GlaxoSmithKline profit rises 32% in Q2 led by recovery of inventory levels

Moneycontrol News

GlaxoSmithKline Pharmaceuticals on Wednesday posted a 32 percent increase in net profit to Rs 130.3 crore in the second quarter ended September 30, helped by the recovery of inventories in trade channels which were hit by GST rollout.

The company posted Rs 99 crore in the year-ago quarter. Revenue for the quarter grew 5 percent to Rs 836 crore over the previous year.

On a sequential basis the net profit jumped by almost five-fold.

The EBITDA margins expanded substantially to 23 percent, as against 17.6 percent in the year-ago period.

“The performance includes a significant recovery of prior quarter trade channel destocking arising from the introduction of Goods and Services Tax (GST),” GlaxoSmithKline said in a statement.

The drug maker said the revenues were hit 6 percent arising from the deflationary impact of GST rates.

While the net profit beat analyst estimates, revenues were lower. Motilal Oswal Research estimated the profit to be at Rs 126.8 crore and revenues at Rs 876.8 crore for the quarter.

“Our underlying performance, neutralising the impacts of GST and prior year disposals, is growing healthily and at least in line with market,” said A Vaidheesh, Managing Director of GlaxoSmithKline.

During the quarter, the company said it has decided to dispose its surplus Thane land for Rs 555 crore subject to the receipt of all regulatory and statutory approvals, as well as various conditions as agreed with the purchaser.

“The proceeds and profit on disposal will be announced and accounted for upon the signing of definitive agreements,” the company said.

GlaxoSmithKline said the construction of its state-of-the-art manufacturing site at Vemgal, Bengaluru, to meet future market demand is nearing completion with a site validation process expected to commence from mid next year.

GlaxoSmithKline derives almost all of its revenues from Indian formulations.

Domestic formulation sales were impacted in the first quarter due to destocking in trade channels in the run-up towards implementation of GST from July 1.

Shares of GlaxoSmithkline declined 0.99 percent to close at Rs 2422.80 on BSE, while the benchmark Sensex gained 1.33 percent to end 33,042.50 points.