Australia’s Pharma major, CSL produced one of the better results of the 2009 profit reporting season yesterday and was rewarded with an early jump in the share price, and then a surprise fall towards the end of the day.
Net earnings jumped past the $1 billion mark for the first time.
And, the Melbourne based blood plasma giant expects another sold year in 2010, forecasting after tax profits to grow by between 14% and 24% in yesterday’s announcement.
The company expects continuing growth in demand for its various plasma therapies,but is looking for a slowdown in sales of its cervical cancer vaccine, Gardasil.
CSL has forecast 2009-10 financial net profit after tax of between $1.16 billion and $1.260 billion after lifting underlying earnings 63% to $1.15 billion in the year to June ($701.8 billion in the 2008 year).
The final profit is after CSL reported a 44% rise in first half earnings to $502 million and a 24% rise in underlying profit (which was roughly unchanged for the full year).
The shares jumped 3% to $34.57, but then retreated during the day on reports of problems in the US with Gardasil and the forecast for lower earnings and sales for the vaccine in the year ahead.
But the then fell, ending down 1.3%, or 44 cents, at $33.12, as selling in China impacted regional markets late yesterday.
Underlying operational profit (adjusted for currency movements, the impact of discontinuing the Talecris merger and non-operational tax items) rose 23% and underlying operating profit, excluding one-off items, was up 45% to $1.02 billion.
Revenue rose 32% to just over $5 billion or 16% on a ‘constant currency basis’. (Up 25% to $2.35 billion for the first half of the 2009 year, 14% on a ‘constant currency basis’).
Helping the 32% rise in revenue for the year, were Human Papillomavirus (HPV) vaccine royalties of $161 million and Gardasil (HPV vaccine) Australian and New Zealand sales of $185 million.
Blood is the main business for CSL and it’s housed in the group called CSL Behring.
"CSL Behring product sales grew 38% to $3.7 billion (17% in constant currency terms) when compared to the twelve months ended 30 June 2008. Strong contribution from immunoglobulins and critical care products have underpinned the growth, the company said.
The final dividend 40 cents per share, unfranked, compared with 23 cents in 2008.
Total ordinary dividends for the year were 70 cents a share up 52% on the previous year.
Earlier this year CSL made an unsuccessful $US3.1 billion takeover bid for United States healthcare company Talecris Biotherapeutics.
The deal was eventually blocked by the US Federal Trade Commission and is now the subject of a class action lawsuit with a small US hospital suing CSL and another blood plasma company claiming cartel behaviour.
"This is a powerful result for CSL, derived in an extraordinary period of foreign exchange volatility and global economic upheaval," managing director Brian McNamee said in a statement on Wednesday.
"This year we benefited from favourable movements in foreign exchange, in contrast to the past four years of currency head winds."
He said global demand for plasma therapies continued to be robust and that over the last few months CSL had received significant orders from the Australian and US governments for swine flu vaccine.
“Global demand for plasma therapies continues to be robust. Our Privigen manufacturing facility rollout is on track and our new facility in Switzerland is now approved.
“Over the last few months we received significant orders from the Australian and US Governments for Swine flu vaccine.
"CSL has vigorously pursued the development of a vaccine and commenced manufacturing in order to meet demand for this important medicine."
CSL said it has commenced clinical trials to determine dosage which are now well underway.
Dr McNamee also said Gardasil royalties continue to make an "excellent" contribution and noted that CSL’s US patent position protects its intellectual property through to 2026.
Looking to 2010, CSL is expecting an underlying operating profit of between $1.160 billion and $1.260 billion, representing growth of 14% to 24% on 2009, based on current exchange rates.
"There are a number of components of our expected result in fiscal year 2010 worth highlighting," Dr McNamee said.
"Growth in demand for plasma therapies is expected to continue.
"Sales will benefit from a product mix change with a shift towards Privigen", an immunodeficiency drug.
“Following the successful rollout of the HPV vaccine program in Australia by the Commonwealth Government, sales of Gardasil are expected to substantially decline as the catch up programs draw to a close.
“Orders for Novel A (H1N1) influenza or ‘Swine Flu’ vaccine are expected to provide a strong contribution to the fiscal year 2010 result.
“In compiling our financial forecasts for 2010 we have determined a number of key variables which may have a significant impact on guidance – in particular, material price and volume movements on core plasma products, competitor activity, changes in healthcare regulations and reimbursement policies, royalties arising from the sale of Human Papillomavirus vaccine; sales of Gardasil in Australia; fulfillment of Novel A (H1N1) influenza vaccine orders; successful implementation of the company’s influenza expansion strategy and plasma therapy life cycle management strate
