CSL chairman Brian McNamee chooses business investment over share buybacks

CSL’s board is aware of investor interest in share buybacks and splitting but will invest in its business and pursue further acquisitions.

CSL chairman Brian McNamee has ruled out share buybacks and splits to deliver more value for investors but has flagged further ­acquisitions to grow the business and deliver value.

Speaking at the company’s annual meeting on Wednesday, Dr McNamee said that in the past five years the number of CSL shareholders had doubled to 240,000.

Asked whether CSL intended to launch a buyback or share-splitting program to enhance value for smaller investors, Dr McNamee said the company was choosing to invest back into the business.

“The board considers this each year and takes into account the company’s balance sheet, gearing levels and the funding required to invest back into the business,” he said.

“This financial year, CSL made significant investments in capital expenditure to expand our facilities and also spent in excess of $1bn in R&D programs. At this current time, CSL is investing back into the business instead of undertaking a buyback.”

CSL chairman Dr Brian McNamee. Picture: Bianca De Marchi

Dr McNamee said the board was aware of interest among some investors in splitting shares – a practice of issuing more shares by dividing the number on issue to increase liquidity. But he said a share split would not change the value of the company.

“Over the past five years, CSL shareholders have doubled in fact to 240,000, so we believe that investors are not deferred from investing in the company,” he said.

CSL shares fell 1.1 per cent to $279.70 on Wednesday against a flat broader sharemarket.

The company – originally the Commonwealth Serum Laboratories – briefly overtook the Commonwealth Bank in 2020 to become the ASX’s biggest company after its shares rose above $300.

A worker at the CSL Broadmeadows facility in Melbourne. Picture: Aaron Francis

But it has since fallen to third place, after BHP shifted its London-listed shares to Australia and CBA regained ground.

In the past year, CSL generated its second-highest profit of $US2.25bn ($3.58bn) off revenue of $US10.5bn, holding its dividend at $US2.22 a share. Dr McNamee said the company had several ­options to pursue further growth – acquiring other companies as well as investing in its own facilities.

He highlighted the group’s $16.4bn acquisition of Swiss renal treatments company Vifor Pharma as a way to fund further growth.

The Vifor acquisition is estimated to be 8 per cent earnings-per-share accretive to CSL this financial year. Morgan Stanley ­equity analysts said it could even propel the company’s shares to $400 in the next three years, and CSL could regain its crown as the biggest company on the ASX.

“Another way we can grow is by way of acquiring organisations that can benefit from being part of the CSL group, and that open up new fronts for the company to help patients,” Dr McNamee said.

CSL chief executive Paul Perreault. Picture: Aaron Francis

“We have done this in the past with acquisitions such as ZLB from the Swiss Red Cross, Aventis Behring in 2004, and the influenza business that became CSL Seqirus in 2015. These acquisitions have been carefully planned and thoughtfully integrated into CSL, and have underpinned the growth.

“In the 2022 financial year we announced the acquisition of Vifor Pharma, and in August we formally welcomed that company to our group as CSL Vifor. Through this acquisition, our global reach, R&D capabilities and balance sheet will help accelerate opportunities to bring new and innovative products to the large and underserved community of people suffering kidney disease and iron deficiencies.”

A market briefing on CSL Vifor will be held on Monday. Chief executive Paul Perreault said the company had “not discovered any material ­issues to alter our view on the positive strategic advantages, the fin­ancial attractiveness, or growth opportunities” in the deal.

“We are pleased to have Herve Gisserot, previously the chief commercial officer for Vifor Pharma, leading the CSL Vifor business,” Mr Perreault said.

Mr Perreault reaffirmed the company’s previous guidance of delivering revenue growth of 7 to 11 per cent, with net profit expected to be $2.4bn to $2.5bn.