By Christine Chen and Rishav Chatterjee
SYDNEY (Reuters) -Australian biotech CSL has cut its profit outlook and delayed plans to spin off its vaccine division, blaming an unprecedented fall in U.S. flu immunisation rates, which knocked its shares down as much as 16.6% to a near seven-year low.
At CSL’s annual meeting in Melbourne on Tuesday, investors frustrated with the former market darling’s tanking share price also rejected executive pay packages for the second year in a row, but the board survived a spill motion.
CSL, Australia’s fourth-largest company by market value, told shareholders in August it would spin off its Seqirus vaccines unit and list it on the Australian Securities Exchange by June next year as part of a broader restructure that also involved cutting 3,000 jobs.
The demerger has now been shelved amid “heightened volatility” in its key U.S. market where vaccination rates are expected to fall by 12% in the northern hemisphere winter season, the company said.
The drop in immunisation rates has come with policy shifts under U.S. Health Secretary Robert F. Kennedy Jr., who has taken aim at vaccines, cut funding for research and ousted the head of the Centers for Disease Control and Prevention, which makes vaccine recommendations.
“In our Seqirus business, we have seen a greater decline in influenza vaccination rates in the U.S. than we expected,” CEO Paul McKenzie said.
Chairman Brian McNamee said the collapse in vaccination rates was “remarkable”.
“We can’t see the bottom of the U.S. vaccination realities today,” he said.
REVENUE AND EARNINGS OUTLOOKS CUT
The company cut its full-year revenue guidance to 2% to 3% growth, down from a range of 4% to 5%, for the financial year ending in June 2026.
It said it expected annual net profit after tax and amortisation (NPATA) to rise between 4% and 7%, down from the previously expected 7% to 10% growth on a constant currency basis.
Shares in CSL fell as much as 16.6% to A$176.23, their lowest level since December 2018. It also marked their biggest intraday drop since mid-August, when the Seqirus spin-off was announced.
Analysts said the decline on Tuesday was driven by the unexpected earnings downgrade, partially offset by news the poorly received demerger was delayed.
The demerger is now expected “when market conditions would support the maximisation of shareholder value”, CSL said.
Shareholders frustrated by the company’s poor performance lodged a 42% protest vote against CSL’s remuneration report, according to a tally of proxies shown at the meeting.
