Strides Pharma Science (STAR) Q4 02/03 earnings summary

Executive summary

• Challenging 18-month period ended 30 Sep 2003: consolidated revenue was Rs. 4,291.94mn and consolidated net loss Rs. 271.95mn, versus profit of Rs. 100.78mn in the prior 12-month period; a return to profitability was reported in Jul–Sep 2003.

• Brazil and Nigeria currency turmoil, working-capital pressure and higher interest costs drove a cash-conservation response, market realignment and production cuts.

• Strategic focus shifted toward regulated markets, generics, partnerships and IPR-led product development, supported by a global manufacturing and distribution footprint.

Financial highlights

• Consolidated sales and services were Rs. 4,271.21mn for 18 months, versus Rs. 2,731.94mn for the prior 12 months; periods are not directly comparable and current figures include newly consolidated subsidiaries.

• Consolidated net loss after minority interest and associate share was Rs. 271.95mn, versus profit of Rs. 100.78mn; consolidated basic and diluted EPS were losses of Rs. 9.26 and Rs. 8.54.

• Standalone total income was Rs. 2,764.13mn and PAT Rs. 63.17mn for 18 months, versus Rs. 2,337.26mn and Rs. 160.35mn for the prior year; results also reflect the CRAM demerger.

• Standalone PBT was Rs. 8.27mn; a Rs. 57.40mn deferred-tax credit contributed to PAT of Rs. 63.17mn.

• Operating cash flow was negative Rs. 64.86mn standalone and positive Rs. 165.98mn consolidated; consolidated cash and equivalents ended at Rs. 88.00mn.

Outlook and guidance

• Regulated-market alliances in the UK, Australia, Japan and South Africa were expected to expand; management anticipated stronger regulated-market contribution and further alliance signings.

• Current-year R&D plans targeted up to four US ANDA filings and 20 product filings for EU, Australia/New Zealand and Japanese markets.

• Management expected IPR initiatives to yield results and identified outsourced R&D and manufacturing as an opportunity, citing niche strengths in softgels and sterile products.

• WHO evaluation was underway for five of seven anti-retroviral drugs; TB and antiretroviral shipments had commenced, with development initiated on newer anti-malarial combinations.