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Glenmark: Most Geographies Show Weak Growth - Views on News from Equitymaster

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Glenmark: Most Geographies Show Weak Growth
Nov 7, 2017

Glenmark announced its results for the second quarter ended June 2017 (2QFY18). While revenues grew by 1.5% YoY during the quarter, net profits were down 4% YoY.

Performance summary
  • Glenmark's revenues grew by a mere 1.5% YoY during the quarter largely on account of a subdued performance across geographies.
  • The European business was the best performer as revenues grew by a robust 49% YoY, while India grew by a tepid 5% YoY. Revenues from the US business fell by 6% YoY, as severe pricing pressure continued to plague the market. Latam business did badly as revenues plunged 22% YoY largely on account of problems in Venezuela.
  • Operating profits fell by 13.5% YoY as margins shrunk by 3% to 17.2%. This was largely on account of higher raw material and staff costs (both as percentage of sales). Staff costs also increased in absolute terms because of the one-time impact of bonus paid to employees.
  • The fall in net profits was lower at 4% YoY on account of substantial reduction in tax expenses.

    Consolidated financial snapshot
    (Rs m) 2QFY17 2QFY18 Change 1HFY17 1HFY18 Change
    Net sales 22,241 22,566 1.5% 41,935 46,196 10.2%
    Expenditure 17,753 18,682 5.2% 33,657 36,537 8.6%
    Operating profit (EBIDTA) 4,488 3,884 -13.5% 8,278 9,658 16.7%
    Operating profit margin (%) 20.2% 17.2%   19.7% 20.9%  
    Other income -18 297   741 450 -39.2%
    Depreciation 687 752 9.5% 1,329 1,530 15.1%
    Finance costs 629 698 11.1% 1,059 1,407 32.9%
    Profit before tax 3,154 2,730 -13.4% 6,631 7,172 8.2%
    Tax 918 589 -35.8% 2,127 1,697 -20.2%
    Profit after tax/ (loss) 2,236 2,141 -4.2% 4,504 5,475 21.6%
    Net profit margin (%) 10.1% 9.5%   10.7% 11.9%  
    No. of shares (m)         282.2  
    Diluted earnings per share (Rs)*         45.7  
    P/E ratio (x)         13.2  

    * on a trailing twelve months basis excluding extraordinary items

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