If you find yourself worrying about the fact the CSL Limited (ASX: CSL) share price has fallen 15% in the last 12 months, here’s a great way to shift your focus.
Think about how the company might look a decade from now. Yes, ten whole years.
After all, the real magic of investing is finding companies that can relentlessly grow and compound earnings over long periods of time. Thinking about a company’s long-term plans can help to put short-term share price movements in perspective.
And CSL actually has a strong vision for how it wants to grow over the next decade. Here are three things we can expect to see from the company over the next ten years:
1. A new manufacturing facility in Australia
In November last year, CSL announced that the company’s wholly-owned subsidiary Seqirus will invest more than $800 million in a new manufacturing facility in Melbourne. The facility will produce seasonal and pandemic flu vaccines as well as antivenoms for Australian snakes, spiders and marine creatures.
The new facility is supported by a 10-year supply agreement with the Australian Government and is expected to be operational by mid-2026.
2. Significant investment in R&D
In addition to the new manufacturing facility, CSL has announced some significant plans to continue investing in research and development (R&D). This includes building a brand-new global headquarters in the Parkville Biomedical Precinct in Melbourne. The huge 16-storey building is expected to open in 2024 and will accommodate 800 employees and “expand our R&D footprint” according to CSL.
The company is also undertaking the construction of a special R&D campus in Marburg, Germany which is scheduled for completion in 2022 and will have enough space for around 600 employees.
Innovation is a core principle of CSL’s business so investing in R&D is an important driver of future growth. In FY20, CSL invested an incredible US$922 million in R&D across its businesses and expects to invest up to 11% of revenue on R&D in FY21.
3. More digitalisation across the business
One of the core pillars of CSL’s strategy over the coming decade is a focus on a digital transformation. Digital investments are often hard to see from the outside of a company. However, digital tools will help with essential areas like improving quality control, supply chain efficiency and regulatory compliance.
For example, the introduction of automated inspection technology can increase the number of vials inspected every minute which means manufacturing operations can accommodate greater demand.
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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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