Strong Aussie Dollar Can Cut CSL Profits

A strong Aussie dollar can cut into blood products and vaccines producer, CSL (ASX:CSL) by $100 million. At its Annual General Meeting (AGM) on Wednesday, the company reaffirmed its August forecast of fiscal 2011 net profit of between A$980 million and A$1.03 billion, at 2009/2010 exchange rates (at around US 90 cents). 90 percent of CSL's profits are generated offshore.

At the annual shareholder’s meeting, CSL chairman Elizabeth Alexander told shareholders that "However, if currency rates on October 8 were to apply for the balance of the financial year, the net profit after tax range referred to earlier would be in the order of $880 million to $940 million."

CSL managing director Dr Brian McNamee has noted that the strong Aussie dollar was affecting certain industries: "One feels the Australian dollar is making life quite difficult for a number of sectors here in Australia, whether it be the manufacturing industry, tourism, (or) educational services."

Global pharmaceuticals firm Merck & Co, the licensee of CSL's cervical cancer vaccine Gardasil, was looking to extend the applications of Gardasil and find new geographic markets for the drug. Dr McNamee said Gardasil could have a renaissance in three areas - geographic expansion, particularly in Asia; extending the use of the vaccine to include boys; and expanding the vaccine to cover more sub-types of the human papilloma virus (HPV). In fiscal 2010, royalties from Gardasil were around $102 million compared to about $160 million in the prior year.