Csl Limited · ASX:CSL
Csl — H1 2004 Earnings Presentation
30 slides from Csl's earnings presentation, Feb 18, 2004
Slide 1: 2003/04 Half Year Result
2003/04 Half Year Result 18 February 2004 CSL Limited A BIO- PHARMACEUTICAL COMPANY 1
Slide 2: Highlights
Highlights Aventis Behring Acquisition Sale of Animal Health Corporate Strong Cash Flow Growth Results Strong Biosciences Growth HPV Milestones R&D ISCOMATRIX® / Chiron Partnership Rhophylac – FDA approval Operations 2
Slide 3: Financial Performance
Financial Performance Reported FX Adj Revenues $640.4m - $728.9m +14% Expenses $173.7m -13% $191.2m -5% EBITDA $111.9m -15% $137.7m +4% EBIT $54.6m -25% $74.0m +2% NPAT (Pre G/W) $44.5m -28% $61.8m - CFO $49.2m +98% $58.6m +135% DPS cents 12cents - WEAKNESS IN USD IMPACTS RESULT 3
Slide 4: Financial Discussion
Financial Discussion • Difficult operating conditions – Weakness in USD – Price / margin pressure – Tax • Management focus – Cashflow growth – Working capital management – Benefits of debt restructure 4
Slide 5: Total Revenues
Total Revenues $800 728.9 $700 $600 $500 Million $400 639.8 640.4 $300 595.6 $200 343.5 $100 $0 2000 2001 2002 2003 Half year ended 31 December Constant FX v 2002 SALES GROWTH 5
Slide 6: Business Unit Performance
Business Unit Performance 6
Slide 7: Business Unit Performance: ZLB Bioplasma
Business Unit Performance • ZLB Bioplasma – Sales $187m – Europe sales growth continues – US IVIG pricing stable – Adverse effects • USD/CHF including ARC • US Albumin pricing/volume • European cryoprecipitate – Integration phase of Plasma Services into ZLB AG – EBITA -$7m, EBITA @ constant FX +$5m
Slide 8: ZLB Bioplasma sales by region
Business Unit Performance ZLB Bioplasma sales by region Europe & RoW USA 32% 68% 1H 2004 $187.3m LESS US SALES DEPENDENCY 8
Slide 9: US Market Conditions
Business Unit Performance • US Market Conditions – IVIG • Volume growth 8% in 2003 • Contract pricing stable • ZLB market share steady – Albumin • Market and price contraction – Plasma volume collected • 15% contraction in plasma centres 9
Slide 10: Bioplasma (Australia)
Business Unit Performance • Bioplasma (Australia) – Sales $113m – Launched Biostate® - Higher purity and retention of vWf, however, yield penalty – Continued strong demand for Intragam® P in Australia 10
Slide 11: Bioplasma (Australia): Free Trade Agreement
Business Unit Performance • Bioplasma (Australia) cont. – Free Trade Agreement with US • Australia to review plasma fractionation arrangements by 1 January 2007 • Decisions will continue to be based on delivering safest and most clinically effective treatments • Re-affirmation of self sufficiency po
Slide 12: Bioplasma (Australia): New Plasma Products Agreement
Business Unit Performance • Bioplasma (Australia) cont. – New Plasma Products Agreement • NBA advised intention to negotiate new Plasma product Agreement with CSL. • Aim to finalise by September 2004 • Current agreement with NBA extended last October to 31 December 2004 • No change to fractionation
Slide 13: Pharmaceutical
Business Unit Performance • Pharmaceutical – Sales $94m – Modest growth in marketed products – Flu season proceeding according to plan – High interest in influenza 13
Slide 14: JRH Biosciences
Business Unit Performance • JRH Biosciences – Sales $99m – Market conditions remain strong • Excellent growth in all product lines – Strong serum sales • By-Prod acquisition doubled FBS sales • FBS 45% of overall business 14
Slide 15: Animal Health
Business Unit Performance • Animal Health – Sales $37m – Sale to Pfizer for $170m – Book value approx $70m – Closure expected March 2004 15
Slide 16: R&D Highlights
R&D Highlights • HPV – issue of US and European patents – Merck foreshadowing 2nd half 2005 filing • ISCOMATRIX® relationship with Chiron • Rhophylac FDA approval • rHDL – Data validation by third party experts very positive – Safety trial in patients with stroke this calendar year 16
Slide 17: R&D Expenditure
R&D Expenditure • R&D spend $42.1m – Investment - slight decline – Currency impact - $3m – HPV IP defence included in prior period - $2m – R&D spend • 52% Plasma • 29% Pharmaceutical • 10% Animal Health • 8% Biosciences 17
Slide 18: Working Capital
Working Capital • Improvements in working capital – Days receivables improved to 43 days – Inventory turns improved to 1.7 (Dec 02 - 1.4) – Benefits of debt restructure – Cashflow from operations $49.2m up 98% 18
Slide 19: Tax Rate
Tax Rate • Group effective Tax Rate 44% • Australia 30% • USA 38% • Switzerland 12% (with relief) (24% standard rate) • ZLB AG loss together with the application of tax relief increases the effective tax rate from 35% to 44% – Additional $4m NPAT if standard Swiss tax rate had applied 19
Slide 20: Forex
Forex • USD weakness – Continues to have adverse financial impact - $14.5m NPAT – Driven by fiscal imbalance in the US economy – Anticipate continued weakness in the current financial year • Aventis Behring acquisition – Mitigate impact of adverse forex movements with significantly better currency m
Slide 21: Aventis Behring
Aventis Behring • US Anti-competition authorities have allowed the deal to proceed • Now have approvals in: • USA • Austria • Spain • Germany • Italy • Turkey • Approvals pending in smaller European countries • Transaction closure likely late March / April 21
Slide 22: AB - Equity Raising
AB - Equity Raising • Institutional raising - $438m – Majority hedged by forward contract – Put option for partial participation in upside • SPP – applications received for $111m – Allocation fourth week of February 22
Slide 23: AB - Integration
AB - Integration Dec April June Time Frame 2003 2004 2004 (Indicative) Integration Integration Implementation Planning First 100 Days Maximizing potential Signing Closing Organisational Implement, Combined design & synergy monitor initiatives business planning INTEGRATION ON TRACK 23
Slide 24: AB - Strategic Rationale
AB - Strategic Rationale • Complementary strengths producing leading competitive positions • Enhanced revenue per litre processed • Operational efficiency • Improved currency matching of revenues and costs • EPS, Cashflow, ROCE accretive COMPELLING STRATEGY 24
Slide 25: Group Value Drivers
Group Value Drivers • Creation of ZLB Behring with full integration benefits • R&D – HPV Vaccine with Merck – Further partnering progress • JRH - maintain growth momentum • Domestic - maintain and develop existing businesses 25
Slide 26: Appendix
APPENDIX 26
Slide 27: Group Results
Group Results Half year ended December 2003 2002 $m $m Sales 636.1 633.4 Other Revenue 4.2 6.4 Total Revenue 640.3 639.8 Earnings before Interest, Tax, Depreciation & Amortisation 111.9 132.0 Depreciation/Amortisation 57.2 59.5 Net Interest Expense/(Income) 9.4 15.8 Tax Expense 19.9 16.7 Profit afte
Slide 28: Sales by Business Unit
Sales by Business Unit December 2003 $636.1m ZLB Plasma Animal Health Services 6% Biosciences 17% 16% CSL Bioplasma Pharmaceutical 18% 15% ZLB Bioplasma 28% 28
Slide 29: Sales Performance
Sales Performance ZLB Bioplasma $14.6 +8% CSL Bioplasma $2.0 +2% Pharmaceutical ($0.8) -2% JRH Biosc Plasma $14.6 +17% re-directed to ZLB Animal Health $4.4 +14% Plasma Services ($32.0) -23% Half year ended 31 December EXCLUDING PLASMA SERVICES - SALES GROWTH UP 7% 29
Slide 30: Aventis Behring - Assets
Aventis Behring - Assets Manufacturing facilities Kankakee (Illinois, USA) Marburg (Germany) Vienna (Austria) King of Prussia (Barcelona plant to be closed by Aventis) 7 Marburg 2 rFVIII assets Kankakee 3 5 Helixate supply contract Freudenberg patent US and German plasma collection business (includi