CSL

CSL result is out.

The result is “fine”, but the below confirms the market view (which we share) on Vifor.

It just wasn’t as good as management had hoped. The impact of generics on Vifor’s iron deficiency franchise has been well flagged, and is well understood by both management and the market, and so, one hopes, should not represent a material future stumbling block (cheap generics that either take share or force lower prices faster on Vifor’s products).

It’s worth reminding ourselves that Vifor is not a huge part of CSL’s business. Seqirus was a good acquisition, Vifor perhaps less so. Also note that management haven’t thrown in the towel on Vifor, in the Q&A they called out that synergies have exceeded expectations and there’s plenty of other good parts of Vifor, as such they “haven’t decided to impair values or lower longer run expectations”.

You can see Venofer and Ferinject (key Vifor products) below; you can also see the rest of the CSL plasma franchise doing very well (IVIG sales, albumin, hemophilia, specialty products).

Turning to the result, NPATA growth of 13% is a solid outcome, here using constant currency (given the strength of the US dollar)…

…and that NPAT figure, in the bottom right of the above table, of $1,942m is still a touch below consensus at $1,980m.

That’s the part that probably matters, a small miss, but on a stock with (from yesterday’s trial miss) negative near-term momentum and a high multiple suggests the stock probably won’t rerate today.

Full-year guidance was reiterated, $2.9bn-$3.0bn, with consensus sitting in between. On the call was an interesting question re the mismatch between guided ranges on revenues vs NPATA, and I found the extra comment from Joy quite interesting. That is an unprompted bit of extra candor, she could have left it as she’d answered it, but went the extra step to strengthen the view.

How bankable is that, how much does it “lift the veil” on what they truly think and feel, is, alas impossible to say. But at the margin, I take it positively.

Cashflows remain strong…

And margins ticked back up a touch. There is seasonality, but this has been a key area of concern for the market.

It is perhaps more visually striking below.

This “margin recovery” story, with its roots in the IVIG franchise, was mentioned at least three times. Recall, during the pandemic, borders were closed, so IVIG collection suffered, and, there’s a 12-18 month product time cycle; in addition, when borders reopened, CSL found material inflationary pressure, with donors needing higher payments to bother donating, when unemployment benefits/cash-handouts to households were as high as they were, in 2022/2023.

That story above was a key part of the reason the stock sold off from pandemic highs, all the way down to $230. Overall earnings grew, but the multiple the market was willing to put the stock on dropped materially.

So whilst it might be early days, and it will take a while for margins to fully normalise, this result was at least a positive indicator on that front.

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