CSL Releases 1H26 Results Following CEO Exit Shock And Has More Than Halved in 2 Years! What’s Real vs Noise?

CSL Releases 1H26 Results:A Volatile Print, But Not a Broken Franchise

Investors should brace for a bumpy ride with CSL right now.

The sudden CEO exit in the final minutes of trading, followed closely by the release of its half-year results, has made this interim season feel a lot more volatile than usual.

That said, when you strip out the noise, the underlying business performance was down modestly, not catastrophic.

Revenue came in at US$8.3 billion, and NPTA was US$1.9 billion. Profitability was impacted this half, but it is important to separate short-term margin pressure from the longer-term earnings power of the franchise.

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Later Cycle CSL, What Matters From Here

When you look at the accounting in the financial statements, statutory profit slid largely because of very large, one off restructuring payments.

That is not an operational expense in the way the market usually thinks about it. In other words, it does not reflect a deterioration in the profitability of CSL’s underlying products. It is a short-term hit to reported earnings, not a sign the core engine has suddenly weakened.

The headlines will probably over-dramatise this and make it look worse than it is, because statutory profit is the number everyone grabs first.

Now, if we shift to the segment picture, you can see CSL is clearly in the later-stage, more mature phase of its business cycle.

CSL Behring still makes up a large portion of revenue at US$5.45 billion, but it is down 7%. For a segment that has been the core of CSL for years, that kind of moderation is a pretty normal phenomenon as a business matures.

What matters from here is the mix shift.

You want the growth in the other segments to keep scaling and act as a hedge, so the company is not overly reliant on one mature segment that is naturally seeing slower growth.

Vifor was the clear standout this half.

It brought in US$1.2 billion of revenue, up 12%, and that is a strong half-year performance in a period where investors are hyper-focused on anything that looks like slowing momentum.

Seqirus, on the other hand, was down 2%, which means the diversification story is not firing evenly across the portfolio right now.

So when people talk about CSL having a hedge against a maturing Behring segment, a lot of that hedge is currently leaning on Vifor continuing to grow and scale.

Underlying Profit Down 4%, Not a Collapse

On a profitability basis, the story is a lot more measured than the statutory headlines suggest.

Gross margins were stable, and underlying operating profit fell 4%. So this is not a gross margin collapse. It is more about mix, volume, and spend.

Cash flow also held up well. Operating cash flow was US$1.3 billion, up 3% year on year.

CSL will write down the value of two of its three divisions by $US1.1 billion ($1.6 billion), with new competition expected to hit sales of its iron deficiency products, while slowing demand and US regulatory hurdles are hurting its vaccines business. (This is the important measure) it alludes to the fact that their IP demand might be less favourable due to rising competition which CSL is now accounting for.

$500m to $550m Savings Target, But FY26 Takes the Pain

That is why we think investors should be prepared for a short-term share price fall. The initial shock comes from the statutory numbers where NPAT and EPS look ugly because the impairments are large.

But operating cash flow being up while statutory profit is down does not really line up if the business was genuinely falling apart. It points to the non-cash nature of a big part of the hit.

On the restructuring side, CSL is targeting annual pre-tax savings of US$500 million to US$550 million by FY28. They also flagged that 60% of FY26 savings are already achieved, while FY26 is carrying the heavy one off cost load.