Dr Reddy's Lab fourth quarter earnings were hurt by one-time Venezuela write-off. The drug major's net profit fell 86 percent at Rs 74.6 crore in January-March quarter from Rs 518.9 crore. Its total income also slipped to Rs 3756.2 crore against Rs 3870.4 crore in year-ago period.
Fourth quarter earnings of Dr Reddy’s Labs were hurt by one-time Venezuela write-off. The drug major’s net profit fell 86 percent at Rs 74.6 crore in January-March quarter from Rs 518.9 crore in corresponding quarter last fiscal. Its total income also slipped 3 percent to Rs 3756.2 crore against Rs 3870.4 crore in year-ago period. Write offs on account of Venezuela stood at Rs 430.9 crore.
According to a CNBC-TV18 poll, net profit of Dr Reddy's Lab was expected to jump 5.7 percent at Rs 548.6 crore in Q4FY16 and a revenue growth at 0.7 percent to Rs 3896 crore year-on-year.
GV Prasad, CEO and co-chairman of the company said, "It's been a challenging quarter for Dr Reddy's. While there has been a marginal decline in revenue, there has been a great impact on profitability. This is mainly due to the provision, made as a matter of actively abundant precaution, to write down our outstanding receivables from Venezuela. We will continue to actively engage with the Venezuelan government to provide affordable medicine to fulfil the need of people of the country, subject to repatriation of funds."
During the period, its EBITDA stood at Rs 480.4 crore compared to Rs 806.1 crore while margins came in at 12.8 percent against 20.8 percent in year-ago period. Due to Venezuela write off, net finance costs spiked to Rs 264.6 crore against Rs 23.3 crore (YoY).
However, research and development (R&D) cost was lower by 5 percent to Rs 487.9 crore in Q4.
Selling, General and Administrative Expenses (SG&A) was up 15 percent (YoY) to Rs 1163.2 crore also on account of remediation costs.
Geographies in Q4
#North America up 12 percent to Rs 1895 cr YoY
#India up 11 percent to Rs 526.7 cr YoY
#Europe down 18 percent to Rs 176 cr YoY;
#Emerging market/CIS down 31 percent to Rs 480 cr YoY
#Rest of the World (ROW) which includes Venezuela in FY16 was down 28 percent YoY to Rs 940 crore
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