Neuland Laboratories (524558) Q4 08/09 earnings summary

Executive summary

• FY09 revenue rose 38.7% to Rs.3,120.26m; operating profit increased 38.3% to Rs.361.4m, while net income edged up to Rs.117.90m.

• Volume sales grew 11.3% to 828.9 tonnes amid recessionary pressures; higher volumes, wider market reach and cost controls supported performance.

• Strategic focus centered on niche APIs with high entry barriers, stronger customer supply-chain support and expansion of contract and clinical research.

Financial highlights

• Revenue Rs.3,120.26m vs Rs.2,248.85m; PBT Rs.144.11m vs Rs.106.65m, up 35.12%; PAT Rs.117.90m vs Rs.113.52m.

• Operating profit Rs.361.4m, up 38.3%; diluted EPS Rs.21.81 vs Rs.21.04.

• Export revenue reached Rs.2,571.75m vs Rs.1,731.35m; exports were 83.89% of revenue, with domestic sales at 16.11%.

• Net cash from operating activities was Rs.216.11m; fixed-asset and work-in-progress purchases used Rs.742.34m.

Outlook and guidance

• Target at least 15 new products annually; near-term growth to draw on the existing portfolio, with longer-term expansion tied to R&D and new launches.

• Contract research was expected to become a growth driver in FY10; clinical research and peptide services were targeted as new revenue streams.

• Plans included further growth in gross margin through R&D-led unit-cost reduction, process efficiencies and lower operating costs without compromising quality or research.

• Expected considerable export revenue in FY10 and continued focus on the US, Europe and Japan.