CSL looks within to drive consistent, profitable growth

Shares in CSL Limited (ASX:CSL) have had a solid 12 months, up 17% and almost 5% ahead of the broader ASX 200 index. That is probably a fair reflection of the result that CSL delivered to investors last week, where some green shoots in one division were offset by headwinds in the others.

CSL's blood plasma division, CSL Behring, remains a powerhouse within the global biotechnology company. It aims to maintain double-digit earnings growth in the year ahead.

That's the message from CSL's Chief Financial Officer Joy Linton, who said the margin turnaround evident in the firm's FY24 result has room for further improvement despite challenging market conditions for two of the firm's three divisions.

CSL Behring generated US$10.61 billion in revenue for FY24, accounting for just over seventy per cent of CSL's total revenue.

"That business probably had, of all of the parts of CSL, the largest shock through Covid, and it has taken quite some time to return that business to the sort of growth that we are starting to see in the year that has just gone."

Linton says the firm is executing a program of margin expansion initiatives, including reducing plasma collections costs and investing in the manufacturing network, that will continue to deliver margin improvement within CSL Behring.

She also expects a continued normalisation of plasma collection levels post-Covid to provide a tailwind for the business.

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Short-term headwinds for CSL Vifor and CSL Seqirus

CSL's other two divisions, CSL Vifor and CSL Seqirus, face more challenging short-term outlooks and are likely to remain flat in terms of their contribution to CSL's earnings in the year ahead.

One challenge is a change in sentiment toward vaccinations in the post-COVID era, described as vaccination fatigue. This shift has reduced the vaccine market size, particularly in Europe and North America.

This pattern is consistent with prior pandemics such as SARS; however, given the scale of the Covid pandemic, it is yet to be seen how protracted and deep this downturn will be.

The silver lining for CSL is that in a challenging market, CSL Seqiris grew despite the decline.

"We've performed quite well. Our revenue for CSL Seqiris was up 4% in a declining market for the year that has just gone. That, I think, is really a testament to the differentiated portfolio we have."

Watch the full interview

As part of Livewire's C-Suite reporting season coverage, I spoke with CSL's chief financial officer, Joy Linton, to discuss the results and the outlook for the firm's three divisions.

Click on the player above to watch the full interview.

Timecodes

• 0:00 - Introduction
• 0:32 - Key figures from the results
• 1:00 - Capital management outlook
• 2:02 - Improving margins at CSL Behring
• 4:22 - The competitive landscape for CSL Vifor
• 6:32 - The outlook for CSL’s vaccine products
• 8:26 - Revenue and profit guidance
• 9:25 - Upside and downside risks to the outlook for CSL
• 11:02 - Operational efficiency