GlaxoSmithKline Pharmaceuticals after decline in sales for the past four consecutive quarters witnessed subdued sales growth during the quarter. The Company Standalone Sales in Q2'CY14 grew by subdued 2% YoY to Rs 659.80 crore. During the quarter, It continued to see the impact of the base effect of differential pricing cuts due to the Price Control Order, extending coverage to the National List of Essential Medicines (NLEM). Also, Operating Profit Margins declined by 160 bps YoY to 17.3% and accordingly Operating Profit declined by 7% YoY to Rs 114.21 crore. Despite the higher other income (8%), and marginal increase in depreciation (1%), but with no EO gain coupled with marginal increase in effective tax rate, PAT fell by 15% YoY to Rs 98.29 crore.
- Subdued Growth in Sales, Margins decline:
The Sales grew by subdued 2% YoY to Rs 659.80 crore for the quarter ended June 2014. The core Pharmaceuticals business grew by 3.7 % during the quarter. It continued to see the impact of the base effect of differential pricing cuts due to the Price Control Order, extending coverage to the National List of Essential Medicines (NLEM) during the quarter. Also, Operating Profit Margins fell by 160 bps YoY to 17.3% on the back of sharp rise in Consumption cost (up by 770 bps YoY) despite lower other expenses (down by 280 bps YoY) and decline in Staff cost (down by 140 bps YoY) as percentage to Sales and net of stock adjustments. Eventually, Operating profit declined by 7% YoY to Rs 114.21 crore.
- No EO gain, PAT fell by 15% YoY:
With the 8% growth in other income to Rs 39.84 crore, EBIDTA decline was less at 3% YoY to Rs 154.05 crore. Also, after the marginal increase in depreciation (up by 1% YoY to Rs 5.01 crore), PBT before EO declined by same 3% YoY to Rs 149.04 crore. However, with nil EO gain compared to Rs 20.07 crore in the corresponding previous period, PBT fell by 14% YoY to Rs 149.04 crore. Further, after the marginal increase in effective tax rate (up by 20 bps YoY to34.1%) PAT fell by 15% YoY to Rs 98.29 crore.
Standalone Half-Yearly Performance:
The Sales declined by 1% YoY to Rs 1269.65 crore for the half-year ended June 2014. Notably, OPM fell by sharp 510 bps YoY to 17.5% and accordingly Operating profit fell by 23% YoY to Rs 221.81 crore. After the 26% fall in other income to Rs 84.72 crore, EBIDTA fell by 24% YoY to Rs 306.53 crore. With marginal 1% increase in depreciation to Rs 9.26 crore, PBT before EO down by 25% YoY to Rs 297.27 crore. After adjusting for EO gain Rs 18.51 crore in the corresponding previous period, PBT fell by 28% YoY to Rs 297.27 crore. Further, after the sharp rise in effective tax rate (up by 330 bps YoY to 34.5%) PAT fell by 31% YoY to Rs 194.33 crore.
Standalone Yearly Performance:
The Sales declined by 3% YoY to Rs 2546.15 crore for the Year ended December 2013. Also, OPM fell by whopping 1050 bps YoY to 20.5% and after this Operating Profit fell by sharp 36% YoY to Rs 522.08 crore. After the marginal 2% increase in other income to Rs 200.97 crore, EBIDTA fall was less at 29% YoY to Rs 723.05 crore. After adjusting for EO gain Rs 26.15 crore (as against EO loss of Rs 148.22 crore), PBT fell by 14% YoY to Rs 729.32 crore. Thanks to the lower effective tax rate (down by 60 bps YoY to 31.2%) PAT fell by 13% YoY to Rs 501.88 crore.
Other information:
The scrip is up by 0.70% to Rs 2513.45 at BSE, India on 12th August 2014.
Management Comments:
Commenting on the performance, Dr. Hasit B. Joshipura, Managing Director, said, "Growth has improved progressively across business verticals. During the quarter we continued to expand our Oncology portfolio with the launch of Vectibix™, which is the first Fully Human Monoclonal Antibody for the treatment of metastatic Colorectal Cancer (mCRC). "
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