SYDNEY: Australian biotech CSL yesterday has delayed its planned vaccine division spin-off and cut earnings forecasts due to a bigger-than-expected decline in US flu vaccination rates, sending its shares down as much as 16.6%.
The company told shareholders in August that it would spin off CSL Seqirus into a listed entity on the Australian Securities Exchange by next June as part of a broader restructuring plan that also involved cutting 3,000 jobs.
At that time, it was believed vaccination rates were stabilising in the United States following a flu season marked by the highest illness and death rates in 15 years, CSL chief executive officer Paul McKenzie said at its annual meeting yesterday.
“In our Seqirus business, we have seen a greater decline in influenza vaccination rates in the United States than we expected,” he told shareholders in a speech.
“This is despite a positive recommendation from the US administration on influenza vaccines and an unprecedented level of infection impacting public health.”
In the United States, health secretary Robert F Kennedy Jr has taken aim at vaccines, cutting funding for research and ousting the head of the Centres for Disease Control and Prevention, which makes vaccine recommendations.
The US Food and Drug Administration in March independently recommended virus strains for 2025 to 2026 influenza vaccines, deviating from traditional advisory committee voting.
Rival Sanofi last week noted pressure on its sales of flu and Covid-19 vaccines in the United States and a “negative buzz” around vaccines.
CSL yesterday cut its company-wide full-year revenue guidance to 2% to 3% growth, lower than a previous range of 4% to 5% for the financial year ending in June 2026.
The company now expects annual net profit after tax and amortisation to rise between 4% and 7%, lower than the previously expected 7% to 10% growth on a constant currency basis.
Craig Sidney, a senior investment adviser at Shaw and Partners, said the sharp sell-off in CSL shares was due to the unexpected downgrade to its full-year guidance.
He said while the stock had shown some weakness recently, the scale of the revision caught investors off guard and would likely prompt brokers to lower their price targets and earnings forecasts.
The Seqirus demerger is now expected to occur when market conditions support maximising shareholder value, the company said.
“Separation continues to be the preferred approach to unlock simplification and focus and sustained long-term growth for each of these great businesses,” chair Brian McNamee said.
Shares in CSL fell as much as 16.6% to A$176.23 in Sydney.
That marked their biggest intraday fall since mid-August, and they traded at the lowest level in about seven years. — Reuters
