You are using an older browser version. Please use a supported version for the best MSN experience.

CSL to hike spending after profit fall

AAP logoAAP 16/08/2016 Lilly Vitorovich

Blood products giant CSL has committed to boosting spending to grow its global operations after suffering a 10 per cent slide in profits due to continuing losses on its recently acquired Novartis flu vaccines business.

CSL - which has major facilities in Australia, Germany, Switzerland, UK and the US - on Wednesday posted a 10 per cent fall in annual net profit to $US1.24 billion, hurt by a $US205.5 million loss from Novartis and a $US115 million hit from currency swings.

Chief executive Paul Perreault said Novartis sales were lower than expected due to a mild flu season.

The $US275 million acquisition of the Novartis unit last July pushed CSL's Seqiris flu vaccine business - which includes the Novartis assets - to second largest globally behind French drug maker Sanofi.

Seqirus is forecast to book a loss in 2016/17, in line with its plans, but is expected to break even the following year.

Mr Perreault defeded the group's financial performance, pointing to a 5.2 per cent jump in underlying annual earnings.

"CSL has produced another strong result for the fiscal year, we really had a lot of robust demand for the differentiated biotherapeutics that we supply to patients around the globe," Mr Perreault said on the media earnings call.

CSL plans to raise $US500 million in the US market later this year, with Mr Perreault saying the funds would be invested in Seqirus, other expansion and capital management.

Capital expenditure is expected to jump to $US800 million in 2016/17 from $566 million, with CSL expanding its manufacturing and logistics facilities and continuing to open new plasma centres in the US and Europe.

CSL said it will also consider another share buyback program of $A500 million following the completion of its current $A1 billion buyback.

CSL shares dropped five per cent to $110.84 on Wednesday as investors punished the company for falling short of guidance.

Bank of America Merrill Lynch said the group's guidance was 15 per cent below market consensus.

CSL expects underlying after-tax profit, including the Novartis unit, to be up 11 per cent this year.

Annual underlying profit after tax - stripping out the Novartis losses - rose 5.2 per cent at $US1.47 billion, on a constant currency basis, thanks to an 8.6 per cent rise in underlying revenue.

Morningstar healthcare analyst Chris Kallos said he was disappointed with the bigger than expected loss from the Novartis unit.

CSL also disclosed that Mr Perreault's total renumeration package jumped 41 per cent to $8.16 million in 2016.

CSL's FY16 FIGURES

* Net profit down 10pct to $US1.24b

* Revenue up 8.2pct to $6.12b

* Final dividend up 3pct to US68c a share

image beaconimage beaconimage beacon