CSL In Rude Health Lifts Dividend 26%

By Glenn Dyer | More Articles by Glenn Dyer

CSL has lifted dividends to shareholders by a very sold 26% for the year to June 30 after reporting record sales and profits for the year to June.

The company is Australia’s leading pharmaceutical (and biotech) company and it showed with a record $US1.73 billion ($A2.39 billion) net profit, up 29% from 2016-17 and fuelled by strong demand for its vaccines (especially flu) and blood products.

The Melbourne-headquartered company’s profit was slightly higher than its guidance of $US1.68 billion to $US1.71 billion forecast in a May update.

Final dividend was boosted to 93 US cents a share from 72 cent US cents. With the higher interim, total payout for 2017-18 will be $US1.72 a share, up from $US1.36 in 2016-17.

Investors liked the news and chased the shares higher in a fairly drab day on the ASX. CSL ended up 3.6% at $209.11. The shares hit an all time high of $209.92 in trading yesterday.

Sales revenue for the year to June 30 rose 14.7% to $US7.59 billion and CSL is looking for a another record breaking performance in the current 2018-19 financial year.

No word yesterday on a new buyback (the company usually announces plans for capital management at its annual meeting).

The company expects June 30, 2019 financial year net profit in constant currency terms to be in the range of $US1.88 billion to $US1.95 billion, an expected increase between 10% and 14%.

The emerging sales and profit driver in the 2017-19 record result was CSL’s Seqirus, the world’s second largest influenza vaccines firm, which reported earnings before interest and tax of $52.4 million this year, helped by seasonal vaccine sales in the United States.

More importantly sales from this business more than doubled in 2017-18 to $US342 million at June 30 as the flu season in the northern hemishhere proved to be severe in many countries and boosted demand.

“Seqirus delivered on its commitment to achieve profitability just three years after the business was formed,” CSL chief executive Paul Perreault said.

He said the Holly Springs influenza vaccines facility in the US state of North Carolina, quadrupled the number of its four-strain flu vaccine doses produced this season for the US market compared to last year.

“We continue to implement process improvements to further boost this capacity,” he said. The company successfully launched during the year of its drug Haegarda, which provides a transformational therapy for patients with hereditary angioedema.

It also saw the global commercial rollout of Idelvion, aimed at Haemophilia B patients, and approval of its immunoglobulin product Privigen for the United States and Hizentra for the US and EU.

Hizentra provides patients with a convenient treatment for for Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) , a debilitating peripheral nerve disorder.

The only negative (and it is one some analysts will start focusing on is the continuing shortage of blood plasma around the world.

“The tightness in supply of our key raw material, plasma, has been a feature across the industry this year,” Mr Perreault said.

He said the CSL Plasma team opened 27 new collection centres in the US – “a growth rate unmatched in the industry”. CSL now operates 206 plasma collection centres worldwide.

“In FY19 we plan to open between 30 and 35 new collection centers and forecast a modest increase in plasma costs, tempering overall margin growth,” he said. These extra costs will be a focus for analysts as well.

During the year the company acquired Calimmune, its entry into the gene therapy space.

Its new CSL112 cardiovascular disease product, which aims to prevent second-time-around heart attacks and stroke after a patient suffers an initial heart attack and which Mr Perreault has described as this product as CSL’s “biggest transformative product at the moment” is now in a Phase III clinical trial.

“If successful, these new therapies will fuel growth for CSL in the years to come,” Mr Perreault said yesterday.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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