Neuland Laboratories (524558) Q4 09/10 earnings summary

Executive summary

• FY2009-10 was marked by lower revenue and a net loss, following weaker launches, pricing pressure, higher costs and foreign-exchange losses.

• Management expected a return to profitable growth from around the quarter ending September 2010, supported by product launches, contract work and improved capacity utilization.

Financial highlights

• Revenue was Rs.2,812.53 million, down 9.8% from Rs.3,120.26 million in FY2008-09.

• EBITDA was Rs.280.76 million versus Rs.361.41 million; net loss was Rs.70.45 million versus prior-year PAT of Rs.117.90 million.

• Interest expense rose to Rs.256.73 million from Rs.143.59 million; depreciation increased to Rs.135.60 million from Rs.73.70 million.

• Net cash from operating activities was Rs.151.76 million; net cash used in investing activities was Rs.233.40 million.

Outlook and guidance

• Robust order book and ramping sales of the top six APIs; seven APIs were being scaled up for commercialization in FY2010-11, with eight more ready for scale-up.

• Targeted 30% incremental revenue growth; management expected incremental gains to become more visible from around the quarter ending September 2010.

• Priorities included cost control, higher cash flow, margin protection and improved process yields; 2010-11 was expected to remain challenging.