The $149 billion group, which is now closing in on Commonwealth Bank to become the ASX’s biggest company by market value, said the result was driven by 26 per cent growth in sales of its immunoglobulin (IG) therapies.
IG is derived from blood plasma and treats a growing list of chronic and rare medical conditions, including immunodeficiency and auto-immune diseases, and to help patients recover from cancer treatment.
Mr Perreault said the company was “somewhat surprised” by the strength of IG demand, but had been able to capitalise on it after investing heavily in recent years in plasma collection centres in the US, in manufacturing facilities and its $1 billion annual research and development spend.
“What went well for us is that we started this strategy a while ago and we stuck to it,” Mr Perreault told The Sydney Morning Herald and The Age.
“If we hadn’t planned for it, we wouldn’t have shown the results we have.”
Mr Perreault said global IG demand still outstripped supply and he expected it to remain “fairly strong” for the next few years.
“After that, who knows,” he said, noting that emerging treatments such as gene therapy for some conditions currently treated with IG could eventually dent demand.
Meanwhile, rival companies are quickening their rollout of plasma collection centres in the US, increasing competition to attract paid donors.
CSL has already had to pay more to people donating plasma as the US unemployment rate improves, contributing to that business unit’s gross profit margin slipping by one percentage point in the half.
“Cost and cost competitiveness is something that will continue to put pressure on the margins, but that’s where we have to be more efficient,” Mr Perreault said.
With CSL trading at 52 times earnings, there have been questions about whether the stock is overvalued.
However, Jun Bei Liu, lead portfolio manager of Tribeca Investment Partners’s Alpha Plus Fund, which holds CSL as a top 10 stock, said it was justified by its rare position as a defensive stock that can deliver double-digit earnings growth.
“That makes a company like CSL very attractive,” said Ms Liu, who called Wednesday’s result “very good”.
“Especially in today’s low-interest rate environment, where are you going to find a similar quality business?”
Citi analyst John Deakin-Bell said CSL’s margins were lower than he expected, but it was still a “very strong result” which would likely drive upgrades to consensus earnings forecasts.
Sales of albumin, another key blood protein used in medical treatments, in China fell 33 per cent, in line with guidance as CSL moves to a direct distribution model there.
CSL’s statutory half-year net profit was up 7.5 per cent to $US1.24 billion and up 11 per cent to $1.29 billion in constant currency terms.
The company upgraded to full-year profit guidance by 3 per cent to between $2.11 billion and $2.17 billion, which would represent growth of 10 to 13 per cent over 2019.
CSL declared an interim dividend of US95¢ ($1.41), up US10¢ from the first half last year.
Business reporter at The Age and Sydney Morning Herald.