CSL Limited (CSL)

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19 August 2020

Results 

Full Year 2020

Full Year 2019

Change

Total Revenue (US$m)

9,295

8,539

+9%

Bloomberg Consensus (US$)

9,293

 

 

CSL Behring EBIT (US$m)

2,451.4

2,350.6

+4.3%

Seqirus EBIT (US$m)

265.1

153.4

+72.8%

Net Profit after Tax (US$m)

2,247

1,919

+17%

Bloomberg Consensus (US$m)

2,113

 

 

Final Dividend (US$)

1.07

1.0

+7%

CSL Limited (CSL) beats expectations despite COVID-19’s negative impact   

What happened?

  • CSL Limited (CSL) – the largest company in the healthcare sector – posted a solid 17% lift in net profit to US$2,247m for the 12 months to 30 June 2020 (at constant currency, which removes the impact of exchange rate movements). Despite supply challenges created by the COVID-19 pandemic, the result beat the average expectations of 13 analysts surveyed by Bloomberg. At the time of writing, CSL is the largest company on the ASX by market capitalisation.
  • A US$1.07 per share final dividend was declared, payable on 9 October 2020. It will trade ex-dividend (which determines dividend eligibility) on 10 September. Based on today’s exchange rate that is ~A$1.47 per share. 
  • It operates two main business units (CSL Behring and Seqirus). CSL Behring is its largest earning division. It provides medicines and treatments for those with rare and serious medical conditions, including bleeding disorders and immune deficiencies.
  • Seqirus is one of the world’s largest influenza vaccine providers, created when CSL purchased the Novartis vaccine business in 2015. It manufactures mainly in Australia, the UK and the US, however still only accounts for a small portion of group profits.
  • Two of CSL’s largest competitors are Spanish group, Grifols and Japanese company, Takeda.

Why did it happen?

  • CSL Behring was once again easily its biggest earner, with revenue (at constant currency) lifting by 9% and the business accounting for ~90% of Group EBIT. Its immunoglobulin (IG) portfolio was as usual the main driver of the division and the fastest grower, with revenue lifting by 20% and accounted for more than half CSL Behring’s revenue. Demand has been strong from patients suffering from chronic conditions such as Primary Immune Deficiency and neurological disorders. COVID-19 has significantly impacted the collection of plasma across its hundreds of centres globally. Plasma is an essential raw material used in the production of many of its therapies. 
  • Seqirus – its flu vaccine business – posted a massive 72.8% lift in EBIT as Governments around the world seek to protect their populations from the potential co-infection of influenza and COVID-19. It expects demand to continue as nations grapple with the pandemic. 

Where to now?

  • Looking forward, CSL is anticipating net profit to be in the range of approximately US$2,100 and US$2,265m. This suggests either a slight decline or modest improvement on the FY20 result. CSL has a long history of providing conservative guidance, however what complicates the outlook is coronavirus uncertainty. The pandemic has already impacted its supply chain due to a decline in plasma collections. 
  • CSL warned that ‘…predicting the underlying outlook in the market and providing a trend is challenging given the circumstances presented by COVID-19’. 
  • CSL shares surged on the result. 

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