BLOOD products manufacturer CSL experienced a strong comeback this week as the market focused more on its medium to long-term outlook.

 

CSL's stock opened on Monday at $24.55 and has risen steadily every day, closing yesterday at $27.80, a rise of 13 per cent over the three days.

Tuesday's boost came through the federal Government's announcement that it would be undertaking a $41 million vaccination program for meningococcal type C. CSL is developing a vaccine for this disease, which is just weeks away from approval.

The company yesterday returned a result in line with market expectations, with a net profit of $124 million, 58 per cent above its previous year's effort.

The profit increase came about through a 57 per cent increase in sales to $1.35 billion, reflecting the fact that, although prices for plasma have been down, the group has considerably increased production through its facility at Swiss-based ZLB Bioplasma.

The company expects this trend to last until at least December. The price of plasma is expected to fall from $US40 a gram to $US38 but an big increase in demand is anticipated.

The company expects to increase its production from 1.3 million litres of plasma to 2.5 million over the next five years, through expansion of its Swiss operation.

CSL's current problems are based solely on the low price for plasma in the US, and this in turn has been caused by one company under-cutting the rest of the market and an over-supply from other producers.

CSL's stock price is still well down from its January 2 high of $52, but analysts pointed out yesterday that despite the company's short-term problems, its medium and long-term outlook was sound.

Andrew Goodsall of Salomon Smith Barney said that the market had mostly digested the information that low plasma prices in the US had been caused primarily by market distortions and should rise again soon.

"You also have to remember that they are selling 30 per cent of their plasma into Europe, and prices aren't as affected there as they are in the US," Mr Goodsall said.

"But, while most people are aware that the next few months will be tough, in the medium and long term, demand will outstrip supply and that will drive the company."

The Australian