CSL falls short across the board in first-half FY25 results
CSL misses earnings expectations for the third consecutive result. Here's what you need to know.
Source: CSL
Mentioned
KEY POINTS
- CSL reports its third consecutive earnings miss, with 1H25 revenue up 5% but NPATA falling short of consensus expectations
- CSL Behring shows strong growth, particularly in China, while Seqirus faces a 9% revenue decline due to low flu immunisation rates
- CSL reaffirms FY25 NPATA guidance, but concerns over Seqirus and Vifor Pharma integration may limit investor confidence
The market's longstanding darling healthcare, CSL (ASX: CSL), continues to fall short of expectations, reporting its third straight earnings miss.
CSL shares fell 2.7% and 4.5% following its previous two financial results, for last year's 1H24 result on 13 February and FY24 on 13 August, respectively.
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)
Converted to Australian dollars, the interim dividend is approximately A$2.08 per share, up 16% year-on-year
Reaffirmed FY25 NPATA guidance of $3.2 billion to $3.3 billion at constant currency, representing year-on-year growth of 10-13%
Behring strength, Seqirus weakness
CSL Behring was a bright spot within the soft result, with revenues up 10% to $5.74 billion. For context, Behring is CSL's largest business segment, specialising in plasma-derived therapies to treat diseases such as immunodeficiencies and bleeding disorders.
A few Behring highlights from the company's earnings announcement and presentation include:
"Strong demand for many of our market leading therapies has translated into sales growth, particularly in our core Ig franchise."
"Strong performance across all geographies ... significant patient demand in all core indications."
"Strong growth in China, driven by continued patient demand and market share gains."
"Plasma collections continue to grow, with the cost of collections decreasing."
The strength of Behring was offset by poor numbers from CSL's influenza vaccines business, Seqirus. The Seqirus business reported a 9% year-on-year decline in revenue to $1.66 billion.
“CSL Seqirus was negatively impacted by significantly low influenza immunisation rates, particularly in the United States," said Managing Director Paul McKenzie.
CSL Vifor posted a 6% revenue growth, reaching $1.07 billion, slightly exceeding consensus expectations. CSL acquired Vifor Pharma for US$11.7 billion in August 2022, but many analysts believe the company overpaid for the acquisition, which has contributed to a sharp decline in its return on invested capital (ROIC).
CSL's ROIC dropped to 10.5% in FY24, down from 12.2% in FY23, 18.1% in FY22, and 21.2% in FY21.
Guidance maintained
CSL maintained its FY25 NPATA guidance of US$3.2 billion to US$3.3 billion and revenue guidance for 5-7% growth at constant currency.
"To get to the lower end of guidance, this implies that 2H25 adjusted NPATA has to grow at circa 26% on the prior corresponding period," noted Jefferies analysts.
CSL is either anticipating a significant uplift in the second half or overpromising, and given its recent track record, investors may be cautious about the company’s ability to meet these ambitious targets — particularly with the challenges facing Seqirus and ongoing concerns over Vifor’s integration.
