CSL shares top $50 after profit upgrade

SHARES in global vaccine maker CSL reached all-time highs yesterday, after the company upgraded its profit growth forecast to 20 per cent, helped by a rise in royalties.

SHARES in global vaccine maker CSL reached all-time highs yesterday, after the company upgraded its profit growth forecast to 20 per cent, helped by a rise in royalties.

The Melbourne company, which manufactures the cervical cancer vaccine Gardasil as well as other lifesaving blood treatments, had originally expected profits to grow by 12 per cent.

The shares jumped $3.23 to a record $50.01. The company reported a net profit of $US1 billion ($957 million) last financial year. Its new profit outlook has been adjusted to remove the impact of exchange rate movements, after it started reporting in US dollars this year.

The chief executive of CSL, Brian McNamee, said the increased outlook was largely underpinned by the performance of CSL Behring, its large-scale plasma branch.

"A number of factors have contributed, including a higher level of sales, a better sales mix and improved efficiencies across the supply chain," Dr McNamee said.

"Also contributing to the better outlook is higher than anticipated royalty income from sales of Gardasil."

In 2007, the Australian government introduced Gardasil as part of a mass vaccination program against the human papillomavirus, which was offered to women and girls up to the age of 26.

CSL also manufactures vaccines for influenza, tetanus, measles, mumps and hepatitis A and B.

Macquarie Group analyst Craig Collie said that the positive outlook suggested the company was benefiting from its position in the healthcare market.

"It's clearly a strong upgrade and confirms just how positive market conditions are right now and how strong their competitive position is," he said.

Last month, CSL announced it would buy back another $900 million worth of shares, or 4 per cent of issued capital, over the next 12 months.

UBS analyst Andrew Goodsall said the outlook showed that CSL was also benefiting from its competitor Baxter undergoing a plant refurbishment that had cut its production by about 20 per cent.

"There has been robust demand as well," he said. "We think there is still growth in healthcare but there are obviously things going on that are peculiar to this [plasma] industry."

Dr McNamee, credited for building the company up from a local government enterprise to a global business, will end his 23-year tenure as chief executive in the middle of the year.

In 2000, he led the takeover of Swiss counterpart ZLB Bioplasma when he was fighting testicular cancer. Four years later, the company acquired a second big target, Aventis Behring in the US.

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