Table of Contents
On the occasion of their earnings announcements today, two of Australia’s leading firms, CSL (ASX: CSL) and BHP Group (ASX: BHP), experienced contrasting market reactions. CSL saw its shares plunge nearly 10% as investors grappled with disappointing results tainted by restructuring costs and downbeat guidance. Conversely, BHP witnessed a rise in its stock value, buoyed by strong cash flows, a dividend increase, and easing inflation cost pressures.
CSL, a global leader in biotechnology renowned for its blood plasma therapies and vaccines, is in the midst of a significant restructuring, aiming to streamline its operations and spin off its Seqirus vaccine division. In contrast, BHP, the world’s largest diversified mining company, continues to thrive, underpinned by robust earnings from its iron ore and copper segments while maintaining its status as a reliable dividend payer.
This article dissects each company’s earnings results, examines market responses, and looks at their performance charts to gauge possible future movements.
CSL (ASX: CSL)
Last price: $244.38 -$26.94 (-10%) (11am AEST)
Key Financial Data
(In Australian dollars)
- Revenue: $15.56 billion (vs. consensus of $15.73 billion)
- Underlying EBIT: $4.47 billion (vs. consensus of $4.52 billion)
- Underlying NPAT: $3.30 billion (vs. consensus of $3.31 billion)
- Underlying EPS: $6.65 (vs. consensus of $6.53)
- Final DPS: $1.62 (vs. consensus of $1.56)
Guidance
- FY26 revenue growth forecast: 4–5% (implying $16.2–$16.3 billion, consensus $16.7 billion)
- FY26 NPATA forecast: $3.45–$3.55 billion (consensus: $3.6 billion)
- Expected one-off restructuring costs: $700–770 million pre-tax in FY26
- 15% workforce reduction planned, with expected annual savings of $500–550 million over three years
- CSL Seqirus to be spun off as a separate ASX-listed entity
- $750 million share buy-back to commence in FY26
Key Takeaways
CSL reported mixed results, falling short of revenue and EBIT expectations but hitting the upper end of NPATA guidance. The company’s extensive restructuring plan and Seqirus divestiture may unlock future value, yet the disappointing FY26 outlook alongside hefty restructuring costs clouds present prospects. This may lead to a cautious hold recommendation as investors await the outcomes of CSL’s strategic initiatives.
BHP Group (ASX: BHP)
Last price: $41.89 +0.42 (+1%) (11am AEST)
Key Financial Data
(In US dollars)
- Revenue: $51.3 billion (in line with consensus)
- Underlying EBITDA: $26.0 billion (vs. consensus: $25.9 billion)
- Underlying NPAT: $10.2 billion (vs. consensus: $10.2 billion)
- EPS: $2.00 (vs. consensus: $2.02)
- Total FY25 DPS: $1.10 (vs. consensus: $1.01) → payout ratio 55%
Guidance
- FY26 production and capex remain unchanged, medium-term capex reduced by $1 billion to approximately $10 billion per annum
- Cost guidance for FY26 indicates inflation pressures have “largely normalised”
- Net debt target range raised to $10–20 billion (from $5–15 billion) → implies ongoing attractive dividends above 50% payout ratio
Key Takeaways
BHP’s consistent performance and dividend increase enhance its appeal as an income investment. With medium-term cost pressures stabilising and ongoing growth in the copper segment, the stock appears well-suited for a hold to accumulate strategy for those focused on steady returns with potential for long-term copper price appreciation.
Conclusion
The divergent market reactions for CSL and BHP indicate shifting investor sentiments. While CSL’s price drop may entice some investors seeking perceived “cheap” stocks, history warns against knee-jerk decisions in reaction to earnings reports. Conversely, robust performances, like that of BHP, reflect solid fundamentals, suggesting potential growth.
Investors should embrace the mantra of trend following: buy into strength and sell into weakness. By scrutinising substantial post-earnings fluctuations, one may glean valuable insights into stock performance over time. Engaging in this analytical practice could yield surprising and beneficial results.
