HEALTHCARE giant CSL will carry out a strategic review of its pharmaceutical and vaccine operations in a bid to maximise its growth prospects following a recent split from the company’s dominant plasma operations.
With global demand for CSL’s plasma-derived therapeutics driving record earnings for the first half of the financial year, soon-to-retire chief executive Brian McNamee revealed that an opportunity existed to take a closer look at the Australian-based segment of the business responsible for manufacturing and marketing a range of vaccines, prescription drugs, antivenoms and diagnostics for the local market.
While Dr McNamee quickly dismissed any suggestion that the split would necessarily lead to a demerger or sale of the business, he conceded that it would come under “a spotlight”, as management reviewed the best strategy to take it forward.
BioCSL, which was previously known as CSL Biotherapies, began operating as a stand-alone business on January 1. Its newly appointed head is John Anderson, who was previously vice-president of commercial operations. The company’s chief financial officer Gordon Naylor is also expected to take a strong interest in the asset, which generates about 10 per cent of group revenue but posted a small operating loss during the interim period.
“BioCSL will, I guess, report about how it’s going to try to grow as an organisation,” Dr McNamee said. “The split certainly creates an opportunity for a greater focus on that business.”
Confirmation of the move came as CSL yesterday exceeded the market’s expectations by reporting a net profit of $US627 million ($605.8m) for the six months to December 31, up 24 per cent on the prior corresponding period.
Global sales revenue of $US2.5 billion grew 7 per cent, with the CSL Behring division reporting a 9 per cent rise in sales to $US1.96bn on the back of strong demand for its immunoglobulin products in the US and Europe as well as its expanding presence in emerging markets, particularly Asia. Profit margins across the group benefited from improved operational efficiencies and earnings per share jumped 30 per cent thanks to recent capital management initiatives, including its current $900m share buyback.
While CSL shares rose in early trading — hitting a record high of $59.12 within minutes of the Australian Securities Exchange opening — the price fell back throughout the session to close down 3c at $57.21, despite the company re-affirming its full-year guidance of 20 per cent profit growth.
Macquarie Equities analysts Craig Collie said the market had yet to factor in the company’s improved profit margins.
“The result certainly beat our expectations,” Mr Collie said. “The most exciting feature was the impressive margin expansion — it bodes well for continued growth.”
The better-than-expected result comes as CSL prepares to change leaders, with the long-serving Dr McNamee to hand over the reins to CSL Behring president Paul Perreault at the end of the financial year.
Mr Perreault, who was yesterday appointed to CSL’s board, also fronted his first results briefing alongside Dr McNamee, telling investors and analysts that it was a “real honour” to be taking over from his predecessor.
He said he saw solid ongoing demand for the company’s immunoglobulins and exciting opportunities for its emerging speciality products portfolio.
Dr McNamee, who announced his impending retirement in August after 23 years in the job, attributed CSL’s success to a consistent strategy and maintaining focus on short, medium and long-term growth.