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CSL Slumps After Forecasting Slower Profit Growth: Sydney Mover

CSL Slumps After Forecasting Slower Profit Growth
The CSL Ltd. logo marks the entrance to the CSL Behring plasma processing facility in Melbourne. Photographer: Carla Gottgens/Bloomberg

CSL Ltd., the world’s second-biggest maker of blood-derived therapies, declined the most in more than three months in Sydney trading after saying profit will grow more slowly this fiscal year than last.

CSL fell 3 percent, the most since May 8, to close at A$65.79. Profit will increase 10 percent in the 12 months ending June 30, compared with 19 percent growth the previous year, the Melbourne-based company said in a statement today. The stock was the worst performer on the 11-company S&P/ASX 200 Health Care Index, which dropped 1.9 percent.

Paul Perreault, who succeeded Brian McNamee as chief executive officer on July 1, said the company is considering extending share buybacks amid a slowdown in key markets, even as CSL increases expenditure on research by about 13 percent to complete clinical studies on various blood products.

“Looking into 2014, we see trading conditions being tempered again by ongoing economic pressures,” Perreault said in the statement. “The board will consider new capital management initiatives which may include a further on-market share buyback program of a similar amount to the current program.”

Per-share earnings will increase at a faster pace than total net income because of CSL’s A$900 million ($819 million) share buyback program, which is 97 percent completed.

Stronger Profit?

Announcements of share buybacks have been a precursor to stronger earnings in the past, Andrew Goodsall, a health-care analyst at UBS AG, wrote in a note to clients after the results were announced.

Net income rose to $1.22 billion, or $2.43 a share, in the 12 months ended June, matching the average estimate of 11 analysts. CSL had profit of $1.02 billion, or $1.97, a year earlier. Revenue increased 6.6 percent to $5.13 billion.

The forecast for the current year was based on constant exchange rates, according to the statement.

Sales of Hizentra, injected by patients under the skin at home, jumped 27 percent, helping buffer currency fluctuations that eroded earnings by $18 million.

CSL is evaluating its non-plasma businesses in a process that could take as long as two years, Perreault said in a March interview. It created a new unit, named bioCSL, in January to encompass its vaccine, pharmaceutical and diagnostics units in order to identify profitability, he said.

The company switched to reporting in U.S. dollars from Australian currency earlier this year.

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