Pfizer: Dismal performance - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Pfizer: Dismal performance

Sep 30, 2003

After a long delay Pfizer announced its 1QFY04, 2QFY04 and 3QFY04 results recently. The company was earlier restrained from announcing the same due to litigations filed by dissenting shareholders of Parke-Davis over its merger with the latter company. For 3QFY04, while the topline has declined marginally by 1%, bottomline has dropped 40%. For 9mFY04, Pfizer has recorded a 7% decline in topline and a massive 60% drop in bottomline. In this context, let us take a detailed look at the company’s performance.

Dismal performance…
(Rs m)3QFY033QFY04Change9mFY039mFY04Change
Net Sales1,3621,349-1.0%3,6933,432-7.1%
Other Income9090.40.4%422283-33.1%
Total expenditure1,1021,1938.2%3,1323,1590.8%
Operating Profit (EBDIT)260156-40.0%561273-51.3%
Operating Profit Margin (%)19.1%11.6% 15.2%8.0% 
Interest41-80.6%64-42.9%
Depreciation19202.1%7170-1.8%
Profit before Tax327226-30.9%906482-46.7%
Extra-ordinary items(29)(38)30.3%(82)(113)38.9%
Tax9365-30.2%288155-46.2%
Profit after Tax/(Loss)205123-39.9%536214-60.1%
Net profit margin (%)15.0%9.1% 14.5%6.2% 
No. of Shares (m)28.828.8 28.828.8 
Earnings per share*28.417.1 24.89.9 
P/E ratio 23.8  41.0 
*(annualised)      
Since all figures include the results of the erstwhile Parke-Davis, the same are comparable.

A general slowdown in the domestic pharma market has resulted in a marginal decline in Pfizer’s topline. Uncertainty caused due to the VAT fiasco and planned de-stocking at the wholesalers level further stunted topline growth. Merger related issues like sales force rationalization have put pressure on the operating margins. Although interest expenses and tax provision have declined, a drop in the operating profits and an increase in the extra-ordinary expenditure has affected Pfizer’s bottomline. The extra-ordinary expenditure increased due to writing off of VRS payments and other merger related expenses.

Quarterly performance…
(Rs m)1QFY042QFY043QFY04
Net sales1,0101,0731,349
QoQ growth (%)-6.2%25.7%
Operating profit10611156
QoQ growth (%)--89.6%1318.2%
Operating Profit Margin (%)10%1.0%11.6%
Profit after Tax/(Loss)7912123
QoQ growth (%)--84.8%925.0%
Net profit margin (%)8%1.1%9.1%

For 9mFY04, Pfizer’s performance was affected due to the company’s poor showing in the 2QFY04. In 2QFY04, the operating margins have dropped to 1% as compared to 9% during the corresponding previous quarter. This was primarily on account of an increase in other expenditure as a percentage of sales to 39% (31% in 9mFY03). Raw material and staff costs have also increased more than proportionately. Declining margins coupled with an increase in the extra-ordinary expenditure has resulted in the company recording a sharp 60% drop in net profit. The gradual decline in the performance of wholly owned subsidiary, Duchem Laboratories, has further affected Pfizer’s results. Duchem Laboratories has now reported a decline in topline and net losses for the last four quarters.

Duchem: Going south…
(Rs m)9mFY039mFY04
Net sales714 122
PAT3 (45)

At Rs 406, Pfizer is currently trading at a P/E of 41x its 9mFY04 earnings. The key reason for Pfizer’s poor showing has been its old product portfolio. Absence of product patents has resulted in the company not being able to take advantage of its parent’s strong product portfolio. Resultantly, Pfizer has recorded de-growth even when the domestic pharma market has shown signs of revival i.e., in August ‘03. Thus we expect the company’s growth to be under pressure in the near term. However, once, the operational merger between Pfizer and Park-Davis is completed, and product patents are introduced, the performance of the company could show some improvement.

Equitymaster requests your view! Post a comment on "Pfizer: Dismal performance". Click here!

  

More Views on News

LAURUS LABS Share Price Up by 5%; BSE HEALTHCARE Index Down 0.1% (Market Updates)

Apr 13, 2021 | Updated on Apr 13, 2021

LAURUS LABS share price is trading up by 5% and its current market price is Rs 441. The BSE HEALTHCARE is down by 0.1%. The top gainers in the BSE HEALTHCARE Index are LAURUS LABS (up 5.5%) and PFIZER (up 6.4%). The top losers are TORRENT PHARMA (down 0.1%) and GSK PHARMA (down 0.2%).

PFIZER Share Price Up by 5%; BSE HEALTHCARE Index Down 0.3% (Market Updates)

Apr 13, 2021 | Updated on Apr 13, 2021

PFIZER share price is trading up by 5% and its current market price is Rs 5,033. The BSE HEALTHCARE is down by 0.3%. The top gainers in the BSE HEALTHCARE Index is PFIZER (up 5.3%). The top losers are GRANULES INDIA and JUBILANT PHARMOVA (down 0.2%).

PFIZER Announces Quarterly Results (3QFY21); Net Profit Up 1.6% (Quarterly Result Update)

Feb 10, 2021 | Updated on Feb 10, 2021

For the quarter ended December 2020, PFIZER has posted a net profit of Rs 1 bn (up 1.6% YoY). Sales on the other hand came in at Rs 6 bn (up 10.3% YoY). Read on for a complete analysis of PFIZER's quarterly results.

PFIZER Announces Quarterly Results (2QFY21); Net Profit Down 14.8% (Quarterly Result Update)

Nov 4, 2020 | Updated on Nov 4, 2020

For the quarter ended September 2020, PFIZER has posted a net profit of Rs 1 bn (down 14.8% YoY). Sales on the other hand came in at Rs 6 bn (up 5.0% YoY). Read on for a complete analysis of PFIZER's quarterly results.

More Views on News

Most Popular

My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)

Mar 31, 2021

A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.

My Stock Trading Strategy (Fast Profits Daily)

Mar 31, 2021

In this video I'll show you exactly how I go about picking stocks for trading.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

PFIZER SHARE PRICE


Apr 13, 2021 (Close)

TRACK PFIZER

COMPARE PFIZER WITH

MARKET STATS