* H1 profit rises 23 pct to A$617 mln, despite currency hit
* Swine flu vaccine helps offset drop in Gardasil royalties
* Sees year profit at upper end of 14-24 pct rise, constant
$ * Shares jump 5 percent, have underperformed over past
(Adds analyst, CEO comments, share price)
By Sonali Paul
MELBOURNE, Feb 17 Australian vaccine and blood
products maker CSL Ltd (CSL.AX) stuck to its full year profit
forecast after reporting a 23 percent rise in first-half
profit, which beat broker forecasts and sent its shares up 5
First-half profits were bolstered by sales of the H1N1
swine flu vaccine and seasonal flu vaccines and stronger
margins in its main business, blood plasma products, which
offset a drop in royalties from its HPV cervical cancer
Analysts said the result beat forecasts largely due to
swine flu vaccine sales, which are not expected to be as strong
in the second half.
"This was always going to be skewed to the first half
because swine flu is a first-half story," said UBS analyst
Governments that had been stocking up on swine flu vaccines
for the northern winter did not need as much as they first
thought because researchers found that one dose is effective,
rather than the two doses they first thought were needed.
CSL, which competes against Baxter Healthcare (BAX.N) and
Spain's Grifols (GRLS.MC), said it still expects a full year
profit between A$970 million and A$1.07 billion ($875 million
and $965 million) based on current rates, or toward the upper
end of a 14-24 percent rise based on last year's exchange
Analysts had been expecting a flat profit around A$1.02
billion this year, based on their own currency assumptions, as
the group has been buffeted by a weaker U.S. dollar, with the
bulk of its earnings from offshore.
In the second half, the company also faces falling
royalties on its HPV cervical cancer vaccine, sold as Gardasil
by Merck & Co (MRK.N) and Cervarix by GlaxoSmithKline (GSK.L)
as countries like Australia have completed immunisation
CSL's shares were up 5.1 percent at A$33.89, outpacing a 2
percent gain in the broader market. The stock has
underperformed the S&P/ASX 200 index over the past
year, falling almost 10 percent compared to a 35 percent gain
in the index.
One risk to CSL's shares stems from an expanding class
action brought by U.S. hospitals, joined last week by the
prestigious Mayo Clinic, against CSL and Baxter, alleging that
they colluded to control plasma products prices.
CSL has repeatedly said it believes there is no substance
to the allegations, first made last year by the U.S. Federal
Trade Commission when it blocked CSL's $3.1 billion bid for
smaller U.S. rival Talecris Biotherapeutics TLCR.O.
"We are very clear on this. We have done nothing wrong. We
are very confident in our position, and we will defend it
vigorously," McNamee told reporters.
He sees the lawsuit as part of the "rich tapestry of life
doing business in America" and said the legal process could
take some time.
CSL Managing Director Brian McNamee said the group's result
in the first-half reflected a tough market, with growing U.S.
unemployment making it harder for patients to pay for
treatments, and as distributors and hospitals cut stocks of
"Prices haven't gone up. Profits are coming from their own
manufacturing efficiencies," said UBS's Goodsall.
Net profit before one-offs rose to A$617 million ($556
million) for July-December from A$502 million a year earlier,
well ahead of analysts' forecasts of around A$526 million.
Gardasil sales fell A$66 million from a year earlier,
reflecting the end of an immunisation catch-up programme in
Australia. H1N1 flu vaccine sales contributed A$160 million.
($1=1.109 Australian Dollar)
(Editing by Jeremy Laurence and Lincoln Feast)