CSL says full year earnings may rise as much as 19% because of the recent slide in the value of the Australian dollar.
The dollar has fallen from more than 98 USc in July, to under 65 USc last week, and around 69 USc yesterday.
According to speeches at yesterday’s AGM in Melbourne, net profit could be up as much as $A160 million in the year to June 30, 2009.
It said that if currency rates on October 13 applied for the rest of the year, profit would be in the order of $A935 million to $A1.01 billion.
Analysts have been forecasting a profit of $A899 million, due mostly to the 38% slide in the Australian dollar since the end of the last financial year.
The company said in August that it expected its net profit this year to rise by 15-21% to between $810 million and $850 million, on a constant currency basis.
A presentation at the AGM showed that every 1% decline in the value of the currency adds around $A6.9 million to profit.
CSL shares dropped by 46c to $37.94 yesterday in early trading, and then recovered to close off 2c at $38.38.
The stock has gained 5% this year, one of around nine companies on Australia’s ASX 200 to have a positive 2008.
The group, which makes blood products and vaccines, such as the fast selling Garadsil anti cervical product, launched the $US3.1 billion purchase of smaller rival, Talecris BioTherapeutics from its private equity owners in August.
It has been asked for more information by US regulators.
Talecris Biotherapeutics, one of the world’s leading manufacturers and suppliers of plasma-derived therapies is based in North Carolina in the US and has plasma fractionation facilities, as well as 56 plasma collection centres.
Chairman, Elizabeth Alexander told the AGM that “It is expected that the acquisition will bring substantial benefits to patients and significant gains to CSL shareholders.
"The combined entity can achieve efficiencies that are not available to either business on their own and will facilitate the provision of more output of high quality plasma products to patients in the USA and Europe.
"This will be achieved by delivering additional scale-efficient manufacturing facilities with a high quality workforce operating as a further centre of excellence, and strengthening CSL’s manufacturing spine.
“By the integration of all manufacturing sites in the CSL Behring Group, the number and yield of plasma products from each litre of plasma will be maximised.
“The acquisition will also enhance our position in key countries including the US by providing a platform to increase diversity and volume of product sales to the benefit of patients in those markets.
“We expect synergies of approximately US$225 million per annum to be realised progressively over the first three years from the time of closing the transaction.
"The net result of this will be that CSL Behring will become a stronger competitor in its most significant global markets.
“This acquisition will be funded through a mix of equity, cash and debt, the level of each designed to strike a balance between earnings per share accretion and the management of financial risk resulting in a pro forma gearing post acquisition of 26%.
“To achieve this, an underwritten institutional placement of $1.75 billion was undertaken together with a Share Purchase Plan to eligible shareholders.
"The balance will be made up of company cash reserves and syndicated debt which will replace the acquisition bridge facility.
“In order to protect the Company against currency risk, the proceeds from the institutional equity placement in mid August was converted to US dollars at an average rate of 87 cents."
That was a very clever move, given the sharp drop in the cost of the Australian dollar. At 87 USc, the Aussie dollar cost of the $US3.1 billion deal is around $A3.56 billion. At 69 USc, the Aussie dollar cost is around $A4.5 billion.
