CSL, the world’s No. 2 blood products maker, has boosted its full year earnings guidance, despite reporting a small fall in profit for the six months to December as the strong Australian dollar against cut returns.
Directors yesterday also boosted interim dividend by one cent a share to 36c, another bullish sign for the rest of the year.
Net profit in the six months to December 31 fell 3% to $483 million, dampened by the effects of a strong Aussie dollar.
But on a constant currency basis, earnings rose 16% for the half.
Managing director Brian McNamee said the profit had been affected by exchange rate fluctuations, which the company had warned of at the AGM late last year and in the outlook given last August with the 2010-11 results.
(It has been a headache for CSL for the past couple of years and doesn’t just include the value of the Aussie dollar. The rise in the value of the Swiss franc has also caused problems and forced the company to build a major blood products factory in Melbourne and close a similar one in Switzerland).
Despite those headwinds, the company has boosted earnings guidance for the full year to a profit rise of 13%.
The company said that using fiscal 2011 exchange rates, net profit would be around $1,060 million, despite the continuing economic pressures in Europe and the US and the return of a competitor to the market.
That’s up from the original guidance for the year of 10%.
Investors liked the news and shares in CSL rose 2.3% or 77c to end at $31.72.
That was in a market that drifted all day, finishing slightly higher.
"‘We now anticipate profit will grow approximately 13 per cent, using fiscal 2011 exchange rates, to around ($1.06 billion), despite continuing economic pressures in Europe and the US, and the return of a competitor to the market,’’ Mr McNamee said in a statement.
"Growth in earnings per share at constant currency will exceed this as shareholders benefit from the effect of the share buyback.’’
The company also said it would move to reporting its earnings results in US dollars from the 2012-13 financial year, reflecting the increasing predominance of the company’s sales worldwide in that currency. (joining the likes of BHP Billiton, Rio Tinto, Fortescue Metals and QBE)
The company said it has cash on hand of $1.3 billion and borrowings $1.78 billion: so net cash of $22 million, meaning it has an ungeared balance sheet.
Much of the that debt has been spent on the $900 million on market share buyback which is approximately 20% complete with $181 million spent.
As with iiNet on Tuesday, the online travel booking company, Wotif.com is enjoying the surge in online business and transactions.
Wotif.com says it earned a record first half profit for the six months to December after it successfully expanded into flight bookings.
(Where it will run up against another solid reporter for the first half in Flight Centre).
The company is still expanding into airline bookings, and now offers domestic and international tickets through the Wotflight website that was started two years ago and hit its straps in the December half.
Wotif’s net profit for the six months to December 31, 2011, was $28.8 million, up 14% on $25.4 million in the previous corresponding half year period.
A change in marketing emphasis helped cut spending on this by $1.82 million in the half year, which helped boost earnings.
Managing director Robbie Cook said the company performed ahead of expectations despite the strength of the Australian dollar.
Investors liked the news and chased the shares, driving them up 34 cents or 8.3% to $4.45.
"Despite awareness levels for flights on Wotif being in their formative stages, we nonetheless sold flights worth $52 million – an impressive 23 per cent uplift," Mr Cook said in yesterday’s announcement.
"We achieved this without having yet embarked upon an active marketing campaign."
Thanks to the higher flight sales, the total value of bookings rose $57 million, or 11% for the half year, to $596 million.
Accommodation remains Wotif’s major source of revenue, with $539 million worth of bookings made in the six months to December, up 4% from the previous corresponding period.
December trading was particularly strong for accommodation bookings, and that performance was maintained through the peak holiday month of January, Mr Cook said.
Total revenue for the first half was $73.97 million, a 4% rise for the half.
Based on the profit of $28.8 million, it’s a net profit margin of well over 35% and a margin on sales of more than 5%, which isn’t too shabby.
Wotif declared a fully-franked interim dividend of 11.5 cents, up 21% from the 9.5 cents paid in the first half of 2010-11.
