All eyes will be on the CSL Limited (ASX: CSL) share price on Thursday.
This morning the biotech giant released its highly anticipated half year results.
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How did CSL perform in the first half?
CSL was a very strong performer during the first half of FY 2021 and delivered a significant jump in profit.
For the six months ended 31 December, the company reported revenue of US$5,739 million, up 16.9% on the prior corresponding period. This was driven by a 9% increase in CSL Behring revenue and a 38% jump in Seqirus revenue. The latter was the result of a 44% increase in seasonal influenza vaccine sales.
On the bottom line, margin expansion led to the company delivering a 45% jump in reported net profit after tax to US$1,810 million.
Management advised that this reflects solid growth in its core immunoglobulin portfolio, the successful transition to its own distribution model in China, strong growth HAEGARDA sales, and an exceptionally strong performance by its Seqirus business.
In light of this, the CSL board has elected to increase its interim dividend by 9% to US$1.04 per share. Though, due to the strengthening of Australian dollar over the last 12 months, this is actually down 9% to A$1.34 in local currency.
CSL's Chief Executive Officer and Managing Director, Paul Perreault, was pleased with the strong half year result.
He said: "I am pleased to report a strong result in an unprecedented time of uncertainty during the most severe pandemic of our lifetime. Guided by our values, our 27,000 dedicated employees remained focused on delivering on our promise to patients and public health. Our people and business model both demonstrated tremendous agility and resiliency in this most challenging of environments."
What were the drivers of CSL's growth?
The CSL Behring business delivered a 9% increase in total revenue to US$4,315 million and a 24% lift in earnings before interest and tax (EBIT) to US$1,665 million.
This was driven largely by a 7% increase in immunoglobulins sales and a massive 93% jump in albumin sales. The latter was thanks to its new distribution model in China. This was supported by a 1% increase in haemophilia sales and a 3% lift in speciality sales.
The Seqirus business was arguably the star of the show with a 40% increase in revenue to US$1,340 million and a 112% jump in EBIT to US$693 million.
This was driven by significant growth in seasonal influenza vaccines. Management notes that a record of over 100 million doses of NH 20/21 were given during the half.
Plasma collection headwinds
One thing that has been weighing heavily on the CSL share price this year has been concerns over plasma collection headwinds.
Mr. Perreault addressed this, saying: "Our plasma collections have been adversely affected during the pandemic. To combat this, we have implemented a number of initiatives to increase plasma collections and introduced a customer fulfilment process to ensure the equitable distribution of medicines to patients."
"We remain the industry leader in opening new plasma collection centres and investing in future innovation – positioning CSL to emerge strongly when the COVID-19 crisis recedes," he added.
However, the company has acknowledged that additional collection costs have been incurred, though it hasn't quantified this.
Outlook
Mr Perreault is positive on the future, stating that: "Demand for CSL's core plasma, and influenza vaccine products remains robust."
Though, he has warned that the additional work it has been doing on COVID-19 vaccines in Australia has resulted in significant opportunity costs to its standard business and manufacturing operations.
As a result, there will be an increase in operations and research and development spend in the second half as its restarts projects and builds them back to scale.
In addition, given how its vaccines are seasonal, the Seqirus business is expected to make its customary loss in the second half.
In light of this, the company is forecasting a full year net profit after tax of US$2,170 million to US$2,265 million at constant currency. This is in line with previous guidance and represents year on year growth of 3% to 8%.
