also said that on July 6, it received a subpoena from the American market regulator Securities and Exchange Commission (SEC) for producing documents pertaining to certain Commonwealth of Independent States (ClS) geographies, and was in the process of responding to the same.
The company has commenced a detailed investigation into an anonymous complaint. The complaint alleges that healthcare professionals in Ukraine and potentially in other countries were provided with improper payments by or on behalf of the company in violation of US anti-corruption laws, specifically the US Foreign Corrupt Practices Act.
A US law firm is conducting the investigation at the instruction of a committee of the company's board of directors and the investigation is ongoing, the company said in its BSE filing.
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