For what it is worth. If it is history I apologise.McNamee has...

For what it is worth. If it is history I apologise.

McNamee has CSL in a global sweet spot
Terry McCrann
August 20, 2009 12:00am
BRIAN McNamee failed to get his -- yet another -- company-making merger up. But just about everything else came up roses in the most turbulent year for business in two decades.
Indeed CSL even made money on its failure to buy the US plasma group Talecris.
First it sent the $2 billion over to the US when the Aussie dollar was high. It brought it back when the Aussie dollar was weak. The money made on the currency turn paid for all the hefty expenses and left $79 million in profit over!
Then secondly, it raised the money from shareholders when the CSL share price was high. And is now in the process of sending it back to shareholders by buying shares from them at -- slightly -- lower prices.
The profit on this turn is negligible because the CSL share price has stayed almost uniquely strong through the meltdown. You can't 'win' them all, Brian.
Amazingly, amusingly, McNamee's biggest worry was keeping the $2 billion-odd safe in the US in this time of GFC! It split the money up between just six banks it thought were safe.
Which bank was one of the six? Yes, that's right -- plus its three cobbers. Only two US banks made the list.
The numbers were as usual impressive as CSL also rode the lower dollar. Group revenue up 32 per cent, net profit up 63 per cent. Adjusted for the currency effect (and the special factors on profit) those numbers came down to still very respectable 16 per cent and 23 per cent, respectively.
CSL will now strike the headwind -- in Aussie dollar terms -- of the rebound in the currency. It's also now got a very lazy balance sheet. After it spends $2 billion or so buying back its shares it will have zero net debt.
The most impressive number was the higher margin in the core plasma business -- CSL Behring. In just the one year, the EBITDA margin was taken up from 31 to 34. That was real: it was not currency driven.
Pity about the merger. That would have given McNamee the chance to do -- on an even bigger scale with a Talecris-enlarged US plasma business -- what they did with Behring. Lifting margin from a 12 starting point.
That aside, McNamee has CSL in a global sweet spot. At around $15 billion, it sits below the $US100 billion Big Pharma companies and the $US40 billion or mid-size players.
But that gives it sufficient scale -- both in business and able to internally fund a $1 billion R&D spend over three years. While remaining a high-growth boutique.
And while this mightn't please its -- institutional -- shareholders, the moment for someone to swallow it has probably