CSL Delays Vaccine Division Spin-Off and Cuts Earnings Forecasts
By Rishav Chatterjee
(Reuters) – Australian biotech company CSL faced a setback on Tuesday as it announced a delay in its planned vaccine division spin-off and a cut in earnings forecasts. The unexpected decline in U.S. flu vaccination rates led to a sharp drop in CSL’s shares, with prices falling by as much as 16.6%.
CSL had previously informed shareholders in August about its intention to spin off CSL Seqirus into a listed entity on the Australian Securities Exchange by next June. This decision was part of a larger restructuring plan that also involved reducing 3,000 jobs within the company.
During the annual meeting on Tuesday, CSL CEO Paul McKenzie expressed his disappointment in the greater decline in influenza vaccination rates in the U.S. than what was initially anticipated. Despite positive recommendations from the U.S. administration regarding influenza vaccines and a significant impact on public health, vaccination rates continued to plummet.
Challenges in the U.S. Vaccine Market
In the U.S., Health Secretary Robert F. Kennedy Jr. has been critical of vaccines, leading to reduced funding for research and the removal of key figures from the Centers for Disease Control and Prevention, which plays a vital role in vaccine recommendations.
Furthermore, the U.S. Food and Drug Administration made independent recommendations for virus strains for the 2025-2026 influenza vaccines, deviating from the traditional advisory committee voting process. Competitor Sanofi also highlighted challenges in its sales of flu and COVID-19 vaccines in the U.S., citing negative perceptions surrounding vaccines.
As a result of these challenges, CSL revised its full-year revenue guidance to a growth rate of 2% to 3%, down from the previous range of 4% to 5% for the financial year ending in June 2026. The company also adjusted its annual net profit after tax and amortization (NPATA) growth forecast to between 4% and 7%, compared to the earlier projection of 7% to 10% growth on a constant currency basis.
Craig Sidney, a senior investment adviser at Shaw and Partners, noted that the unexpected downgrade in guidance led to a significant sell-off in CSL shares. Investors were taken aback by the magnitude of the revision, which is likely to prompt brokers to adjust their price targets and earnings forecasts accordingly.
Demerger Plans Postponed
The planned demerger of CSL Seqirus will be postponed until market conditions are favorable for maximizing shareholder value, the company announced. CSL Chair Brian McNamee emphasized that the separation of CSL Seqirus remains a strategic priority to unlock growth opportunities and streamline operations for long-term success.
