Biopharmaceutical CSL Limited (ASX: CSL) reported a solid interim result for the first half of financial year 2015, thanks in part to growing demand and revenues from its major blood plasma and albumin products. In line with the company's five-year earnings growth trend, half-year earnings per share (EPS) gained 10%.
During the first half, the company announced it was expanding production facilities to meet increased demand for its products. This heightened demand was especially so for its China market. In its flu vaccine business, production was up as well due to a heavier flu season.
CSL CEO and managing director Paul Perreault summed up the gains, "Double digit sales growth was achieved in both albumin and specialty products. Influenza vaccine sales were very strong, up 24% following a severe influenza season in the northern hemisphere."
The 7% interim sales growth also followed CSL's 5-year annual average.
EPS growth was greater than net profit after tax (NPAT) growth in part due to CSL's share repurchases. CSL has had eight share buybacks in the past nine years. The current buyback is only about 11% complete of the total $950 million in share value the company intends to repurchase.
That is one of the perks of owning this stock. The company generates enough cash flow to afford these buybacks on a regular basis, which in turn incrementally increase the earnings and dividends per share. A higher EPS lifts share prices up and shareholders get a raise in their dividend payments.
Here are the half-year results highlights:
– Sales US$2.744 billion, up 7% over first half a year ago
– Earnings before interest and tax (EBIT) 7% gain to US$878 million
– Net profit after tax (NPAT) US$692 million, gaining 7%
– Earnings per share US 146 cents, increasing 10%
– Dividends per share US 58 cents, up 9%, unfranked
Full year 2015 outlook
According to CEO Perreault, "We expect that global demand for plasma therapies will continue to grow, but the market will become increasingly competitive, with new competitors and new products. CSL possesses diversified product portfolios, decades of market knowledge and a strong R&D pipeline of innovative therapies – positioning the company well to compete effectively."
Earnings guidance for full year 2015 is 10% NPAT growth at a constant currency rate. Previously the company had guided for 12%, so the stock has fallen around 8% in trade today.
CSL is a quality company with a steady growth track record. The 1.5% unfranked yield may not be the biggest, but the company has grown its dividend an average annual 11.4% in the last five years. That is attractive to long-term investors looking for a stable defensive stock.
