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3 big surprises from the CSL full year results

biotech shares

Last week blood product company CSL Limited (ASX: CSL) released a huge result for the 2020 financial year. The CSL share price soared on the news. But three things in particular caught me by surprise:

1. CSL was able to avoid major COVID-19 disruption

Collecting plasma from donors is an essential part of producing many of CSL Behring’s products. I was expecting the disruption from the COVID-19 pandemic might have a big impact on the company’s performance. However CSL was able to avoid major disruption and says plasma collections only dropped by around 5% compared to the prior financial year.

This was helped somewhat by the opening of 40 new plasma collection centers and a US Food and Drug Administration mandate that reduced plasma quarantine periods from 60 to 45 days. The reduction opened up inventories and improved the availability of essential blood components.

Still, CSL says that COVID-19 restrictions are expected to continue to restrain plasma collections in the 2021 financial year and it expects increased collection costs for plasma in the year ahead.

2. Cash flow from operations rocketed 51%!

Given revenue lifted by a solid 7.2% in the 2020 financial year I was not expecting a huge 51% jump in cash flow from operations. The increase helped to power CSL’s cash balance to US$1.2 billion, up almost 82% on the prior year.

Because CSL has changed to the ‘indirect’ method of reporting cash flows, it can be a little tricky to tell exactly what drove the increase. But essentially, the higher profit result, combined with less cash tied up in working capital and less cash paid out in taxes, helped to lift cash from operations higher.

3. CSL has one of the top CEOs in the world

Earlier this year, I wrote that I think CSL could be one of the best companies in the world. So I shouldn’t have been surprised to discover that CEO Paul Perreault had been named as one of the top 100 CEOs in the world by Harvard Business Review. In fact, he came in a few places ahead of fellow healthcare titan Colin Goldschmidt, CEO of Sonic Healthcare Limited (ASX: SHL).

Paul Perreault has been with CSL since July 2013. CSL’s reported revenues have almost doubled since then, climbing from US$5.1 billion to US$9.2 billion.

With the successful integration of flu vaccine business Seqirus, and continuing success in research and development, it’s no wonder Perreault is considered one of the best.

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Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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