CSL reports $160m profit at half-year

CSL (ASX:CSL) has reported a strong net profit of $160.1 million for the first six months of the 2004-2005 fiscal year, up more than 500 per cent on the figures reported last year.

The strong profit includes a $95.8 million benefit from inventory included in the acquisition of Aventis Behring. But the adverse impact of foreign exchange fluctuations cost the company $34 million.

Sales revenues were also up more than 122 per cent to $1.4 billion, and the company has a net operating cashflow of $192 million, also up by 290 per cent.

And the company now expects to make a net profit for the full year of $270-295 million, depending on sales of the inventory from Aventis, and not including the profit from the sale of JRH, which was announced last month.

"This is a strong result. It endorses the strategy presented to shareholders over 12 months ago at the time of acquiring Aventis Behring. The last six months have seen a wave of initiatives designed to reshape CSL as a global bio-pharmaceutical company," said CEO Brian McNamee.

The company has announced a fully-franked interim dividend of $0.17, up significantly from last year's $0.12 dividend, and will also commence an on-market share buyback of up to 10 million shares, or up to five per cent of issued capital, as a result of the strong earnings.

McNamee said a combination of strong cash flows, cash on hand and undrawn bank facilities have given the company the ability to fund the buyback, while retaining the capacity to continue to finance R&D needs, invest in existing businesses and pursuit of strategic growth opportunities as they arise.

The acquisition of Aventis Behring in March 2004 has had a major impact on the company's earnings, according to McNamee. The integration of the plasma group with CSL's existing plasm business ZLB to form ZLB Behring has proceeded ahead of plan, and has provided benefits in excess of the company's initial projections, particularly in manufacturing, but also in commercial operations, head office functions and R&D.

"The ZLB Behring integration has been very well executed, attesting to the calibre of the staff involved. The success of integration and the improved operating environment have given us cause to anticipate a higher level of acquisition benefits, which includes raising our estimate of the ongoing value of integration benefits to between $US130 million and US$150 million," McNamee said.

McNamee said the company's current focus was to close the sale of JRH to US group Sigma-Aldrich, which will net the company US$370 million in cash.

"We have all the regulatory approvals now and it's just a matter of whether it happens by the end of this month or the end of next month," he said.