CSL’s FY26 Suggests The Downtrend Is Done

Australia | 1:49 PM

CSL's FY26 result and FY27 guidance suggest a recovery may be underway following a long run of downgrades.

• CSL’s FY26 result beat low expectations
• Slowing declines in the second half from the first imply positive trends
• More constructive commentary around Ig markets the highlight of FY27 guidance
• The worst appears over, but most analysts remain cautious

By Greg Peel

CSL Ltd’s ((CSL)) FY26 results proved better than expected, although expectations had been lowered heading into the announcement.

FY26 revenue of US$15.8bn was up 2% on FY25 and 3% ahead of consensus expectations. Underlying profit of US$3.0bn was down -3% on FY25 on higher tax, but 1% ahead of consensus.

A final dividend of US$1.62 took the total FY26 dividend to US$2.92, flat on FY25. The company also announced a $1.1bn share buyback for FY27.

Breaking it Down

In the primary Behring division, revenues were 2% ahead of consensus, though down -1% on FY25 in constant currency terms.

Immunoglobulin (Ig) revenue was flat in FY26 but --importantly-- showed a material improvement in the second half, Ord Minnett notes, rising 7% year on year.

Similarly, albumin revenue declined -17% in FY26, but the decline moderated to -5% in the second half with encouraging signs that price declines in China, reflecting government cost containment measures, are slowing.

While pricing remains challenging, volume trends have stabilised and CSL continues to expand its hospital and retail footprint, Morgans notes.

Revenues in Seqirus were 2% ahead of consensus, albeit down -8% in constant currency terms on FY25, largely due to bird flu contracts in FY25 not being repeated.

Encouragingly for Ord Minnett, seasonal (human) flu vaccine revenues rose 4%, and management expects support from growth in new markets and a slower drop in US immunisation rates ahead.

Revenues in Vifor increased 3% in constant currency and were 3% ahead of consensus, as stronger kidney treatment sales offset competition-driven weakness in iron products.

Guidance

FY27 guidance is for revenue in constant currency terms to be flat on FY26, with underlying profit growth of 5%.

Guidance assumes mid-single-digit revenue growth in CSL Behring, and low-single-digit revenue growth in Seqirus, while Vifor revenues are expected to decline by -25% due to ongoing competition from generics in iron products.

Macquarie points out Seqirus and Vifor have a smaller impact on the group's performance.

While FY27 guidance of 5% is largely underpinned by lower intellectual property amortisation and cost savings, and consequently has been viewed as low quality, RBC Capital thinks this is somewhat of a moot point, believing guidance is conservative.

While the guidance implies lacklustre growth in FY27, the more constructive commentary around Ig markets were what drove the shares higher, Ord Minnett suggests.

Management highlighted that underlying demand for Ig products was robust, US channel inventory was at more appropriate levels, and it expected Ig to grow in line with the market.

Morgans views this as an important change following the recent period of market share losses and inventory uncertainty.

An expected improvement in Behring’s gross margin, and slower rates of decline in China albumin pricing and US immunisation rates were also well received.

The FY27 outlook implies a stronger recovery in Behring sales (mid-single-digit) from a higher starting point, and a modest lift in gross margin offset by the larger (-25%) contraction in Vifor sales.

The cost savings program is ahead of plan and UBS notes 5% of savings in FY27 will be reinvested in growth opportunities.

It appears CSL does not need a material market share recovery to generate earnings growth, Morgans suggests, as long as Behring grows with the Ig market, transformation savings are delivered and newer products continue to scale.

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