CSL share price drops despite expectations of growth in FY23

The CSL Limited (ASX: CSL) share price is currently down 4% after the healthcare giant reported its FY22 result.

CSL is Australia’s biggest ASX healthcare share. But, it’s a little smaller today in market capitalisation terms as the market didn’t respond positively to the company’s report and guidance.

The headline number was that its net profit after tax (NPAT) fell 6% to $2.255 billion, using a constant currency comparison. That was despite revenue going up by 3%. In Australian dollar terms, the annual FY22 dividend is up 6% to AU$3.11 per share.

CSL said the performance was “as expected” in a difficult global environment. Nonetheless, it managed to reach the top end of its guidance.

The company reported higher collection costs, and it also significantly grew its investment in research and development. Its growth was limited by FY21 plasma collections being reduced due to the pandemic, which then constrained subsequent sales of core plasma therapies in FY22, due to the long-term nature of its manufacturing cycle.

Markets are usually forward-looking

Investors are learning about how FY22 went for the company. But they may be paying particular attention to what the company is expecting in FY23, as investors like to ‘price in’ what’s happening next. Is this what’s affecting the CSL share price today?

CSL said that as FY22 progressed, its plasma collections grew significantly. Collections were up 24%, which it expects will “underpin strong sales growth” in core plasma products going forward. But, the pandemic put it two years behind the projected growth in plasma collections, which is “suboptimal for patient care”.

However, the company warned that the current higher cost of plasma is “also expected to prevail into FY23”. But, it predicted that its influenza business, CSL Seqirus, will deliver another strong year driven by demand for its differentiated products. Seqirus saw revenue growth of 13% in FY22.

In FY23, CSL expects net profit after tax for FY23 to be between $2.4 billion and $2.5 billion at constant currency, “returning to strong sustainable growth”. This guidance excludes the earnings and costs of Vifor, the recently-acquired business. The company will update guidance to include Vifor when it can.

The idea behind buying Vifor is that CSL will expand its leadership across an “attractive portfolio focused on renal disease and diseases of iron deficiency”.

CSL share price snapshot

Since the beginning of 2022, CSL is down by around 2%.

The post CSL share price drops despite expectations of growth in FY23 appeared first on The Motley Fool Australia.

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More reading

• CSL share price on watch following FY22 results
• 5 things to watch on the ASX 200 on Wednesday
• Looking to buy CSL shares? Here’s what to watch when the biotech company reports this week
• Here are 3 ASX blue-chip shares reporting this week
• Goldman Sachs gives its verdict on the CSL share price

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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