CSL Limited

Thank you for standing by, and welcome to the CSL Limited Full Year Financial Results 2026 Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypads. I would now like to hand the conference call over to Michelle Rees, Head of Investor Relations. Please go ahead.

Good morning everyone and thank you for joining CSL's 2026 full year results presentation. I'm Michelle Rees, Head of Investor Relations. Before we begin, I would like to draw your attention to the important disclaimer on the screen. A copy of this, along with our ASX materials, has been published on the CSL and ASX websites. With me today are Gordon Naylor, CSL's Interim Chief Executive Officer and Managing Director, Ken Lim, our Chief Financial Officer, and Diego Sacristán, our Chief Commercial Officer. Please note this briefing is being webcast. I will now hand over to Gordon.

Thanks Michelle and good morning everyone. Today's call is primarily about our FY26 full year results and the outlook for FY27. I'll also give you a broader update on our progress toward a return to profitable, sustainable growth. In early May, after 90 days in the role, I shared with you that our financial performance had fallen short of expectations and the rapid diagnosis work undertaken to assess the drivers of that outcome. I'm pleased to report that in the intervening weeks, we've been able to maintain momentum to stabilise the company's performance Restore the cadence and focus of the leadership team and start to deliver results. Considerable work remains, but we are making progress. FY26 has been a reset year for CSL. The actions that put us back on the path to sustainable growth started well before my appointment and have been delivered with intention and urgency. My observation on this is twofold. The industry structures in which we compete remain robust. And as I travelled around the global business and engaged with staff, it is evident that the CSL culture of capability, commitment and openness remains deeply held. There is absolute clarity in the global workforce about the task at hand. The leadership team has been key to ensuring that communication with the broader organisation has been consistent, open and transparent. The full support of the board has helped us to move rapidly. The FY27 planning process included the allocation of accountability to a high level of detail, all supporting CSL's return to profitable growth. We assessed initiatives in play, focusing on the ones that are core to our success and stopping the ones that weren't. Since I'm not a candidate for the permanent CEO role, I've been able to work with the board on the process. I'm pleased to say, on behalf of the board, that the search is progressing to plan and the board is impressed with the calibre of talent on our shortlist. In the interim, my role is to continue to drive the business forward and to give the incoming CEO the strongest possible foundation from which to build. I then expect to return to the board as a non-executive director after a suitable transition period. With that, let's turn to the FY26 result. I'll take you through the high points and then hand over to Ken to explore The numbers I talked to are on a reported basis, and the percentage movements mentioned are on a constant US dollar currency basis, unless otherwise stated. Revenue was $15.8 billion, down 1%. Underlying NPAT-A was $3.1 billion, down 2%. while underlying NPAT was $2.8 billion, down 3%. As you know, we're returning to NPAT as our core financial profitability measure. Reported NPAT includes the significant one-off restructuring and impairment charges that Ken will discuss in detail. Within the businesses, Baring Revenue declined by 1% at constant currency. Securus declined by 8% and V4 grew by 3%. Underlying demand for aminoglobin remains robust and denbry has performed ahead of our initial expectations and haemogenics continues to grow. Within influenza vaccines, Seqirus was the only global participant to grow seasonal influenza revenue year on year, despite significant sectoral headwinds. Our transformation program delivered $176 million of savings in FY26, ahead of the target we set for the year. We selectively reinvest a portion of those savings in commercial and development initiatives where we expect the returns to justify the investment. Cash flow from operations remained strong at $3.5 billion. This supported the completion of the share buyback of around AU$1 billion and Ken will talk about a further buyback ahead. In addition, I'm pleased to announce that we are maintaining the dividend in US dollars. These capital returns are evidence of the underlying robustness of the business. Turning now to CSL Baring, our largest business. Total revenue was $11.4 billion, which was down 1% against the prior comparable period. Immunoglobulin revenue was broadly flat for the year. The reported outcome was affected by the normalisation of US channel inventory that we spoke about in our May update. We now see channel inventory at more appropriate levels. You may recall during the year we were also cycling the Medicare Part D changes and the loss of the UK tender during the first half of FY25. These created an additional headwind to the year on year comparison and contributed to the flat full year IG result. The more relevant indicator of current demand is the second half performance. IG revenue increased 7% on the prior comparable period and 4% on the immediate preceding half. We regard this as an early indicator that the commercial investments we've made in the US are yielding benefits. We're now maintaining patient share in Hyzentra, which is important as it demonstrates the durability of the franchise. Albumen revenue declined by 17%, principally reflecting cost containment measures and the resulting reduction in market value in China. We're encouraged to see a slowing in the rate of decline in the Chinese albumen market. You can see this reflected in our second half result, which was down 5%. compared to the prior comparable period. We have expanded our geographic footprint in China and our partnership with Baheel who bring great strengths in the retail channel. We continue to see progress from the commercial investment initiatives in both IG and Elberman. It remains early and we recognise the need to demonstrate sustained execution, but the direction of travel is improving. Elsewhere in the portfolio, our newer products performed well. And Denbry has had a strong launch and is now available in 19 markets around the world. And Haemgenics grew by 25%. In perioperative bleeding, competition in the US continues to impact case centric pricing, although we are seeing the rate of decline beginning to moderate. On portfolio execution, underlying IG demand remained robust. As I mentioned, our US and China field force investments are beginning to show progress. Album and volume growth in China has stabilised, although market value remains under pressure. And Denbigh has exceeded our initial launch expectations, and the Phase 3 trial for the Varmex candidate has commenced, was the first patient expected in the very near future. We also licensed clozacizumab to Eli Lilly for indications other than for cardiovascular events in people with end-stage kidney disease. That transaction allows the program to benefit from Lilly's development capabilities while enabling CSL to focus its resources on those opportunities where we are best placed to create value. We are aware of a trial evaluating a similar antibody that recently failed its primary endpoint. Given the population differences, we do not view the Zeus results to be necessarily predictive of the outcome of our study, which continues. Now moving to the operational side of the business. CSL is the global leader in plasma collection. We have a large and highly productive network, deep operational knowledge and a long history of collecting safe, high quality plasma. This has always been foundational to bearing success, supporting both margin structure and competitiveness. On my first day as CEO, I appointed Steve Marlow, who heads CSL Plasma, to the global leadership team. This was to ensure that this part of the group received the appropriate focus. Underperforming centres have been closed, with plasma collections shifting to more efficient ones. We are also pursuing the next wave of plasma innovation by reducing unnecessary sources of process variants Reducing unit supply costs and optimising labour productivity through sophisticated donor scheduling and improved workflows. Better digital engagement with donors is expected to yield more personalised donor communication and improve the donor experience. Given the information-intensive nature of this business, there is fertile ground for AI applications, an area which we are pursuing rigorously. We have been a leader in driving innovation across the industry. Continuing with that intent, we are transitioning a portion of our US plasma centres to the latest generation haemonetics plasmapheresis platform. On the manufacturing side, our yield initiatives are progressing. Planning for the Horizon 2 clinical studies continues and construction of the Kankakee IG facility has commenced. Turning to CSLV4, revenue was $2.4 billion, an increase of 3%. However, that headline result does not reflect the more recent underlying trajectory of the portfolio. Dialysis revenue grew by 18%, largely as a result of the temporary benefit from VELFORO's inclusion in the US Tdapa reimbursement arrangement. Although this arrangement will cease on December 31st this year, we have and will continue to experience an early decline in revenue and margin ahead of that date. Within non-dialysis nephrology, Pilsbury achieved strong patient uptake in its launch markets, while Veltassa grew through new market entry. The iron portfolio declined by 16% as generic competition intensified in both Europe and the United States. These portfolio dynamics are central to the outlook for V4 and to the impairments recognised in the result. So I want to take a moment to go into these in more detail. There are significant headwinds facing V4. These are structural and will materially affect the earnings profile of the business over FY27. Injectifa is now competing against generic entrants in the United States. The European iron portfolio has been in this position for over a year now and continues to experience substantial price erosion. As I mentioned, Belforo will lose the benefit of Tdapa at the end of calendar 2026 and we believe sales will decline substantially from their recent highs. This is factored into our forward guidance. In addition, the European Commission has adopted the decision to revoke the marketing authorisation for Tavernios in Europe. While we are disappointed in this decision,