Neuland Laboratories (524558) Q4 07/08 earnings summary

Executive summary

• FY07/08 revenue rose 5.45% to Rs.2,248.85m; net income increased 25.7% to Rs.113.52m, with EPS reaching a record Rs.21.04.

• Performance reflected higher realizations, product-mix changes, cost and yield improvements, and strong export growth despite lower API sales volume.

• Capacity, R&D and customer-service investments supported expansion into contract research, contract manufacturing and clinical research.

Financial highlights

• Sales and export incentives were Rs.2,248.85m before Rs.71.82m excise duty; net sales were Rs.2,177.03m versus Rs.2,021.70m.

• PBT rose 6.86% to Rs.106.65m from Rs.99.84m; PAT increased to Rs.113.52m from Rs.90.38m.

• EPS was Rs.21.04 versus Rs.16.75; exports reached Rs.1,731.35m versus Rs.1,322.65m, up around 31% as stated.

• Sales volume fell to 744.4 MT from 880.3 MT, while average realization per kilogram increased YoY.

Outlook and guidance

• Seven new products were expected to be commercialized in FY08/09; additional products were in R&D for future customer needs.

• Additional manufacturing facilities were expected to become operational in Q1 FY08/09; higher production, productivity and operating margins were anticipated.

• The Cato Research joint venture was expected to begin clinical-research operations in H1 FY08/09 and contribute to FY09 revenue.

• Medium-term priorities: profitability, capacity utilization, process efficiency, demand-led product scale-up and stronger U.S. and Japan presence.