CSL is Australia's big pharma. A privatisation that was woefully under-priced and a magnificent deal for management and those early shareholders.
Along with the likes of BHP Billiton, Rio and Brambles, it is one of a handful of world-scale players we have among our corporate ranks.
Like all big pharma companies it is a profit machine when run with the right balance: and it says there's more to come as it rides the wave of Gardasil, the cervical cancer vaccine developed in Brisbane and now on sale around the world.
The company has grown in the blood plasma business where it is now one of the top three and the Gardasil HPV vaccine generated more than $100 million in sales in Australia alone, and $86 million in licence fees from overseas markets in the closing months of the financial year.
The company said 2007 saw a 54% in annual earnings to $539.3 million, up from $350.9 million in the 2006 year. Total dividends for the year are up 53% and it sees earnings rising another 30% in the 2008 year.
Total revenue in 2007 rose 14% to $3.3 billion, net operating cash flow of $481 million, research and development spending rose 19% to $191 million and earnings per share of $2.95, up 53% when compared to the previous year's earnings.
And it is predicting profit to rise to as much as $700 million in the 2008 financial year.
The company also announced its intention for a buyback of about 4.5% of its issued capital and plans to split the increasingly expensive shares three for one. A motion for the split will be put to the AGM in late October.
CSL shares jumped $2.88 to $93.06 after hitting a high of $96.00! Investors scrambled aboard after a recent sell-off in the wake of the market instability.
CSL is now valued at more than $17.1 billion.
CEO, Brian McNamee, said: "We continue to anticipate stable to favourable market conditions for our plasma therapies business and growing contribution from royalties associated with the international sales of GARDASIL. Total revenue is expected to grow approximately 12-14%.
"Research and Development, which is a cornerstone of our growth strategy, will receive an additional investment of around 15% taking total spend to around $220 million.
"In compiling our financial forecasts for 2008 we have determined several key variables which may have a significant impact on guidance – in particular royalties arising from the sale of GARDASIL by Merck, foreign exchange movements, tax rate changes arising in the multiple jurisdictions within which CSL operates together with price and volume movements in core plasma products.
"This financial year we again anticipate strong growth resulting in a net profit after tax for FY2008 of between $670m and $700 million using 2006/07 exchange rates.
"This guidance excludes any interest cost on borrowings used to fund the buyback announced today," Dr McNamee said in a statement detailing the 2007 profit and associated operational performance review.
The company had declared a final dividend up 38% to 55 cents per share, franked at 50%, payable on 12 October. That takes total dividends for the year to $1.04 cents per share, up 53% on the previous year.
CSL said that, without including the $18 million settlement of its action with Sanofi over the acquisition of Aventis Behring, net profit after tax still was $521 million for the year, up 48%.
Dr McNamee said 2007 had been a record year for CSL, with strong financial results, new products approved and growth initiatives announced.
"The very successful rollout by our licensee, Merck, of their cervical cancer vaccine GARDASIL is an indication of the importance of this very significant unmet medical need," he said.
"Robust global demand for the CSL Behring's plasma therapies, together with Gardasil royalties and the success of Australian Gardasil sales by CSL Biotherapies have been the key drivers …"
Dr McNamee said CSL's financial strength and its "favourable outlook" was behind the decision to buy back around 4.5 per cent of CSL's issued capital.
"The size of the buyback has been balanced to ensure CSL retains the capacity to finance ongoing research and development, invest in the existing business and pursue strategic growth opportunities that may arise," he said.
The proposed 3:1 share split would "improve the affordability and liquidity of the company's shares for retail shareholders".
Dr McNamee said CSL anticipated "stable to favourable market conditions" for its plasma therapies business and growing contribution from international royalties from Gardasil.
"Total revenue is expected to grow approximately 12-14 per cent. Research and development, which is a cornerstone of our growth strategy, will receive an additional investment of around 15 per cent taking total spend to around $220 million."
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The merger between Coles Group and Wesfarmers has moved a tiny step closer with the proposed marriage receiving the blessing from the competition regulator, the ACCC.
The Australian Competition and Consumer Commission (ACCC) decision came after a review of the deal, worth about $22 billion, and inquiries with interested parties.
"While these market inquiries revealed some concern from certain market participants about overlap in LPG, hardware, and related sectors, following further analysis the ACCC concluded that there was not likely to be a substantial lessening of competition in any market," said chairman, Graeme Samuel, in a statement yesterday.
The Commission said the market inquiries had shown that in relation to hardware, garden products, tools, lighting and electrical products, the relevant Coles businesses, particularly Kmart, were not considered to impose a stron
