Australia’s biggest drug company, CSL Ltd, seems to have run out of ideas for new investment, so it is going for another buyback offer to shareholders of up to $900 million.
The buyback is the second since its attempt to buy US blood plasma group Talecris for $US3.4 billion, fell over in 2009, and it dominated yesterday’s 2010 profit announcement.
The company has already returned $1.8 billion to shareholders.
The amount involved in the buyback is 90% of the company’s net profit for the 2010 year of $1.05 billion, but CSL is rolling in cash, with cashflow from operations rising 14% to more than $1.16 billion in the latest year.
Net profit fell from the $1.15 billion earned in the 2009 financial year, but a touch better than the company’s guidance of $980 million-$1.03 billion.
Operational net profit of $1.053 billion was 3.2% higher from $1.02 billion in the previous year.
Revenue fell 8.2% to $4.627 billion, while sales revenue at constant currency was up 10% at $5.08 billion.
CSL declared a final dividend of 45 cents, franked to 5.28 cents per share, up from the 40 cents paid in the 2009 year.
The company said it expected annual net profit in fiscal 2011 of about the 2010 level.
“For the 2010/11 financial year we anticipate net profit after tax of between $980 and $1,030 million, at fiscal 09/10 exchange rates.
“Although slightly less than 2009/10, this represents a growth of up to about 10% on the underlying operational profit, largely reflecting CSL’s global plasma therapeutics business which is expected to deliver this growth.”
But foreign exchange rate movements may impact this forecast, the company warned.
CSL said it “continues to maintain a robust balance sheet, supported by strong cashflows and excellent growth prospects”.
As a result, the company would increase its dividend payout ratio to 43%, and buy back another $900 million in shares, after the huge earlier buyback of more than 54 million shares, which cut the size of the company’s issued capital by about 9%.
While the World Health Organisation had moved on from the recent influenza pandemic alert, CSL said underlying operational profit growth still would be “solid, largely underpinned by ongoing growth in demand for plasma therapies”.
CSL said its annual result had been affected by an unfavourable foreign exchange “headwind” of $187 million.
The key challenge for CSL is to find a new source of growth after its planned takeover of US rival Talecris Biotherapeutics was blocked by US regulators in 2009.
Spain’s Grifols is now trying to buy Talecris for $US3.4 billion from its American private equity buyers.
CSL was knocked back on competition ground.
CSL’s shares had risen just under 1% so far this year, while the broader market was off about 8%.
News of the buyback and an almost steady profit forecast for 2011 didn’t impress investors who sold the shares down 88c, or 2.7% to $31.90.
That’s pushed the shares into the red for 2010, while the market is now off about 8%.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.