Tokyo: Japan’s third biggest drug maker, Daiichi Sankyo Co. Ltd, posted its second straight quarterly deficit on losses at its Indian unit Ranbaxy Laboratories Ltd.
The net loss was 38 billion yen (Rs1,938 crore today) in the fourth quarter (Q4) ended 31 March, compared with a profit of 1.2 billion yen a year earlier, the Tokyo-based maker of the Benicar hypertension pill said on Tuesday.
Problems galore: Daiichi Sankyo chief executive Takashi Shoda. Harikrishna Katragadda / Mint
Earnings this year will be hurt by Ranbaxy, which last month forecast it will have a loss in 2009. Daiichi Sankyo needs to restore investor confidence after the stock dropped 42% since the company said in June it will pay about $5 billion (Rs24,800 crore today) for 64% of Ranbaxy, whose operations have been plagued by a US import ban and investigation.
“The Ranbaxy takeover has been a failure so far,” said Mitsushige Akino, who oversees about $615 million at Ichiyoshi Investment Management Co. Ltd in Tokyo. “It doesn’t have a solution to its problems yet and is losing its market capitalization.”
Daiichi Sankyo wrote down 351.3 billion yen in valuation losses for its stake in Ranbaxy for the full year, based on the stock’s price as of 31 March.
The company forecast it will post net income of 40 billion yen for the year ended 31 March, missing analysts’ expectations of 77.5 billion yen, according to the median of 14 estimates compiled by Bloomberg. Revenue will rise 14% to 960 billion yen in the 12-month period, and operating profit will climb 8.7% to 96 billion yen, Daiichi Sankyo said.
Daiichi Sankyo said it plans to pay a dividend of 60 yen per share in the current 12-month period, 25% less than a year ago.
Daiichi Sankyo lost 9.3% to close at 1,653 yen on the Tokyo Stock Exchange, the largest drop since 26 February. Ranbaxy gained 1.62% to close at Rs175.65 on the Bombay Stock Exchange. The stock has plunged 76% from the Rs737 per share that the Japanese drug maker paid for its stake.
Q4 sales at Daiichi Sankyo rose 16% to 215 billion yen on revenue from Ranbaxy, India’s largest drug maker. The Japanese company has said it plans to record Ranbaxy’s earnings with a quarter’s lag.
Daiichi Sankyo had an operating loss, or sales minus the cost of goods sold and administrative expenses, of 9.7 billion yen after booking goodwill costs for the Indian acquisition.