Shares in blood products group CSL fell 5% yesterday after it revealed an 18% slide in 2015-16 profit, plans to raise $US500 million in the US and run another big share buyback.
CSL posted a 10% fall in net profit to $US1.24 billion for the year ended June 30, hurt by a $US205.5 million loss from the Novartis influenza vaccines business and a $US115 million loss from currency value changes (which seems to be a constant for the company these days).
After-tax underlying profit though was up 5.2% at $US1.47 billion, on a constant currency basis, thanks to an 8.6% rise in underlying revenue. That figure strips out the Novartis unit’s losses. CSL shares were down 5% per cent, at $110.80 at the close yesterday.
But the company said it expected profits to rebound by at least 10% in 2016-17 from the 18% drop in underlying net profit of $US1.15 billion ($1.5 billion) for the year to June 30.
The company said in yesterday’s financial result and statement that the recovery would be driven by a sharp reduction of losses in the Novartis influenza business, full year contributions from new products and ongoing demand for speciality blood plasma products.
Directors declared a 3% lift in final dividend to US68 cents (equivalent to 89 cents unfranked for Australian shareholders), and said they would consider a further $500 million share buyback after nearly completing the current $A1 billion buyback announced last year. Total dividend for the year was up 3% to US1.26 a share from $US1.24 in 2014-15.
"At the core, CSL is a growing, broad based, stable business which generates solid earnings growth. We are igniting this growth with innovative biotechnology advancements, including our newly approved and launched novel recombinant therapies Idelvion and Afstyla," chief executive Paul Perreault said.
He said net profit after tax is expected to grow by about 11% in the next year at constant currency and after adjusting for the one-off gains and costs associated with the acquisition of the Novartis influenza vaccines business.
And he said earnings per share should again exceed profit growth in the coming year, (thanks to the share buybacks shrinking the issued capital). Mr Perreault told an analysts briefing that the additional funds will be invested into the business, including its recently enlarged vaccine unit Seqirus, and can also be used to fund future dividend payments and share buybacks.
“It’s more just managing the cash; we’re still, I think, appropriately leveraged as an organisation," Mr Perreault said.
The share buyback is only a prospect, but CSL has in the past hinted at such a move at the full year profit statement, and confirmed it at the annual meeting in October, which it did with the current $A1 billion issue last year.
