Earnings Wrap: CSL beats earnings estimates, Treasury Wine and Cochlear lift dividends

CSL delivers 10% jump in profit, beats expectations.

CSL (ASX: CSL) reported FY profit of $2.61B, ahead of the $2.55B expected by analysts. The profit number was driven by revenue of $13.31B, which was also ahead of consensus expectations of $13.30B.

Surging sales in its immunoglobulin division, which had been badly impacted by Covid, fuelled the results, led by key therapies Privigen and Hizentra.

Earnings per shares increased 6%, to US$5.41, with CEO Paul MacKenzie saying the company “rebounded strongly driven by exceptional growth in immunoglobulin sales and record plasma collections”.

The company declared a final dividend of US$1.29 per share, bringing the total full year dividend to US$2.36 – a 6% increase on last year. Converted to Australian currency, the total full year dividend is approximately A$3.59 per share (+13%)

CSL also provided FY24 guidance of NPATA $2.9-3.0B at constant currency.

Cochlear posts record $1.9bn in sales for FY23

The hearing device designer and manufacturer’s sales of Cochlear (ASX: COH) implant units increased 16%, which management attributed to a combination of market growth, improved clinical capacity, market share gains, and COVID catchup surgeries.

Statutory net profit rose 10% to $305 million, at the top end of the company’s guidance range.

Management also emphasised the group’s strong balance sheet and cash flow, which underpinned the 21% increase in its final dividend of $1.75 a share, lifting the full-year dividend to $3.30 a share.

Outlook

Cochlear is targeting FY2024 underlying net profit of between $355 million and $375 million, which would mean a lift of between 16% and 23% on FY2023.

Treasury Wines: Earnings beat, upbeat guidance

Treasury Wine Estates’ (ASX: TWE) FY23 net profit fell 3.3% to $254.5 million as volume declines in the Americas and Commercial portfolio offset higher prices. The result was a slight top-line miss but earnings came in ahead of consensus expectations.

• Revenue fell 2.2% to $2.42bn vs. $2.45bn expected

• EBITS rose 11.4% to $583.5m vs. $573.3m expected

• Underlying net profit rose 16.6% to $376.1m vs. $353.2m expected

• Final dividend of 17 cents per share, trading ex-div on 1 September

“In F23, we have once again delivered margin accretive earnings growth while continuing to navigate the tightening economic environment across a number of our key markets,” said CEO Tim Ford.

Outlook:

• “Well positioned to deliver growth in F24 with continued strong trends for Luxury wine and resilient category dynamics for Premium wine”

• COGs expected to be flat year-on-year

• Global supply chain optimisation program delivered $62m worth of COGs savings in FY23, the program is expected to deliver incremental benefits in Fy24 and the full run-rate of $90m+ by FY25

• Consumer demand for premium wine is expected to remain consistent

• Demand for commercial wine is likely to remain challenged in both Australia and the UK, with further volume declines expected in this segment for Treasury Premium Brands

• TWE notes the continued improvement in Australian and Chinese relations, which may have the potential for a future review of tariffs on Australian wine

Seek: FY23 in-line but FY24 miss

Seek (ASX: SEK) posted FY23 earnings that were mostly in-line with analyst expectations.

• Revenue up 10% to $1.23bn vs. $1.24bn consensus

• EBITDA rose 7% to $546.1m vs. guidance of $560m and $553m consensus

• Adjusted net profit fell 1% to $255m vs. guidance of $250 and $252m consensus

• Final dividend of 23 cents per share

“SEEK has grown revenue and earnings in FY23, with yield improvements coming through increased variable pricing and adoption of depth products. This yield performance has more than offset lower job volumes caused by a slowing of economic activity across all markets in FY23, and particularly in the last quarter," said CEO Ian Narev.

Disappointing outlook:

• Revenue between $1.18bn to $1.26bn vs. $1.25bn consensus

• EBITDA between $520m to $560m vs. $580m consensus

• Net profit between $220m to $260m vs. $265m consensus

“Economists are generally forecasting lower levels of economic activity in the markets in which we operate, whilst acknowledging the potential for volatility ... In ANZ, we currently expect higher unemployment and a corresponding decline in job ad volumes," said Narev.

Challenger profits rise 10% on retiree cohort demand

Pensions and asset management business reported a 10% profit increase in FY2023, the $521 million result driven by growing demand for its retirement income products.

The firm’s dominant Life business achieved total sales of $9.7 billion during the year, up 5.2% on FY2022.

“Growth across retail annuities was exceptional, up 53% to $3.6 billion, reflecting the attractiveness of our offering,” said Challenger’s managing director and CEO Nick Hamilton.

“Pleasingly, this growth was weighted towards longer duration business, with 74% of new business annuity sales for terms of two years or more.”

The firm’s funds management also performed strongly, group assets under management up 6% to $105 billion during the period, Hamilton also emphasising continued investment in the group’s global investment management business, Fidante.

Management has declared a fully-franked dividend of 24 cents a share for FY2023, up 4% on last year.

Outlook

In FY24, Challenger is targeting net profit before tax of between $555 million and $605 million, with the mid-point of the range representing an 11% increase on FY23.

The FY24 guidance range excludes Challenger Bank, the sale of which is expected to complete in the first half of FY24.

Sims reports 70% profit dip on the back of weak steel demand

Metal recycling and “circular economy” conglomerate Sims Limited has reported a 70% dip in profit for FY2023, its $181.1 million in statutory NPAT down from $599.3 million a year earlier.

• Earnings before interest, tax, depreciation and amortisation fell 47.2% to $515.7 million, from $976.4 million in FY2022.

• Earnings per share declined 69% to 91.7 cents.

“We produced a resilient performance in FY23, in the face of challenging market conditions. Our strategic market and geographic diversification gave us a good foundation for navigating these challenges,” said group CEO and managing director Alistair Field.

He emphasised the group’s solid cash flow, despite EBIT that came in below last year’s record highs and the “disciplined approach and solid balance sheet” which allowed it to pay a fully-franked final dividend of 21 cents a share.

Across Sims’ business units:

• North America Metal saw FY23 EBIT fall by 81% to $55.5 million and a 12% decline in sales revenue.

• The Australia and New Zealand business recorded a 24% decrease in EBIT to $142 million in FY2023. Sales revenue was down 7.7% to $1.56 billion.

• The UK business booked EBIT of $7.3 million in FY2023, down from $69.8 million in FY2022, though the second-half was an improvement on the first-half.

Outlook

Assessing the broader market landscape, management noted there are positive and negative forces expected to impact the short term, including subdued global steel demand in the first half of FY2024, and soft scrap metal inflows driven by lower prices.

“But we remain confident in the medium and long-term fundamentals,” it said.