CSL (ASX: CSL) shares have staged a massive intraday reversal from session lows of -5.9% to around -1% in afternoon trade.
The biotech giant posted a -5.4% decline in full-year profits to US$2.25bn, primarily driven by a well-documented struggle with obtaining plasma donations.
The profit figure was in-line with Bloomberg estimates of US$2.26bn and ahead of Morgans forecasts of US$2.18bn.
Results at a glance:
Full year | 2022 | 2021 | % change |
---|---|---|---|
Revenue (US$m) | 10,561.9 | 10,310.0 | 2 |
Behring revenue (US$m) | 8,598 | 8,574 | 2 |
Seqirus revenue (US$m) | 1,964 | 1,736 | 13 |
Gross profit margin (%) | 54.3 | 56.7 | -240 bps |
Profit (US$m) | 2,254.7 | 2,375.0 | -5 |
Final dividend (US cents) | 118 | 118 | unch |
The overall result was light on surprises, with profits and dividends in-line with consensus expectations. The plasma collection struggles have been a well-documented and widely known headwind for the business.
Still, there were pockets of weakness that could have compounded to the initial knee-jerk selloff.
Cashflow from operations was US$2.63bn, down -27% compared to a year ago
Reflects lower profit before tax and a significant increase in inventories driven by higher plasma costs per litre
Immunoglobulin sales of US$4.02bn, down -3% as supply was constrained by lower plasma collected in the previous year
This resulted in higher fixed cost absorption
Inventories of US$4.33bn from US$3.78bn a year ago, up 14.6%
CSL also flagged increased costs for collections
No major R&D wins
It's not often you see widely watched large cap stock reverse a -6% dip.
Factors that might have contributed to the reversal include:
The influenza vaccines business, Seqirus tried to pick up the slack for plasma collections, with revenue up 13%
Achieved by growth in "seasonal influenza vaccines driven by their differentiated and high value product portfolio."
Plasma collections improved 24% year-on-year. Volumes now exceed pre-pandemic levels
Anticipated to "underpin future sales growth"
"Underlying demand for immunoglobulin continues to be robust due to significant patient needs in core indications - namely primary immune deficiency, secondary immune deficiency and CIDP"
"The strong growth we have seen in plasma collections is anticipated to continue as COVID recedes and underpin strong future sales growth in our core plasma therapies. The current higher cost of plasma is also expected to prevail into FY23," said CEO Paul Perreault.
CSL guided to net profits after tax for FY23 to be between US$2.4bn to US$2.5bn, up 6.4% to 10.9% compared to FY22.
A few initial assessments from brokers:
Citi: Result was in-line with expectations but guidance was below consensus. Higher costs of plasma collections and plans to grow inventory could impact margins and profits. Buy rating retained.
Macquarie: Similar view with results largely in-line but guidance falling short of expectations. Outperform rating maintained.
The intraday reversal creates a lot of 'noise' on a candle chart, so we'll use a line chart instead.
CSL shares have been consolidating around the low-mid $290 level since mid July. It will be interesting to see which way the stock breaks, that being the $300
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