CSL 1H25 Earnings Call Highlights

CSL (ASX: CSL) shares tumbled 4.9% on Tuesday after the company reported weaker-than-expected revenue, net profit and dividends for the first-half of FY25.

1H25 Earnings Summary

• Revenue up 5% to $8.48 billion vs. $8.54 consensus (0.7% miss)

• NPATA up 3% to $2.07 billion vs. $2.16bn consensus (4.1% miss)

• Earnings per share up 3% to $4.29

• Interim dividend of $1.30 per share vs. Morgan estimates of $1.35 per share (3.7% miss)

  • When converted to Australian dollars, the interim dividend is approximately A$2.08 per share, up 16% year-over-year.

• Reaffirmed FY25 NPATA guidance of $3.2 billion to $3.3 billion at constant currency, representing year-on-year growth of 10-13%

Earnings Call Highlights

The below topics have been answered by CEO Dr Paul McKenzie and Interim CFO John Levy.

Behring: “Revenue was up 10% at constant currency... growth in our Ig franchise was strong. Underlying demand continues to be robust in all of our core indications and patient diagnosis rate continues to improve.”

Ig franchise: “Growth in our Ig franchise was strong... sales were up 15%, with strong growth recorded across all geographies.”

Collections: “Plasma donations continue to grow and we have seen further reduction in our cost of collecting plasma... helping to drive improvement in the gross margin for CSL Behring.”

Seqirus: “CSL Seqirus’s performance was impacted by weak market conditions in the US... the negative performance of the seasonal influenza vaccines will be offset to some extent by CSL Seqirus leadership position and pre-pandemic preparedness.”

Immunisation rates and trends: “Immunisation rates in the US, specifically in the 18 to 64 year cohort, have significantly declined, which drove competitive pressures... there are signs that vaccination rates outside the US are stabilising.”

Competitive pressures: “Lower vaccination rates have also led to competitive pressures in the market.”

Vifor: “Revenue was up 6%, driven by both iron and nephrology. FERINJECT delivered volume growth of 6% in Europe.”

Analyst Q&A Highlights

Behring's Gross Margin for FY25: "We’re delighted with the performance in the first half... the pattern over the past few years has been for margin to be slightly lower in the second half than in the first half. And we're expecting that to reoccur this year. We still going to deliver a 100 and a bit. So we're very confident about delivering that for the full year."

Can you clarify your full-year earnings guidance, especially in light of Seqirus potentially underperforming expectations: "We're reaffirming our full year guidance for 2025, right, which is the 10% to 30% on NPATA... Seqirus will actually outperform its normal H2 levels and adds to our confidence in restating the guidance."

What are the drivers of the strong performance in your Ig franchise, and how does it compare to peers: We're really pleased with the performance of our Ig franchise... the launch of our prefilled syringe 50 mill... we are now producing through the manufacturing network quite efficiently and we're able to meet the needs of our patients in a growing market."

Are you still on track to return to pre-COVID gross margins at Behring by FY27-28: "We remain very confident about achieving the original target. But it'll be at FY27-28, not FY26."

Why isn't the company seeing better operating leverage in the Behring divisional sales and marketing costs, given the strong revenue growth predominantly from more established products like Ig and albumin: "It's a bit of timing in there. We have been investing ahead of the launch of ANDEMBRY, so we haven't got the revenues yet. But there is some marketing expense in there. That's probably the main reason."

How is the company managing the competitive landscape in the flu market, especially given reduced immunisation rates and the impacts on sales: "What you're seeing is the collective weight of the change in immunisation rates. In the US, there's been a reduction of 50 million doses over the past four years. We are feeling the impacts of these decreases in immunisation rates, especially in retail and GP settings, but we maintain premium pricing with our enhanced vaccines. Our differentiation strategy is playing out very strongly."

Given the intensifying competition in Europe, do you think it’s challenging to maintain the current gross margin for Vifor: “I would point you to the first half performance, which is pretty solid on the gross margin and on the operating margin... we expect that there's we will, we will maintain Vifor gross margin moment, which is a fantastic outcome in the face of the competition.”

This article was generated with the support of AI and reviewed by an editor.