CSL: Result 2012
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CSL’s 2012 result was outstanding. Revenue, in US dollar terms, grew 13% to US$4,616m, whilst net profit grew 12% to US$1,024m. Earnings per share rose a more meaningful 16% due to the company’s $900m share buyback program. A final unfranked dividend of 47 cents per share (ex-date 17 Sep) was declared bringing the annual total to 83 cents up from 80 cents in the prior year.
CSL’s primary business, CSL Behring, increased sales by 12% in US dollar terms driven by a particularly strong result from immunoglobulin products. Immunoglobulin sales increased 15% thanks to higher volumes and swifter customer migration to more expensive products such as Hizentra and Vivaglobin.
| Full year to 30 June | 2012 | 2011 | Change (%) |
|---|---|---|---|
| Revenue (AU$m) | 4,433 | 4,188 | 6 |
| Revenue (US$m) | 4,616 | 4,097 | 13 |
| Net profit (AU$m) | 983 | 941 | 4 |
| Net profit (US$m) | 1,024 | 918 | 12 |
| EPS (AU cents) | 189.2 | 174.0 | 9 |
| EPS (US cents) | 197.2 | 169.8 | 16 |
| DPS (AU cents) | 83.0 | 80.0 | 4 |
Unpinning much of CSL’s growth are discoveries born of its 1,000-employee strong research and development division. CSL invests around 8% of sales in R&D, a move we support. The efficacy of this spending is demonstrated in its speciality products business where newer business lines, such as peri-operative bleeding products Corifact and Beriplex, have helped the division achieve 18% sales growth (in US dollar terms).
From 2013 the company will report in US dollars, and that’s not the only change. 2013 will also see Paul Perreault, currently president of CSL Behring, take the reigns as chief executive following the retirement of the long standing Brian McNamee. The new chief appears to be a sensible choice and we remain confident that he’ll manage CSL with the same rigor, long-term focus and shareholder-friendliness that’s marked McNamee’s tenure.
Management expects net profit to grow around 10% in 2013. Earnings per share may grow more quickly if CSL commences another share buyback. Mr Market, however, has again been drawn to CSL's quality, which has seen its stock price rise 51% over the past year and 18% since Why CSL is a top 10 business from 10 Apr 12 (Hold – $35.62). On a forecast price to earnings ratio of around 20 CSL isn’t cheap, but this isn’t a company to let go of too easily. HOLD.
Note: The Growth portfolio owns shares in CSL.
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