CSL profits take US$250m hit from foreign currency movements

Foreign currency movements have dented the forecast profits of multi-national biotechnology company CSL (ASX: CSL) by up to US$250 million.

The company this week reported higher-than-expected headwinds, up from an estimated US$175 million reported at the time of its half year results in February.

Its constant currency profit guidance for the year remains unchanged, albeit now skewed to the top end of the range.

Currency tide

CSL told investors that the currency tide had moved against it during the year.

“In the second half of the year, between December and May, the euro improved against the US dollar, but there wasn’t much movement in the yuan,” the company said.

“In the back part of the year, the two currencies that moved most were the pound to the US dollar and the Australian dollar to the US dollar… currencies have moved against us, and the greater the currency headwind in the 2023 financial year, the lower our starting point will be in 2024.”

Capital investments

Negative impacts from currency movements were partly a function of CSL’s capital investments in Australia.

“We have had major capital works in Australia, including our (Melbourne-based) cell culture facility,” the company said.

The $800 million cutting-edge vaccine plant will be the only one of its kind in the southern hemisphere and is expected to create a supply chain worth more than $300 million a year to the Australian economy.

It will use CSL Seqirus vaccine adjuvant technology (MFS59) to manufacture seasonal and pandemic cell-based influenza vaccines.

MFS59 is the world’s only approved human vaccine for Q fever and antivenoms for venomous creatures native to Australia.

CSL said cell-based technology could offer scale and production time advantages over traditional vaccine manufacturing processes and could become an important part of the nation’s response to a future pandemic crisis.

The plant is expected to be running by 2026.

NPATA forecast

CSL said net profits after tax and adjustments for the 2024 financial year could grow by up to 18% to $US3 billion which would be below consensus expectations of $US3.5 billion.

Key variables which may have a significant impact on this guidance include the success and timing of research and development activities; decisions by regulators regarding approval of products and label claims; competitive developments; difficulties or delays in manufacturing; research collaborations; and the company’s ability to protect its patents and other intellectual property.

R&D pipeline

Global demand for CSL’s products remains robust and the company’s research and development pipeline has “never been better”.

First patient dosages in a trial of the company’s USFDA-approved Hemgenix (etranacogene dezaparvovec) gene therapy option for the treatment of moderate and severe haemophilia B is expected within the next few weeks.