Research & Development Underpins CSL’s Future Earnings
- FY21 net profit after tax and sales up 10 percent to US$2375 million, and US$10,310 respectively
- High gross profit margin of 56.7 percent on sales
- Record final dividend of US$1.18 (A$1.61) per share, US$2.22 (A$3.06) for full year
- High cash conversion ratio of 165 percent, with cash flow from operations at US$3622 million
CSL (or the ‘Company’) is a world-leader in the research, development, manufacture and distribution of biopharmaceutical products. The Company’s operating model comprises 2 businesses – CSL Behring and Seqirus. CSL Behring provides plasma-derived and recombinant products and operates plasma collection networks under the CSL Plasma banner. Seqirus is in the influenza vaccines business. It manufactures and distributes non-plasma biotherapeutic products and develops influenza related products.
FY21 Financial Result
CSL delivered a strong result of US$2,375 net profit after tax, up 10 percent on a constant currency basis. This profit was derived from sales revenue of US$10,310 million (also up 10 percent), at a 56.7 percent gross profit margin. This high gross profit margin is characteristic of pharmaceutical companies, especially a global player with scale, like CSL.
The profit result translates to earnings per share of US$5.22, up from US$4.63 a year earlier. A record final dividend of US$1.18 (approximately A$1.61 per share, franked at 10 percent) will be paid to shareholders on 30 September. This brings the total full year dividend to US$2.22, (approximately A$3.06 a share). Operating cash flow was $3,622 million, reflecting a strong cash conversion ratio of 165 percent. R & D expenditure was $1,001 million, up 5 percent on the prior comparable reporting period. CSL has a world-class research capability that assists with planning for future revenue well into the following decades.
CSL Behring accounts for 85 percent of CSL’s revenue, serving 100 countries across Asia Pacific, Europe, Latin America and North America. This division provides medicines that treat serious diseases and medical conditions. These diseases include people living with conditions in the immunology, haematology, cardiovascular and metabolic, respiratory and transplant therapeutic areas. CSL Behring’s products are also used in cardiac surgery for burn treatment and for urgent warfarin reversal.
A leading influenza vaccine provider in the world, Seqirus is at the forefront of influenza protection globally and a transcontinental partner in pandemic preparedness. It operates modern production facilities in the US, UK and Australia, with commercial operations in more than 20 countries.
CSL has guided the market to a lower net profit after tax range of US$2150 million to US$2250 million, at constant currency. Constant currency removes the impact of exchange rate movements, enabling comparability of operating performance from one year to the next. Plasma collections are being impacted by COVID-19, particularly in the US where volumes are slightly lower due to lockdowns that restrict the movement of donors. Margins are being impacted by higher collection costs in this COVID-19 environment. As vaccination rollout builds, collections should normalise, implying any profit decline is likely to be temporary.