New Delhi: India’s top drug maker, Ranbaxy Laboratories Ltd, on Tuesday reported a worse-than-expected 91% plunge in net profit during the quarter to 30 June, as a weaker rupee escalated dollar-denominated costs.
The company, based in Gurgaon near New Delhi, posted a profit of Rs22.9 crore in April-June, compared with Rs266.2 crore a year earlier. Revenue rose 12.6% to Rs1,829.6 crore from Rs1623.8 crore in the same period, driven by sales in North America.
Forex impact: Ranbaxy’s managing director Malvinder M. Singh. (Photograph by Harikrishna Katragadda/Mint)
The company suffered a foreign-exchange loss of Rs193 crore on account of the rupee’s 7.2% depreciation against the dollar in the three monthsto June, the local currency’s biggest quarterly slump in a decade, according to Bloomberg.
A large part of Ranbaxy’s expenses are denominated in dollars, the currency in which it also has to service $440 million (Rs1,870 crore today) of debt, boosting operational and interest costs.
“The results are worst than expected. The forex losses are greater than what we had thought and even the top line growth is not attractive,” said Ranjit Kapadia, sector analyst at Mumbai-based Prabhudas Lilladher Pvt. Ltd.
A Mint poll of five equity analysts had predicted a net profit of Rs88.15 crore and revenue of Rs1,901 crore for Ranbaxy.
Excluding the foreign exchange gains and losses, Ranbaxy would have had a profit of Rs160.8 crore, little changed from Rs160.4 crore a year ago, according to a company statement. Its shares fell 3.84% to Rs474.80 per share on the Bombay Stock Exchange on Tuesday, in tandem with a 3.9% fall in the Bombay Stock Exchange’s benchmark Sensex.
“We expect the second half of the year to be stronger than the first half,” Ranbaxy’s managing director Malvinder M. Singh said.
Singh has clinched five out-court settlements on patent lawsuits with big drug makers—agreements that are worth $16 billion in sales at innovator drug prices and benefits from which will accrue to Ranbaxy over the next three-four years.
Singh forecast an Ebitda (earnings before interest, depreciation, tax and amortization) margin of “17% or little more than that” for 2008, compared with an earlier estimate of 17.5-18%, on account of continuing drug discovery expenses.
The drug maker had planned to hive off its new drug research unit into a separate entity but, the plan was shelved after Tokyo-based Daiichi Sankyo Co. Ltd agreed to buy a controlling stake in Ranbaxy for $4.6 billion.