The CSL Ltd (ASX: CSL) share price is up more than 3% after reporting its FY23 result.
CSL is a large ASX healthcare business that provides plasma therapies, vaccines and other healthcare offerings.
CSL FY23 result
Here are some of the highlights from the 12 months to June 2023:
- Revenue rose by 31% to $13.3 billion in constant foreign exchange terms
- Underlying net profit (NPATA) rose 10% to $2.6 billion
- Net profit after tax (NPAT) fell 3% to $2.19 billion
- NPAT rose 8% in constant foreign exchange terms
- Final dividend of US$1.29 per share
- Full year dividend of US$2.36, up 6%, in Aussie dollar terms it rose 13% to A$3.59
CSL said that its Behring division rebounded strongly thanks to “exceptional” growth in immunoglobulin sales (up 21%) and record plasma collections (volume up 31%). Albumin sales rose 11% to $1.1 billion, with sales in China up strongly as COVID restrictions eased, while supply improved in the US and Europe.
The vaccine business, Seqirus, experienced revenue growth of 9% to $2 billion. It said that during the period a licence agreement was signed with Arcturus Therapeutics for next-generation mRNA vaccine technology.
CSL Vifor revenue was $2 billion, representing a contribution of 11 months since acquisition in August. It represented growth of 14% compared to the 11 months in FY22 before CSL ownership. CSL Vifor cost synergies are “well on track.”
Research and development expenditure was $1.23 billion, up 22% year on year. The increase reflects the inclusion of CSL Vifor and progression of the pipeline. New products could drive the CSL share price higher if they are successful.
Management commentary
The CSL CEO and Managing Director Paul McKenzie, said:
The strong growth in our immunoglobulins franchise is expected to continue following record plasma collections in FY23.
We have a number of initiatives underway to improve efficiencies which include a focus on optimising plasma collection costs, improving manufacturing yields and bringing new products to market, all of which will support the medium-term recovery in CSL Behring’s gross margin.
The launch of HEMGENIX® in the US last quarter will continue to deliver this paradigm-shifting treatment to the haemophilia B community in the US and Europe in the year ahead. Our R&D pipeline includes a number of late-stage programs nearing completion which will lead to more options for patients and protecting public health.
Outlook for the CSL share price
Management are expecting another strong year for CSL Seqirus, while looking to ‘unlock’ the value and growth of CSL Vifor.
In FY24, revenue growth is expected to be between 9% to 11% compared to FY23 at consistent foreign exchange rates.
Underlying profit is expected to be between $2.9 billion to $3 billion at constant currency exchange rates, representing growth of between 13% to 17%.
CSL may be one of its strongest ASX businesses, but to me it seems to be valued at a fairly high price/earnings ratio (p/e ratio) with how large it is and the relatively slow earnings growth rate. There are many ASX growth shares I’d rather buy first that are smaller.
