Moneycontrol Bureau
Drug major Sun Pharmaceutical Industries' first quarter consolidated net profit disappointed street on Tuesday, down 46 percent quarter-on-quarter (down 60.2 percent year-on-year) to Rs 479 crore. The bottomline was impacted by exceptional loss, higher tax expenses and lower other income.
Revenue met expectations, growing 10 percent (up 6.7 percent on yearly basis) to Rs 6,767.6 crore in June quarter compared to Rs 6,157 crore in March quarter.
Profit was estimated at Rs 894 crore on revenue of Rs 6,262 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Sun Pharma said net profit for the quarter was adversely impacted by one-time items related to restructuring as well as exceptional charges of Rs 685 crore.These exceptional charges related to impairment of fixed assets and goodwill and other related costs and have arisen on account of Ranbaxy integration and optimisation measures, it added.
In fact, the country's largest drug maker already issued profit warning (on July 20), saying FY16 revenue will remain flat or record marginal decline compared to FY15. Hence, profit may also be adversely impacted due to certain expenses/charges arising out of Ranbaxy integration as well as remedial actions, it added.
Branded generic sales in India (which contributes 27 percent to total sales) increased by 11 percent year-on-year to Rs 1,784 crore.
However, US finished dosage sales fell 4 percent to USD 488 million, impacted primarily due to competitive pressure on some products and temporary supply constraints arising from remediation efforts at the Halol facility.
Its US subsidiary Taro Pharma registered a 125.2 percent growth in net profit at USD 103.6 million and a 65 percent growth in revenue at USD 215 million year-on-year. However, its sales volume declined 10 percent as a result of increase in competitor activity in the US.
"We remain cautious of the ever-increasing pressure on business from strong competition and the continuing industry and customer consolidations," said Kal Sundaram, Taro’s CEO on August 7.
Sun's emerging markets sales dropped 15 percent on yearly basis to USD 133 million due to volatile currency movements in certain emerging markets and a strategic decision of not participating in low margin businesses. Rest of World sales declined 7 percent to USD 91 million year-on-year.
Research and development investments stood at Rs 511 crore for the quarter, an increase of 37 percent over Q1 last year. This included significant investments on account of funding the clinical development of MK-3222, the IL-23 monoclonal anti-body in-licensed from MSD (US), said Sun.
Operational performance was ahead of expectations. Consolidated operating profit (earnings before interest, tax, depreciation and amortisation) shot up 108.4 percent sequentially (down 4 percent year-on-year) to Rs 1,859.7 crore and margin expanded by 1300 basis points (down 310 bps year-on-year) to 27.5 percent in June quarter. Analysts were expecting operating profit at Rs 1,504 crore and margin at 24 percent for the quarter.
Other income fell 72.4 percent to Rs 105.4 crore from Rs 382.5 crore on sequential basis. Consolidated tax expenses for the quarter were Rs 226.8 crore against tax write-back of Rs Rs 600 crore in previous quarter."After the management's guidance [that its revenues would be flat for the year], the focus is on EBITDA, which is good," Sarabjit Kaur-Nangra of Angel Broking told CNBC-TV18. "But the numbers on the top line are better than our expectations."Posted by Sunil Shankar Matkar
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