Another Australian company winning on the world stage

World beating company delivers again, but is it cheap enough to buy?

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 22, 2012 10:51 am AEST

Blood products company, CSL Limited (ASX: CSL) has today reported a full year net profit of $983m, up 4.5% over the previous year. In constant currency terms, profit was up 16%, but the strong Australian dollar reduced the profit by $108m.

Sales revenues were up 7%, while earnings per share was up 9% to $1.89, thanks to the company's ongoing share buyback, which CSL has suggested maybe increased by a further $900m, once the current program has been completed. The company still has around $207m left of its existing buyback. In the last three years, CSL has spent more than $3 billion buying back shares.

Research and development expenditure rose 13% in constant currency terms, to $355m, as CSL continues to invest in future blood plasma products. Its existing business appears to be doing exceptionally well, with sales of Immunoglobin and Albumin both up 15% and speciality products up 18%.

With a number of other products in its pipeline, either under development or undergoing trials, CSL looks well placed to generate growth over the next few years. In fact, the company expects profits to grow at 12% using current exchange rates. Any fall in the value of the Australian dollar against the US dollar, is likely to raise that growth rate.

CSL is regarded as one of Australia's world beating companies, alongside Cochlear Limited (ASX: COH), Computershare (ASX: CPU), Aristocrat Leisure Limited (ASX: ALL) and BHP Billiton Limited (ASX: BHP) to name but a few. These companies are market leaders in their respective fields, with large market shares and competitive advantages that make it difficult for competitors to knock them down.

Today's result confirms that CSL is still standing tall and appears to have a continuing strong future ahead of it.

The Foolish bottom line

CSL trades on a P/E ratio of over 22 at the current price of $42.39, and although it shares look expensive, the company continues to deliver attractive results.

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Motley Fool writer/analyst Mike King owns shares in CSL, Cochlear and BHP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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