Australia biotech giant CSL reports profit dip, flags cost spiral

Aug 17 (Reuters) - Australian biotech giant CSL Ltd (CSL.AX) said annual profit fell due to declining donations of blood plasma, the key ingredient of its products, and flagged higher staffing costs as collection volumes returned to pre-pandemic levels.

Australia's third-largest company makes most of its money paying people in the United States for blood plasma which it converts to treatments for rare diseases, but since the onset of COVID-19 in 2020 it has experienced a slump in donations because of movement restrictions and health concerns.

That resulted in a 6% dip in year-to-June profit to $2.24 billion, in line with the company's guidance. The former government laboratory said donations rebounded by a quarter since it raised the fees it pays, setting it up for stronger sales, but added that rising costs would constrain profit margins.

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"Costs are up, employee costs are up, the amount of people (available) to work, especially in the retail sector, is very tight," CEO Paul Perreault said on a media call.

Wages at its more than 300 collection centres were up as much as 10%, which Perreault called "a signfiant increase to compete".

The update shows how raging inflation is impacting the top tier of the Australian economy. CSL shares were down 4% by mid-session, against a flat overall market (.AXJO), as analysts recalculated forecasts to include the changed operating environment.

"Higher cost of plasma is expected to continue," Jefferies analysts said in a client note, which also noted profit margins from CSL's blood plasma sales had thinned more than expected.

Offsetting the profit decline, CSL's vaccine business, which brings a sixth of profit, grew its contribution 16% as the pandemic stoked demand for inoculations against COVID-19 and other viruses like influenza.

CSL said it expected net profit in fiscal 2023 between $2.4 billion and $2.5 billion and declared a final dividend of $1.18 per share, unchanged from last year.

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Reporting by Byron Kaye in Sydney and Roushni Nair and Jaskiran Singh in Bengaluru; Editing by Shailesh Kuber and Stephen Coates

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