CSL chief executive Paul Perreault has warned the outlook for plasma collections remains challenging for the biotech giant, damping investor hopes for a profit upgrade after first-half earnings jumped 44 per cent.
The company’s shares opened up 5 per cent on Thursday, running as high as $295.30 early in the day after the country’s local COVID-19 vaccine manufacturer posted a net profit of $US1.8 billion ($2.3 billion) for the six months to December 31. Sales rose 15 per cent to $US5.7 billion in the half.
Strong demand for CSL’s flagship immune deficiency treatment Hizentra increased revenue at pharmaceutical division CSL Behring by 9 per cent to $US4.3 billion. Yet the company’s vaccine producer Seqirus was the standout performer, with sales up 38 per cent to $US1.4 billion amid global demand for seasonal influenza vaccines in the face of the COVID-19 pandemic, the company said in a statement to the ASX.
But Mr Perreault cautioned that despite being an exceptional result in tough market conditions, the numbers were more complicated than they first appeared.
“The full-year result will be heavily skewed to the first half,” he told analysts. “The impacts of COVID, both positive and negative, add a pretty heavy layer of complexity and uncertainty to our earnings profile until we get through this pandemic.”
CSL maintained its previous earnings guidance, predicting profits of between $2.17 and $2.27 billion for the 2021 financial year. Asked why the $131 billion biotech wasn’t increasing its forecasts, Mr Perreault highlighted that because of the seasonal nature of the flu vaccine business, Seqirus was expected to make a loss in the June half.
At the same time, the company is also doing everything it can to boost collections of plasma, the vital blood substance needed for many of its key treatments, as it faces a turndown in collections due to the pandemic.
December collections were 20 per cent below last year’s, with Mr Perreault saying the firm is continuing its efforts to use digital systems and social media and influencer outreach to bring more donors into centres. It’s also working hard to manage inventory levels to avoid shortages of some key medicines due to the lower collection results, and has halted taking on new customers for some product lines, he explained.
There is a lag time of several months between collection of plasma and the distribution of medicine products, so the slowdown of collections during 2020 is just only starting to have an effect.
“We’re very cautious about it at this point,” he told The Sydney Morning Herald and The Age. While not expecting products to run out of stock, “we know we’re currently up against the supply we collected six months ago,” he said.
Rhett Kessler, a fund manager at CSL investor Pengana Capital, said CSL was better placed than its rivals as the whole sector faces collection challenges.
“CSL remains the lowest-cost producer of plasma-based products, even as the whole industry faces significant hurdles in the collection of raw materials,” he said.
JP Morgan healthcare analyst David Low said the slowdown of plasma collection was expected to be a short-term issue and would have some impact on CSL’s profit numbers through the 2022 financial year, though the extent of it was hard to quantify.
“We are hopeful collections will recover as the US vaccine roll-out accelerates, allowing for a return to better days for CSL in [financial year 2023],” he said.
CSL declared an interim dividend of $US1.04 per share, up 9 per cent in US dollars, but down 9 per cent from last year for Australian investors as the greenback has weakened against the Aussie dollar.
Its shares retreated from their early spike but still traded 3.1 per cent higher at $289.86 by mid-afternoon on Thursday.
Source: Thanks smh.com