The CSL Ltd (ASX: CSL) share price seems to be stuck in the doldrums over the last couple of weeks. Shares in the biotherapeutics giant have been on the decline since the company announced its half-year results 2 weeks ago.
Interestingly, CSL reported a significant 45% increase in its net profit after tax. So why is the share price falling? As always, the devil is in the details.
Dividends cut in Aussie dollar terms
No, it’s not CSL picking favourites between the United States and Australia. Due to CSL’s operations being heavily focused in the US, most of the company’s financials are shown in US dollar terms. This causes fluctuations when interchanging between multiple currencies.
In this case, CSL declared a dividend increase of 9% to US$1.09 per share. However, the Australian dollar has strengthened by 17% compared to the USD in the last year. That means the Australian equivalent is actually less. In fact, CSL would have had to increase its dividend by more than 17% for it to increase on last year’s payout for Aussies.
Yesterday’s GDP figures indicate that the currency issue could worsen. Australia’s economy is rebounding strongly, backed up by the surprising 3.1% of GDP growth for the last quarter. The CSL share price also tumbled 1% yesterday.
The disappointing dividend for Australian shareholders is likely in focus today as CSL’s shares go ex-dividend. Meaning, if shareholders wanted to collect this dividend, but don’t want to stick around for the next one, today is the last day they had to wait around for.
CSL COVID-19 vaccine is a straggler
While Pfizer Inc (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) were provisionally approved earlier in the year, the AstraZeneca (LON: AZN) COVID-19 vaccine that CSL is set to manufacturer locally took a bit longer.
Furthermore, as reported by The Australian Financial Review, the AstraZeneca vaccine has lower efficacy than the Pfizer vaccine.
CSL resorted to an agreement for producing the AstraZeneca vaccine. This came after the company abandoned its own development attempts with the University of Queensland. This decision was made after participants gave false positive readings for HIV.
Foggy future weighs on CSL’s share price
Management warned that plasma collections had been impacted due to the challenging environment in its half results. As a result, CSL had experienced additional costs associated with collecting plasma.
Additionally, analysts at Goldman Sachs made the decision to downgrade CSL’s rating to a neutral. Analysts were concerned that management only reaffirmed guidance on the strong profit lift, instead of upgrading. This was interpreted by the analysts as potentially signalling headwinds for the company.
Accounting for today’s move, the CSL share price has now fallen by 16.5% in the last 12 months.