CSL has again seen profits hit by the strong Australian dollar, yesterday forecasting a 10% fall in full year earnings based on current exchange rates.
The Melbourne-based maker and exporter of blood products and vaccines reported a 19% fall in first half profit in its interim profit statement, released yesterday.
Net profit fell to $500.2 million for the six months to December 31 compared with $617 million in the prior corresponding period after revenue fell 9.3% to $2.19 billion.
The shares eased 49c, or 1.3%, to close at $37.02, as investors took in the news and all but ignored it.
Since the company’s 2010 profit result was release last August, the shares have risen strongly, as the value of the Australian dollar has risen to parity with the greenback, CSL’s principal selling currency.
The shares have risen from $31.03 in August around the time of the profit report’s release, to a 52 week high of $38.07 late last month.
CSL said full year net profit, based on current exchange rates, was likely to be about $950 million, compared with the $1.053 billion profit for 2009-10. CSL earned a peak $1.145 billion in 2009 as it rode the weak Australian dollar in the wake of the GFC in late 2008.
If profit comes in around $950 million, then earnings will have been cut by $200 million in the past two years due to the value of the dollar.
Based on the prior year’s exchange rates, underlying profit for the year to June 30, 2011 would rise about 10%.
CSL said its first half result included an unfavourable foreign exchange impact of $47 million.
The company declared an unchanged interim dividend of 35c a share, a sign that the lower profit hasn’t been a real concern to CSL’s financial health.
CSL managing director Dr Brian McNamee said in the statement that CSL’s underlying business had continued to grow.
"We have reached a number of important milestones in the development of our existing portfolio that will support continued growth," he said.
"These include licensing into new geographic and patient markets.
"Given the challenges of currency headwinds, government healthcare reforms and continuing weak economic conditions in a number of countries where we operate, this is a noteworthy achievement."
Dr McNamee said trading conditions in the second half of this financial year were expected to remain similar.
"The company remains well positioned with a broad portfolio of products, a global market reach, and a very strong balance sheet," he said.
"At the annual general meeting in October 2010 we provided guidance for a net profit after tax of between $980 million and $1,030 million, at fiscal 2009/10 exchange rates.
"We now anticipate the result to be at the top of this range which represents about 10 per cent growth in underlying profit when compared to the full year 2010.
"Using current exchange rates, net profit after tax for the 2011 financial year is expected to be approximately $950 million, recognising that there are a number of items that fall unevenly between the first half and second half of the financial year."
