For the battered and bloodied CSL, the problems look like getting worse before things get better. Pic: Getty Images.<\/p>\n
Despite \u201cgreen shoots\u201d of recovery, CSL\u2019s earnings officially are going backwards
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In today\u2019s thumping profit downgrade, blood and plasma giant CSL (ASX:CSL)<\/a> admits its current year earnings will go backwards, as management strives to right the listing ship.<\/p>\n Despite the company\u2019s woes, management in February pointed to underlying net profit advancing 4-7%.<\/p>\n Now it looks like earnings for the year to June 30 2025 will retreat around 4%.<\/p>\n Concerningly, the core Behring arm faces improved competitor capacity that has boosted excess plasma supply.<\/p>\n This problem appears to be structural, rather than cyclical.<\/p>\n Investors slashed CSL shares by as much as 20%, pushing them below the $100 mark for the first time in ten years.<\/p>\n \u201cWe fully recognise that CSL\u2019s financial outcomes have fallen short of expectations,\u201d interim CEO Gordon Naylor said.<\/p>\n He said the company\u2019s US$32 billion ($44bn) of invested capital clearly was not all \u201cworking as hard as it should be\u201d.<\/p>\n Naylor said management\u2019s growth medicine was helping, \u201cbut the financial benefits will take longer than previously anticipated to materialise\u201d.<\/p>\n The company said immunoglobulin demand in its core US market was growing at mid to high single digits, consistent with CSL\u2019s expectations.<\/p>\n But the reported revenue will reflect CSL\u2019s \u201cnormalisation of channel inventory\u201d.<\/p>\n In other words, there was too much stuff in the system.<\/p>\n \u00a0<\/p>\n What\u2019s the damage?<\/p>\n CSL now expects full-year revenue of US$15.2 billion, around 2% lower and net profit after tax and amortisation (NPATA) of US$3.1bn (4% lower).<\/p>\n This is on a \u2018constant currency\u2019 basis. Taking \u201cvolatile\u201d currencies into account, revenue will come in US$400m higher, while NPATA \u00a0will be a modest US$30m lower.<\/p>\n But management always has nominated constant currency as its preferred measure.<\/p>\n The immunoglobulin problem is expected to result in a US$300m revenue hit.<\/p>\n Turnover will decline by a further US$200m because of the declining value of the Chinese albumin market (despite CSL\u2019s expanding share).<\/p>\n And did anyone mention the Middle East conflict?<\/p>\n The conflagration will erase US$150m of revenue from the iron side of the business and CSL\u2019s haemophilia treatment Hemgenix.<\/p>\n \u00a0<\/p>\n Green shoots among the weeds<\/p>\n More positively note, management reports \u201cgreen shoots\u201d, including \u201cimprovements in end-patient demand and momentum across recent product launches\u201d.<\/p>\n Behring\u2019s second half volumes have grown, although gross margins have \u201cdegraded\u201d.<\/p>\n The performance of CSL\u2019s flu vaccine arm also has been \u201cmoderately stronger than previously anticipated\u201d.<\/p>\n On Behring, Naylor said the industry was \u201cstable and growing and the company has evident strengths in plasma collections and influenza vaccines\u201d.<\/p>\n Naylor said CSL remained \u201cvery profitable\u201d, with \u201cmetronomic\u201d cash flows and significant financial capacity.<\/p>\n \u201cI can also say that CSL continues to have evident competitive strengths in plasma collection and influenza vaccines.\u201d<\/p>\n In its transformation program already announced, CSL expects ongoing annual cost savings of US$500-550m.<\/p>\n CSL today also flagged US$5bn of non-cash asset impairments over the next two years, US$1.5bn of which was recognised in the December 2025 (first) half.<\/p>\n \u00a0<\/p>\n Emvision expands its stroke trial remit<\/p>\n