CSL falls short across the board in first-half FY25 results

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.