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Abbott Laboratories: A healthy dose

Jul 26, 2000

Abbott Laboratories (India), the 51.5% Indian subsidiary of Abbott USA has reported impressive results for the first quarter ended June 2001. Pre–tax profits have jumped almost 70% on the back of a 18.5% jump in the topline. The company has however not provided for the part of the deferred revenue expenditure, which was incurred when it paid of the workers of its Kurla plant who took a VRS when it shut down the plant. The balance meant to be written off amounts to Rs 22.28 m.

(Rs m) 1QFY00 1QFY01 Change
Sales 278 330 18.5%
Other Income 1 1 3.9%
Expenditure 260 309 18.8%
Operating Profit (EBDIT) 19 21 13.2%
Operating Profit Margin (%) 6.7% 6.4%  
Interest 7 1  
Depreciation 2 2 18.0%
Profit before Tax 11 18 69.4%
Other Adjustments      
Tax   2  
Profit after Tax/(Loss) 11 16 51.0%
Net profit margin (%) 3.9% 5.0%  
No. of Shares (m) (eoy) 2.6 2.6  
Diluted no. of shares (m) 2.6 2.6  
Diluted Earnings per share* 16.7 25.1  
*(annualised)      

Abbott India, is active in the areas of anti–infectives, dermatological (skin infection), anti–diarrhoeal and gastro–intestinal apart from a portfolio of hospital products and nutritional products. The company has introduced Hytrin in India. The product has captured over 55% market share and has been growing at over 50% over the last two years. The company’s Claribid (used in cases of upper respiratory tract infection) also has been growing at over 40% and enjoys a 35% market share.

The company has also been restructuring its operations over the last three years. And the benefits of the restructuring are being reflected in the growth in pre–tax figures.

If one were to exclude the write off of deferred revenue expenditure, the current stock price of Rs 401 implies an earning multiple of around 16 times.


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