Earnings Report /
Bangladesh

Beximco Pharmaceuticals: Q1'23: EPS -1.3% due to GM dent, financial expenses, and subsidiaries' losses.

  • Gross margin dent, higher financial and tax expenses, and losses from subsidiaries were major reasons for EPS decline.

  • The consolidated growth is higher because BXPHAR incorporated sales from Synovia in Q1'23, which was absent in Q1 FY22.

  • The impact of currency depreciation on outstanding foreign loan balance likely caused the rise in financial expenses.

IDLC Securities
13 November 2022
Published byIDLC Securities
  • EPS declined 1.3% yoy in Q1 FY23. EPS in Q1 FY23 stood at BDT 3.24 against BDT 3.29 reported in Q1 FY22. Gross margin dent, higher financial and tax expenses, and losses from subsidiaries were the major reasons for this decline.

  • Consolidated sales rose c16% yoy compared to c6% growth on standalone sales in Q1 FY23. Revenue stood at BDT 9,787 mn in Q1 FY23 against BDT 8,469 mn in Q1 FY22, implying a c16% yoy increase. On standalone basis, BXPHAR generated c6% sales growth. The consolidated growth is substantially higher because BXPHAR incorporated sales from Synovia in Q1 FY23, which was absent in Q1 FY22.

  • Gross margin deteriorated by 292 bps yoy and Opex/Sales rose by 30 bps yoy. High commodity prices and BDT depreciation made the import of raw materials expensive, leading to margin decline. Overall salaries and allowances - c42% of opex - increased by c28% yoy, resulting in c17% yoy increase in opex.

  • Financial expenses rose c90% yoy. Financial expenses rose to BDT 311 mn in Q1 FY23 against BDT 164 mn in Q1 FY22. The impact of currency depreciation on outstanding foreign loan balance (BDT 1,183mn as of Sep 2022) is likely to have caused the raising financial expenses.

  • Effective tax rate increased by 213 bps yoy. Although current taxes fell c9% yoy to BDT 394 bn, deferred taxes rose significantly to BDT 75 mn in Q1 FY23. The deferred tax payments raised effective tax rate for the quarter.

  • Negative contribution from subsidiaries; likely to be driven by Synovia. Synovia likely dragged down overall subsidiaries’ gross margin and NPAT since Q2’22 as it is currently a loss-making concern. This is expected to change as it slowly reaches break-even, evidenced by gradual loss reduction of its other subsidiaries.