CSL (CSL) SNAPSHOT
Profile: CSL is a global biotech company which develops and delivers medicines and vaccines. Its two main business segments are CSL Behring and Seqirus. Behring focuses on treatments such as immunoglobulins and albumin, which are manufactured from blood plasma (a component of blood). These are used for the treatment of diseases and conditions such as immune deficiencies and bleeding disorders. Seqirus largely generates revenue from influenza vaccines.
History: The Commonwealth Serum Laboratories was established in 1916 to produce vaccines and antitoxins. Over the years, CSL has provided Australians with access to insulin, penicillin and various vaccines against diseases such as influenza and polio. Listed on the ASX in 1994, CSL has made various acquisitions over time including Aventis Behring, which is now known as CSL Behring, Nabi and the Novartis influenza business, now known as Seqirus.
Earnings composition: CSL Behring reported Earnings Before Interest and Tax (EBIT) of US$2.4bn (94% of group EBIT) in FY19, while Seqirus reported US$154m (6%). CSL’s main markets are North America and Europe, as measured by revenue.
Most recent result – 1H20: EBIT increased 5% (up 8% on a constant currency basis) on the prior corresponding period (pcp) to US$1,632. CSL Behring EBIT increased 3.2% on the pcp to US$1,289m. CSL Behring revenue increased 8.7% on the pcp to US$3.8bn, driven by strong growth in immunoglobulins (IG). During the half, 20 new US plasma collection centres (required to collect blood for IG production) were opened. Seqirus EBIT increased 13% on the pcp to US$343m. Transitioning to a new distribution model in China resulted in a 33% decrease in overall albumin sales, in line with guidance given with the FY19 result. Net profit after tax (NPAT) increased 7.5% to US$1,248m, from US$1,161 in the pcp (up 11% on a CC basis). CSL declared a dividend of US$0.95, up from US$0.85 in 1H19.
Company outlook: CSL intends to open c.40 new collection centres in FY20. The company upgraded FY20 NPAT guidance to $2,110-2,170m on a constant currency basis (up 10-13% on FY19 NPAT of US$1,919m). The guidance includes the impact from the transition to a new albumin distribution model in China.
Important dates: Ex-dividend date is 11 March 2020. Payment date is 9 April 2020. FY20 results are scheduled for 19 August 2020.
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