INVESTORS have applauded CSL's upgraded profit forecast after the blood products and vaccines maker sought to immunise itself against the euro-zone crisis.
CSL upgraded its full-year profit growth forecast to 13 per cent, or about $1 billion, leading to almost a 3 per cent increase in the company's share price yesterday.
Managing director Brian McNamee said despite a fall in earnings CSL would experience significant growth in the next three years, particularly in emerging markets.
"We are seeing excellent growth in the United States and Europe and I wouldn't want to ignore those markets," Mr McNamee said. "Clearly we see opportunities for further growth."
CSL unveiled a 3.4 per cent slide in net profit to $483.261 million for the half year to December 31, 2011, from $500.2 million in the previous corresponding period.
But Mr McNamee said CSL was confident its full year earnings for 2011-12 would be stronger and upgraded CSL's profit growth forecast from 10 to 13 per cent.
He said the first-half profit result had been affected by exchange rate fluctuations.
After getting its fingers burnt in the Greek debt crisis last year, CSL made an ?11 million ($A13.71 million) first-half provision related to accounts in the troubled southern European economies of Greece, Italy, Spain and Portugal.
Mr McNamee added the Melbourne-based biotech would continue providing its essential medical products to Greece, despite the risk of not getting paid for them.
In August CSL revealed Greece's state-owned hospitals could not afford to pay millions of dollars owed to CSL for the supply of products to treat haemophiliacs and trauma patients, leading it to write off $25 million for 2010-11.
Sales of its essential products in Europe and the US were positive, as were sales in new markets such as China, Russia, the Ukraine and Brazil.
On another front, CSL said it was close to finalising an investigation into why hundreds of Australian children under five had reactions to CSL's seasonal flu vaccine in 2010.
CSL shares were 80?, or 2.6 per cent, higher at $31.75 yesterday afternoon. It declared an unfranked interim dividend of 36? a share, up from 35?.
Frequently Asked Questions about this Article…
What profit upgrade did CSL announce and what does it mean for investors?
CSL upgraded its full-year profit growth forecast to 13% (about $1 billion), up from a previous 10% forecast. For investors this signals management expects stronger full-year earnings for 2011–12 and potential support for the share price and dividends.
How did CSL perform in the half year to December 31, 2011?
CSL reported a 3.4% slide in net profit to $483.261 million for the half year to December 31, 2011 (from $500.2 million a year earlier). Management said the first-half result was affected by exchange rate fluctuations.
Why did CSL point to exchange rates and Europe when explaining its results?
CSL said exchange rate fluctuations weighed on first‑half earnings. The company also booked provisions tied to troubles in southern European economies after exposure to the Greek debt crisis, which affected short‑term results.
How did CSL manage exposure to the euro‑zone crisis and Greek debt issues?
CSL made an €11 million (about A$13.71 million) first‑half provision related to accounts in Greece, Italy, Spain and Portugal. Earlier it had written off $25 million for 2010–11 due to unpaid bills from Greek state hospitals, but said it would continue supplying essential medical products to Greece despite payment risk.
Which markets is CSL expecting to drive future growth?
CSL expects significant growth over the next three years particularly from the United States and Europe, and it reported positive sales growth in new and emerging markets such as China, Russia, Ukraine and Brazil.
How did the market react to CSL's upgraded profit forecast?
After the upgrade, CSL shares rose almost 3% (2.6%) to $31.75, reflecting a positive market response to the stronger profit guidance.
Is CSL investigating safety concerns related to its seasonal flu vaccine?
Yes. CSL said it was close to finalising an investigation into why hundreds of Australian children under five had reactions to CSL’s seasonal flu vaccine in 2010.
What dividend did CSL declare and is it franked?
CSL declared an interim unfranked dividend of 36 cents a share, up from 35 cents in the prior period.
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