CSL Ltd (ASX:CSL) has received record demand for its seasonal influenza vaccines amid a challenging operating environment due to the COVID-19 pandemic, according to global credit consultant S&P Global.
The company faced ongoing plasma collection challenges but exceptional growth in the group's flu business, Seqirus, contributed to EBITDA growth of around 42% in the six months to Dec 31, 2020.
S&P Global stated that the continued presence of COVID-19 has significantly boosted demand for seasonal influenza vaccines.
Seqirus revenue growth
Seqirus delivered revenue growth of around 38% on the back of a 44% increase in flu vaccinations although sales are predominantly skewed to the first half of the financial year given that the majority of sales are directed to the northern hemisphere.
S&P's report highlighted that CSL's solid EBITDA performance is transitory and upward rating pressure is not expected.
A positive rating action could occur if CSL is committed to operating with a debt-to-EBITDA ratio sustainably below 1.5x, underpinned by a set of robust financial policies.
S&P estimates that at the current rating level, the company's debt-to-EBITDA ratio will be in the range of 1.5x to 2.0x.
It was 1.7x as at June 30, 2020.
“We believe plasma supply constraints remain the key risk for CSL over the next 12 months - these constraints stemmed from collection challenges during periods of social mobility restrictions,” S&P Global said.
“Plasma collections fell during the first half of fiscal 2021 (year ending June 30) because of disruptions to donors' ability to visit plasma centres, closure of borders, as well as COVID-19 associated illness and quarantine requirements.
“We believe these plasma collection constraints are likely be short term and we do not envisage plasma collection normalizing until fiscal 2022."
Group EBITDA increases
Group EBITDA increased by around 42% during the six months to Dec. 31, 2020 (in constant currency), driven by the extraordinary growth of around 95% in Seqirus.
EBITDA for CSL's Behring division increased by around 31%, despite the constraints on plasma collection.
The Behring division benefited from strong global demand for immunoglobulins and albumin sales growth of around 93%, largely driven by the successful transition to CSL's own distribution model in China.