Cipla Posts Murky Q3FY14 Results, PAT Margins Decline By 23%

Cipla, a global pharmaceutical company having presence in more than 170 countries including India announced its unaudited consolidated financial results for the quarter ended December 31, 2013. 

Cipla clocked a robust growth on total revenue (sales and other operating income) of 23% YoY to Rs 2580.78 crore during the Q3FY14 compared to the same period of previous year. This was mainly due to strong performance in domestic as well as in export businesses. The revenue from the international market which constitutes around 60% of the total sales has increased by 32% YoY to Rs 1508.37 crore compared to the same period of the previous year. The growth in export revenue was primarily due to growth in anti-retro viral, anti-cancer, anti-allergic and anti-biotic segment. While the income from domestic sales has increased by more than 13% to Rs 1044.26 crore compared to the same period of the previous year. Domestic revenue grew mainly on account of growth in respiratory, anti-infective and cardiology. The company generates around 94% of its total income from formulation. The export of this segment rose by around 34% YoY basis to Rs 1352 crore in the Q3FY14 compared to the same period of the previous year.

The total expenditure of the company in this quarter stood at Rs 2204.68 crore an increase by more than 31% YoY basis compared to the same period of the previous year. The increase in total expense can be attributed to increase in cost of raw materials, increase in employment expense and from the other expenses. The material cost which accounts 39.1% of total sales has increased to Rs 999.09 crore in the Q3FY14 compared to Rs 781.91 crore in the Q3FY13.The material cost has increased mainly due to change in product mix, use of ARVs in higher proportion. The employees cost has also swelled by more than 46% YoY to Rs 402.82 crore in the Q3FY14 compared to the same period of the previous year. The employees cost has augmented mainly due to increase in manpower and due to annual increments. While the other expenditure has increased by more than 32% YoY to Rs 711.62 crore due to increase in R&D (by 178 crore) and other expense.

The EBITDA of the company in the Q3FY14 has reduced by more than 10% YoY to Rs 467.27 crore compared to the same quarter of the previous year. The EBITDA in this quarter has reduced mainly due to increase in cost of raw materials and other expenditure of the company. The EBITDA margin in this quarter has reduced to 18.10% in the Q3FY14 compared to 24.66% in the Q3FY13. 

The company said that the current year’s figure include the relevant results of Cipla's subsidiaries from the day they became subsidiary of the company and therefore the corresponding figures for the previous period are not comparable.

The company has reported a decline of around 23% YoY basis in the profit after tax to Rs 296.53 crore for the quarter ended December 31, 2013 compared to Rs 387.81 crore for the quarter ended December 31, 2012. The sharp plunge in PAT can be attributed to increase in interest. The interest cost has increased by more than 322% YoY to Rs 33.26 crore compared to the same quarter of the previous year.

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