CSL ready to turn around Novartis unit

Vaccine giant CSL has lifted half year net profit by four per cent, helped by strong revenue growth. (AAP)

The world's second biggest flu vaccines supplier posted a 3.8 per cent rise in interim net profit to $US719 million ($A1.01 billion).

Biotechnology giant CSL is ready for a long, tough slog turning around the performance of its recently acquired Novartis' flu vaccine business.

Chief executive Paul Perreault said the $US275 million acquisition had made CSL the second biggest flu vaccines supplier in the world behind French drug maker Sanofi.

But it faces a tough few years before the business becomes profitable.

CSL completed the Novartis flue vaccine acquisition at the end of July, and then integrated the unit into its existing vaccine division, which has been renamed Seqirus.

"We've been busy. We've got a lot more work to do in turning around the performance of this business," he told analysts at the company's first-half results briefing on Tuesday.

Mr Perreault said CSL has found some surprises since taking over Novartis' flu vaccine business, noting it was a carve out of a carve out.

"We weren't handed an operating business with everything in tact," he said.

"We've had some surprises. But it hasn't changed my view, the turnaround is going to take some time. We've said that it would take five years to get us back to really where we want to be and the first couple of years were going to be tough."

After the first three years, the Novartis business is expected to be profitable, and over five years CSL expects to be the leading player in the flue vaccine space, Mr Perreault said.

In fiscal 2016, the Novartis business is expected to report a loss in the range of $US90 to $US120 million.

CSL on Tuesday reaffirmed its annual profit growth guidance of five per cent, after removing the impact of currency movements and the Novartis business.

The company also expects earnings per share growth to exceed profit growth.

Net profit rose 3.8 per cent to $US718.8 million ($A1.01 billion) for the six months to December 31, bolstered by solid demand for its vaccines and blood plasma products.

That compares with $US692.2 million over the same period a year ago.

Underlying profit, which excluded the impact of currency movements and acquisition of Novartis' flu vaccine operation, rose seven per cent.

Interim sales jumped by 11 per cent to $US3.06 billion from $US2.74 billion.

Macquarie Securities analyst Craig Collie said the company's strong results were driven by market beating sales growth. Mr Collie has an outperform rating on CSL and 12 month price target of $110.00.

CSL shares closed $1.57 higher at $106.00.

Sales of the group's subcutaneous immunoglobulin product, Hizentra, jumped 31 per cent at constant currency, led by sales in the US and Europe.

Intravenous immunoglobulin sales growth was underpinned by strong demand for Privigen, with sales up 13 per cent.


*Net profit rose to $US718.8m from $US692.2m

*Sales revenue rose to $US3.06b from $US2.74b

*Interim dividend steady at 58 US cents a share

Source AAP

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