CSL Limited (ASX: CSL) shares could be a focal point today after the company once again impressed with its Half Year (HY) report. This time CSL was reporting for the period ending 31st December 2018.
CSL is Australia’s largest healthcare company, specialising in biopharmaceuticals. Founded in the late 1900s as the Commonwealth Serum Laboratories, CSL was sold by the Government to Australian investors in 1994 at $2.30 per share. Today, CSL is a global leader in blood plasma vaccines and antivenoms, providing relief for potentially life-threatening medical conditions.
The 5 Five Key Points
- Sales revenue was up 11% in constant currency (CC) terms to $4,505 million
- EBIT of $1,553 million, an increase of 6% in CC terms
- Net profit after tax (NPAT) up 10% at CC; a total of $1,161 million
- Earnings per share up 10% at CC to $2.56
- Interim divided up 8% to $0.85 per share
Analyst Targets
The Bloomberg estimate for NPAT was AUD$1.59 billion. Converting CSL results to AUD, actual NPAT was approximately AUD$1.636 billion. Therefore, it seems CSL has comfortably beaten estimates and they advised FY19 NPAT is now expected to be at the high end of previous guidance, which was a range of $1,880 million to $1,950 million.
Growth Drivers
CSL reported that the main drivers of growth were “standout performances” from its Immunoglobin, Specialty Products and Influenza Vaccines franchises. One of their products, Hizentra, was approved for Chronic Inflammatory demyelinating polyneuropathy (CIDP) which also helped to drive demand in the immunoglobulin portfolio. Other top performers were:
- Idelvion sales, up 55%
- Kcentra sales, up 19%, and
- Haegarda sales, which more than tripled in the HY period
Management Commentary
CSL’s Chief Executive Officer, Paul Perreault, said the growth is particularly impressive given the strength of last year’s results. He stated, “This is a solid result and particularly pleasing given it follows a very strong comparative period.”
He also noted the impressive growth of Haegarda and Idelvion, stating they have been, “transformational products and the sales growth reflects this. Haegarda sales have tripled and Idelvion sales are up 55%.”
Also noteworthy was the sales of Seqirus influenza vaccines. Mr Perreault noted, “Only three years ago it posted a full year loss of more than $200 million.Acknowledgingg its sales are heavily skewed to the first half of the financial year, Seqirus delivered a first half earnings before interest and taxes of over $300 million.”
Outlook
Mr Perreault advised that CSL is expecting to outpace the market once again in plasma collections.
The current plan to open 30-35 new collection centres in FY19 is on track. In the influenza market, Seqirus is expected to post a loss in the second half of the financial year due to the seasonality of the demand.
CSL currently has five new products in human clinical trials and they reported that patient recruitment for a cardiovascular disease trial is “progressing well”.
All sectors considered, CSL’s NPAT for its 2019 financial year is expected to be around $1,950 million -– meaning growth of approximately 12%.
My Take
CSL is a true Australian success story, and one of the most closely followed companies on the ASX.
This HY earnings report confirms that they can continue growing, even relative to previous strong periods. During the half, the company was named in the Top 100 Global Diversity and Inclusion Index and named in the Top 50 companies for Diversity in the US, demonstrating their commitment to inclusion and innovation.
CSL has been a reliable long-term investment, but with a share price close to $200, is it overvalued? This Rask Media article takes a closer look at whether the current CSL share price is fair, and whether it could be a buy.
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