Lupin’s Q3 Earnings Weak On Foreign Exchange Loss
Lupin profit fell 65 percent on a year-on-year basis.
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Lupin Ltd.’s third quarter profit and margins declined, missing analyst estimates, as the drugmaker incurred a foreign exchange loss.
Net profit fell 65 percent year-on-year to Rs 221.7 crore in the October-December quarter, Lupin said in a stock exchange filing. That’s nearly half of the Rs 426 crore that analysts tracked by Bloomberg had estimated. Revenue fell 11.3 percent to Rs 3,975.6 crore from the year-ago period, matching the Bloomberg consensus estimate.
The operational performance too was below consensus as earnings before interest, tax, depreciation and amortisation fell 43.5 percent to Rs 688.3 crore year-on-year while the operating margin contracted to 17.31 percent.
The margins were hit by a forex loss of Rs 82.1 crore compared to a gain of Rs 27.6 crore in the same quarter last year. The drugmaker also took a Rs 36.1-crore charge on its U.S. operations after the new tax regime.
“The quarterly performance was muted on the back of business mix as well as forex losses,” Nilesh Gupta, managing director of Lupin, said in the press release accompanying the earnings. The weakness is likely to continue for the rest of the financial year 2017-18, the management noted in its conference call, even as the “U.S. business starting to stabilise at the current level”.
Though Lupin’s top line was dragged down by a 34.2 percent year-on-year drop in North America sales, on a sequential basis, sales in that market rose a little over 5 percent. U.S. sales account for 37 percent of the company’s total revenue.
Sales in India, which account for 27 percent of the total revenue, rose 7.8 percent year-on-year.
Our near-term priorities are to successfully commercialize Solosec, resolve the warning letter on Goa and Indore Unit 2 and continue to evolve our complex generic pipeline while accelerating growth in our other markets.Nilesh Gupta, MD, Lupin
In December last year the U.S. FDA had issued a combined warning letter against Lupin’s Goa and Indore-Unit II plants, in a move that is expected to delay its future drug approvals. Post the drug regulator’s warning, promoters of the drugmaker took to buying shares of the company to instill some positive sentiment in the market, BloombergQuint had reported earlier.
Other Highlights
- Operating profit fell 43.5 percent to Rs 688.3 crore year-on-year
- Ebitda margin contracted fell to 17.31 percent.
- The operational performance was also below Bloomberg estimates.
Lupin’s shares fell as much as 5.3 percent to Rs 804, the lowest since September 2013, after the earnings announcement. The Nifty Pharma Index declined 2.2 percent in comparison.