Lupin Misses Estimates Despite 58% Profit Growth
Net profit increased to Rs 662 crore from Rs 420 crore, while revenue rose 32%.
Lupin Ltd.’s profit rose 58 percent in the July to September quarter, but the performance fell short of analyst estimates.
Net profit rose to Rs 662 crore from Rs 420 crore in the corresponding quarter of the previous year, the company said in a press release. The consensus estimate of analysts tracked by Bloomberg stood at Rs 708 crore. Lower tax rate contained net profit fall to 25 percent from Rs 882 crore in the three months ended June 30.
Revenue increased 32 percent to Rs 4,211 crore, falling short of the consensus estimate of Rs 4,359 crore.
Earnings before interest, taxes, depreciation and amortisation grew 80.7 percent to Rs 949 crore over last year, but declined 19.7 percent over the June quarter, reflecting weak operating performance. EBITDA margin contracted 400 basis points v/s the June quarter to 22.1 percent with the management attributing it to higher R&D spend and a larger quantum of forex loss (Rs 45 crore) in the quarter gone by.
The company spent 13.6 percent of its revenue towards research and development, staying within the 12-15 percent range guided by the management.
The quarter’s profits were impacted on account of higher research spend and forex. We remain committed to improving operational performance and delivering quality products.Nilesh Gupta, Managing Director, Lupin (Source: Earnings Release)
Geographical Performance
Lupin’s India business grew 12 percent, falling short of the 14 percent figure expected by analysts. About 23 percent of the pharma company’s portfolio falls under price control in India.
Sales in the U.S. jumped 68 percent year-on-year to $292 million, but declined 9.3 percent compared to the quarter ended June on account of price erosion in some of its products. Lupin also bore some brunt of Mylan’s entry in the U.S. market, losing about 6 percent of its market share to the latest entrant in the anti-diabetic drug category.
Sales in Japan grew at 10 percent while sales in South Africa rose 27 percent over last year.
American Business
The pharma company’s seen it’s prices dip in single high-digits and the management expects the trend to continue. But what will make investors happy is the fact that the company has not received any subpoenas from the U.S. Department Of Justice (DoJ).
The company sees new launches and ramp up of Gavis offsetting the price erosion in Fortamet and Glumetza. U.S sales are expected to grow at more than 20 percent per annum in the next 2-3 years, guided Vinita Gupta.
We have had every responsible pricing policies in place. So I think the risk to us is limited.CEO Vinita Gupta in an earnings call on price collusion investigation in U.S.
Guidance
The management continued with its R&D spend guidance of 12-14 percent of sales, while saying that the the capex should come from in FY18 from current year’s level of US$ 250-350 million in FY17. EBITDA margins should remain in the 26-28 percent band, the CFO said.