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US sales boost helps lift CSL H1 profit 6.8pc

Lex Hall with AAP  |  13 Feb 2019Text size  Decrease  Increase  |  
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Pharmaceutical giant CSL has lifted first-half profit 6.8 per cent to $US1.16 billion ($1.63 billion), helped by increased drug sales in the US.

Sales revenue for the six months to 31 December rose 8.6 per cent to $4.342 billion, and CSL (ASX: CSL) raised its interim dividend by six US cents to 85 US cents.

Australia's fifth-largest listed company said it expects full-year profit to come in at the upper end of its existing guidance of $US1.88 billion to $US1.95 billion, on a constant currency basis.

"This is a solid result and particularly pleasing given it follows a very strong comparative period," chief executive and managing director Paul Perreault said in a statement.

biotechnology CSL blood plasma vaccines

CSL says Seqirus's Flucelvax flu shot has proven more effective than traditional influenza vaccines incubated in eggs

The company's drug therapies for patients suffering from the debilitating neurological disorder CIDP, the blood-clotting disorder haemophilia B and the hereditary swelling disease HAE have lifted sales, Perreault said.

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CSL's influenza vaccine business, Seqirus, delivered first-half earnings before interest and taxes of $300 million, compared to a full-year loss of more than $200 million three years ago, Perreault said.

The company says Seqirus's Flucelvax flu shot has proven more effective than traditional influenza vaccines incubated in eggs, although due to the seasonality of the business Seqirus will likely post a loss for the second half of the year.

Perreault said Seqirus's president, Gordon Naylor, will retire later this year after a successful 31-year career at CSL, although he will stay on until his replacement is named.

At 1pm Sydney time, CSL shares were down $4.14, or 2.13 per cent, at $189.56.
It is trading at an 8 discount to Morningstar’s fair value estimate of $207.

Morningstar analyst Mathew Hodge applauded the result, saying the turnaround was going better than expected.

Hodge played down the dip in the share price reaction, noting that CSL had performed well in the lead-up to this result, nudging $200 in late January.

The market was perhaps underwhelmed by the 8 per cent sales increase at the blood products division CSL Behring, Hodge said.

"It's a pretty strong result overall. Seqirus has had a really good first half. EBITDA is up 60 per cent and but CSL Behring hasn't grown as quickly as thought so all the growth came out of vaccines. But the turnaround is going to be better than expected." 

"The share price fall is not a big in the scheme of things. There were a couple of small one-off items which affected the optics of the overall profit – an unfavourable currency movement and an acquisition payment.

"But you're trying to guess where the potential disappointment is. We were expecting the year to come in at the top end of guidance. Perhaps there's an expectation of a bigger upgrade."


. Lex Hall is content editor with Morningstar Australia

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