CSL half-year profit jumps 8pc

Australia’s biggest health company, CSL, has reported an 8 per cent surge in half-year net profit.

CSL is closing in on Commonwealth Bank as Australia’s largest stock by market capitalisation. Picture: iStock.

Australia’s biggest health company, CSL, has reported an 8 per cent surge in net profit as it closes in on Commonwealth Bank on becoming the ASX’s largest stock.

Net profit rose to $US1.248bn ($1.86bn) in the six months to December 31, reflecting an 8 per cent increase on the same period in 2018. Meanwhile sales revenue soared 8.4 per cent to $US4.7bn.

Immunoglobulin therapies were the biggest sales driver for the company, recording a 26 per cent increase in revenue to $US1.99bn.

CSL chief executive officer Paul Perreault said the results reflected the “focused execution of our strategy, robust demand for our differentiated medicines and a deep, inherent passion for meeting the evolving needs of our patients”.

Demand for immunoglobulin therapies is continuing to grow amid a tight plasma market, prompting CSL to open 30 new plasma collection centres last year, taking the total number of centres in its network to more than 230. This year it plans to open another 40 centres to keep up with the strong demand.

“Our largest franchise, the immunoglobulin portfolio, performed exceptionally well, with Privigen sales growing 28 per cent and Hizentra sales up 37 per cent,” Mr Perreault said.

“Underpinning this growth has been continued strong patient demand together with an expanded label claim for both Privigen and Hizentra to now include CIDP (Chronic Inflammatory Demyelinating Polyneuropathy), a debilitating neurological disorder.”

Sales of CSL’s albumin - a protein made in the liver that keeps fluid leaking from blood vessels - grew in all markets except China, which weighed on that portfolio’s revenue, which sank 33 per cent to $278m

Mr Perreault attributed the decrease in albumin sales in China to CSL switching to a new direct distribution model in that country.

“This transition has seen overall albumin sales decrease... which is in line with guidance. The China transition is progressing well and will improve our participation in the value chain as well as allowing us to now work directly with clinicians,” he said.

“The availability of albumin to patients has not been impacted and reported sales are expected to return to a more normalised level in FY21.”

The results come as CSL shares have continued to surge, with its market capitalisation reaching $147.84bn, a whisker from another former government business enterprise, Commonwealth Bank, which has a market capitalisation of $149.97bn.

While BHP, which is also listed in London, has total market capitalisation larger than either CSL or Commonwealth Bank, its locally-listed shares are dwarfed by each of the pair.

Mr Perreault also upgraded CSL’s full year profit guidance, which is now expected to be between $2.1bn and $2.17bn, representing 10-13 per cent growth on 2019.

This growth incorporates the one-off financial impact of transitioning to a new direct distribution model in China,” Mr Perreault said.

Analysts had expected the upgrade.

“CSL is the most likely stock in our sector to upgrade guidance, in our view. Its market leading position within the tight IG market where it is able to meet demand and achieve positive mix and pricing growth supports 11 per cent earnings growth in FY20 and 22 per cent EPS growth in FY21,” Credit Suisse analysts said in a note to investors.

CSL will pay an interim dividend of US95c a share on April 9.