CSL shares plunge to six-year low as growth stalls
CSL’s share price fell to a six-year low after it cut growth forecasts as vaccination rates in the US fell and demand from China fell due to government cost control measures.
Shares of the blood products giant fell 15.9 percent to $177.17 in midday trading Tuesday, their lowest level since 2018, after CSL cut its revenue growth forecast from four to five percent to two to three percent. It also reduced its profit forecast from 7 percent to 10 percent and from 4 to 7 percent previously.
CSL shares were down 36.1 percent year-to-date, trading above $300 as recently as October 2024.
“It’s obviously very frustrating that the share price hasn’t gone anywhere for some time and has fallen so much recently,” Chairman Brian McNamee told shareholders at the company’s annual general meeting on Tuesday.
“This is very disappointing for us and for you as shareholders,” he said, emphasizing that he still believes in CSL’s strategy, growth story and ability to generate strong returns.
CSL’s board took an embarrassing “second strike” at the meeting; Only 57.1 percent of the shares were cast in favor of the remuneration report, well below the required 75 percent approval.
This triggered an automatic decision on whether to vacate CSL’s board, but this ended in resounding failure, with approximately 97 percent of the votes cast against it.
Dr McNamee said CSL chief executive Paul McKenzie and the board were working to quickly overhaul the company.
“The reality is that CSL has been operating in a very complex way for some time, and this has affected our ability to respond decisively to geopolitical headwinds and maintain our market leadership position,” he said.
“It is clear to the board and Paul that changes must be made quickly and effectively.”
Mr McKenzie said CSL was actively cutting costs and expanding its research and development footprint from 20 different sites to six.
“It’s very difficult to stay relevant, it’s very difficult to connect to the ecosystem, it’s very difficult to optimize your relationship between R&D and commercial when people are spread out across 20 sites,” he said.
CSL said it reduced its guidance in part due to the severity of the 2024 flu season and a larger-than-expected decline in flu vaccination rates in the U.S. despite positive advice from the U.S. Centers for Disease Control and Prevention.
Based on insurance claims to date, CSL expects U.S. flu vaccine rates to drop another 14 or 15 percent, on top of declines in the previous two years.
“It’s remarkable, but this is our reality. We can’t see the bottom of vaccine realities in the US today. It should be soon. The prevalence of the disease is real and strong,” Dr McNamee said.
“We made this vaccine. We expected to sell it. We didn’t.”
Given CSL volatility in the US flu vaccine market, CSL said it no longer aims to discontinue its vaccine-making Seqirus business in 2025/26.
CSL said it had also cut its recommendations because government cost-containment controls in China had reduced demand for albumin, a blood protein used for a variety of medical and surgical problems.
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