>WOCKHARDT (ANGEL BROKING)

PERFORMANCE HIGHLIGHTS

■ Net Sales increase marginally: For 2QCY2009, Wockhardt reported Net Sales of Rs954.2cr (Rs910.3cr), which were up 5% yoy. As per ORG-IMS, Wockhardt’s domestic formulation business grew by 9% during the quarter, and currently ranks 15th in the market. The company’s Europe business grew by a mere 3% during the quarter, with sales from Pinewood and Negma flat yoy, and sales from the UK growing by a healthy 11%. Further, the US business of the company grew by a strong 24% during the quarter, and now contributes 19% of the Total Revenue. Wockhardt received 7 ANDA approvals till Q2CY2009, and has launched 64 products in the US. For 1HCY2009, the Net Sales were up by 5% to Rs1,817.4cr (Rs1,731.5cr). During the quarter, the company has also entered into a definitive agreement to sell Esparma (its German business), Animal Healthcare and the Nutrition business, in order to raise funds for debt repayment by divesting the non-core businesses.

■ Operating Margin contracts: For 2QCY2009, the OPM of the company contracted by 561bp to 17.6% (23.2%). This was primarily on account of a fall in the Gross Margin by 1106bp to 54.3% (65.4%). However, Employee and R&D expenses de-grew by 10% and 36%, respectively. For 1HCY2009, the OPM was down by 470bp to 19.2% (23.9%).

■ The Bottom-line plunges in the red: Wockhardt reported a Net loss of Rs189.9cr (Profit of Rs105.8cr), on the back of Rs255.3cr MTM losses. We are negatively surprised by the quantum of the MTM losses, given the fact that the Rupee has appreciated by 5.6% during the quarter and, during the last 2 quarters, the company has cumulatively booked Rs500cr on the MTM front. For 1HCY2009, Wockhardt reported a Net loss to the tune of Rs200.1cr (Profit of Rs156.7cr).

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