Blood products and vaccines group, CSL, is within a day’s rise of topping its all time high of $120.86 after rising $3.33, or 2.9% to $118 yesterday in the wake of the expected solid interim profit.
The company reported a net profit of $US805.5 million for the December half, up 12.1% from $US718.8 million, on revenue of $US3.5 billion up more than 16% from $US3 billion a year earlier.
Interim dividend was boosted to US64 cents a share from US58 cents. On top of this the company expects stronger growth this half and stuck to its full year guidance.
Last month the company surprised the market with an upgrade to its full-year profit forecast following stronger than expected sales in the December half year.
CSL says its full-year net profit after tax was expected to grow in the range of 18%-20%, which would indicate a sharp rise in growth this half.
CEO Paul Perreault said yesterday the company’s various investments in recent years are now “paying off”.
"CSL has never been better positioned for sustainable growth. As a global biotechnology leader, CSL is driven by its promise to develop innovative medicines and reliably supply them to patients in more than 60 countries,” he said yesterday.
CSL benefited from the problems of competitors in meeting demand for immunoglobulin products in the US market in particular, where the company had been able to build market share, meaning growth has been well ahead of the broader market for several years now.
And CSL believes it can retain part of this expanded market share.
"It was a one-off," Mr Perreault said. "We will keep some, we will lose some, but some will stick with us."
He also pointed out that growth in other areas such as specialty products, as well as declining losses at its influenza vaccine business, also contributed to the profit rise.
Even with the improvement at the group’s influenza business, CSL is still only expected to reach break even next financial year. Three years ago, CSL paid Novatis $US275 million for the business. However it is still making transitional payments to the Swiss-based group.
CSL also disclosed that China accounts for a large, and growing, share of revenues, with sales there approaching $US600 million a year just for albumin. At present, much of this product is supplied out of Europe, although an expansion in capacity is under way at its Broadmeadows plant in Melbourne.
In the half albumin sales were up a solid 35%, with the group wanting to expand its role in supplying the Chinese market, although it is hampered by government regulations.
CSL currently has a $500 million share buyback in the market. If the company meets its full year guidance, a repeat (yet another) of a buyback of this size (at a minimum) looks very possible at the AGM in October.
To date, CSL has purchased approximately 550,000 shares for approximately A$53 million, representing approximately 11% of the intended buyback program, so the share price will get strong support over the next eight months from the buyback.
