Operator
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 Sakristan, 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 financial details. As a reminder, 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, Bering revenue declined by 1% at constant currency, Securus declined by 8% and V4 grew by 3%. Underlying demand for aminoglobin remains robust and Denbury has performed ahead of our initial expectations and Haemgenics continues to grow. Within influenza vaccines, Securus 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 remains strong at $3.5 billion. This supported the completion of the share buyback of around $1 billion Australian dollars 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 Bearing, our largest business. Total revenue was $11.4 billion, which was down 1% against the prior comparable period. Immunoglobin 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. Albumin 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 albumin 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 Bahil 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 Denbury has had a strong launch and is now available in 19 markets around the world, and Haemgenix grew by 25%. In perioperative bleeding, competition in the US continues to impact KCentra pricing, although we are seeing the rate of decline beginning to moderate. On portfolio execution, underlying IG demand remains robust. As I mentioned, our US and China field force investments are beginning to show progress. Albumin volume growth in China has stabilised, although market value remains under pressure. And Denbri has exceeded our initial launch expectations and the Phase 3 trial for the Varmex candidate has commenced. with the first patient expected in the very near future. We also licensed clazokizumab 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 variance, 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 Hemenetics 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 CSL V4, revenue was $2.4 billion dollars, 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 to DAPA 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, Filspari achieved strong patient uptake in its launch markets, while Weltassa 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. Injectifer is now competing against generic entrants in the United States. The European iron portfolio has been in this position for over year now and continues to experience substantial price erosion. As I mentioned, Belforo will lose the benefit of Tadapa at the end of calendar 2026 and we believe sales will decline substantially from their recent highs. This is factored into our Ford guidance. In addition, the European Commission has adopted the decision to revoke the marketing authorisation for TAVNI-OS in Europe.
While we are disappointed in this decision, we respect the outcome of the regulatory process.
Patient care remains our highest priority and we are working closely with health authorities to provide clear information to patient communities and healthcare providers on next steps. Taken together, these factors create a considerable portfolio headwind. We are taking mitigating actions. The commercial and medical organisations of V4 and Bering have been integrated. This has enabled us to combine management structures, remove duplicated regional and country-level activities and deploy resources across the combined portfolio more effectively. We are pursuing growth in Filspari and Valtassa, and we are examining the portfolio with a disciplined approach to return on investment. None of these actions eliminate the headwinds, but they do mean that the business is actively adapting its cost structure, commercial model and portfolio priorities. Turning to CSL Securus. Sikiris continues to perform well as a sectoral leader with the innovative product portfolio driving continuing market share gains Revenue was $2 billion, down 8% reflecting the non-recurrence of pre-pandemic sales associated with the avian influenza threat in FY25 Seasonal influenza revenue increased by 4% The adjuvanted portfolio grew by 5% and cell culture revenue also grew by 5%. As highlighted earlier, Securus was the only global vaccine company to grow seasonal influenza revenue year on year. Since the business was established, it has grown seasonal influenza share in each year through product differentiation, manufacturing capability and focused commercial execution. We're proud of this performance which reflects a long-term strategy of differentiating the portfolio through cell-based and adjuvanted vaccines supported by real-world evidence and targeted geographic expansion. The business gained traction in the US integrated delivery network and paediatric segments despite a challenging overall US market. The final season of standard egg-based defluorier represents another step in the evolution of the portfolio toward enhanced vaccines. The differentiation strategy continues to drive out performance and market share gains in the United States and Europe. Germany completed a successful first season and we entered France with enhanced recommendations for Fluad. We have also secured a PAHO agreement that provides a platform for market and volume expansion in South America. Our adjuvanted cell-based vaccine, Algum Flu, has been approved in the UK and received a positive recommendation from the European Medicine Agency's CHMP. The operation of separation of Securus is now complete, which was achieved on a cost-neutral basis. The business has appropriate operating autonomy, while continuing to benefit from selected CSL group capabilities and governance. We're now comfortable with where Securus sits in relation to the group's corporate structure, with no plans to undertake a demerger in the near term although we are preserving optionality for a demerger if it would create incremental shareholder value. The Tullamarine facility is now open and will support the move toward a fully differentiated portfolio part of which is the expansion of our cell-based pandemic offering that has already yielded new agreements in Canada, New Zealand and Australia. CSO is increasingly, sorry, Securus is increasingly positioned around differentiated products, targeted customer segments and selected markets where its technology and real-world evidence can support sustainable value. I'll now hand over to Ken to take you through the financial result in more detail.
Thank you, Gordon. and good morning everyone. Starting with the financial highlights for FY26, I'll walk through the P&L focusing on reported numbers and changes expressed in constant currency. Total revenue for the group was $15.8 billion, down one percent. Gross profit was $8.5 billion, dollars down two percent and the group operating result was six point eight billion dollars down three percent. In research and development we made strong progress on our restructuring initiatives with R&D expenses down thirteen percent to one point two billion dollars while still investing in attractive development programs such as the Viomex phase three trial. General and admin costs were also down by 13%, benefiting from our cost management initiatives and organisational simplification. Net interest was relatively flat with our gearing finishing the year at 1.8 times within our target range after executing a share buyback of 1 billion Australian dollars. NPAT A before restructuring and impairments was $3.1 billion, down 2%. I'll go into more detail on the restructuring and impairments shortly. Group underlying NPAT, which is the bottom line earnings metric we will be focusing on going forward, was $2.8 billion, down 3%, before restructuring and impairment charges. Our underlying effective tax rate was 19.1%. NPAT on a statutory basis after restructuring and impairments was a loss of 2.6 billion dollars. Cash flow from operations was strong at 3.5 billion dollars and we maintained our final dividend in US dollars at $1.62 per share taking the full-year dividend to $2.92 per share. Turning to the next slide, the table provides a bridge from NPAT-A to underlying NPAT and then to statutory NPAT attributable to CSL shareholders. As I noted earlier, our FY26 NPAT-A was $3.1 billion. From NPAT-A, we deduct the post-tax amortisation of acquired intellectual property which was $322 million in FY26. We then adjust for the share of amortisation that is attributable to non-controlling interests. That takes us to underlying NPAP attributable to CSL shareholders of $2.8 billion. This reflects the operating performance of the business after IP amortisation but before the restructuring and impairments recognised during FY26. To get from underlying NPAT to statutory NPAT, we deduct post-tax restructuring and impairment expenses of $6 billion and then add back the portion of those impairment expenses attributable to non-controlling interests. This result in statutory NPAT attributable to CSL shareholders of a loss of 2.6 billion dollars. Turning to the segment results. Bearing revenue was 11.4 billion dollars down one percent at constant currency. Gross profit declined by two percent and gross margin declined by 70 basis points. The gross margin result reflects product and geographic mix, the USIG channel inventory normalisation and continued pressure in albumin. These impacts were partly offset by further improvement in plasma collection costs and manufacturing efficiency. Sales and marketing expense in bearing increased by eight percent, reflecting the deliberate commercial investments Gordon discussed, including field force expansion in the US and China and support for Endembry. For V4, revenue increased by three percent, with gross profit also increasing by three percent. V4's operating result increased by 11 percent as we continue to take out operating costs. I previously foreshadowed that from FY27 onwards, we'll be updating our segment disclosures, including the separation of Securus down to segment EBIT. Although Bearing and V4 have been integrated across commercial and medical affairs, our intention is to continue to report them separately down to gross profit in order to maintain visibility over the distinct revenue and profit drivers of the two businesses. Bearing and V4 will be treated as a single segment for reporting sales and marketing, R&D and general and admin costs. Turning to Securus, revenue was down 8% with gross profit down 9% and the operating result down by 12%. While Securus' seasonal influenza vaccines revenue was up 4%, its overall result for the year was lower due to the non-recurring revenue from avian flu sales that were recognised in FY25. Sales and marketing costs increased by 8%, reflecting the launches into new markets such as Germany and France. We made strong progress on our transformation program. In FY26, we reported total restructuring costs of $799 million, of which $339 million was cash. We delivered $176 million of savings, ahead of the $100 million target we set for the The majority of the savings were generated across R&D, commercial and medical, and operations. In FY27, we expect incremental savings of approximately $220 million, taking the annualised savings to approximately $400 million, and then growing to up to $550 million in FY28. We're taking a disciplined approach to reinvesting a portion of these savings into high-priority growth opportunities. In FY26, $30 million was reinvested in commercial initiatives, principally to support execution in Bering. We also invested $50 million in R&D to support the Vimex candidate. In FY27, we expect to reinvest around half of the incremental savings into commercial initiatives and progressing a clinical development program. As foreshadowed in May, we're reporting pre-tax non-cash impairments of $5.5 billion in the second half of FY26, which together with the impairments recorded in the first half equates to total pre-tax impairments of $7.1 billion for the full year. The largest component of the second half impairments relates to V4, where we have impaired products and goodwill by $4.1 billion. This reflects changing market dynamics, which Gordon has discussed, including increased generic competition, the conclusion of the Tidapa period for Velforo, and the revocation of the marketing authorisation for Tavneos. The balance of the second half impairment relates to property, plant and equipment. In particular, our facility in Lengnau, Switzerland. This impairment relates to a portion of the site that had been set up to support third-party contract manufacturing activities. Further detail on the impairment is set out in Appendix C of the investor materials. Turning to the next slide, we're taking a disciplined approach to how we invest CapEx across our network. In FY26, our CapEx was $766 million. As can be seen from the chart, our CapEx has come down in recent years, following a period of significant investment as we expanded capacity across the network to meet increasing demand for our products. moving forward we expect our capex over the medium term to increase driven by the horizon two investment we're making at our site in kankakee for fy 27 we anticipate capex to be around one billion dollars plus or minus 100 million moving now to our balance sheet our operating cash flow continues to support a strong and flexible balance sheet with capacity to support investment in growth opportunities while also providing cash returns to shareholders. During FY26, we completed a buyback of AU$1 billion, and in FY27, we intend to undertake a further buyback of approximately AU$1.1 billion. At year-end, net debt to EBITDA was 1.8 times. We've also maintained the full-year dividend in US dollars. Our capital allocation priorities remain clear. We'll support the business through investment in growth opportunities that meet our strict return criteria. We'll continue to maintain a strong balance sheet, targeting net debt to EBITDA in a range of 1.5 to 2 times. And finally, we'll continue to return excess capital to shareholders where that represents the most attractive use of our cash flow. I'll now hand back to Gordon to cover the outlook.
Thanks, Ken. FY26 was a difficult year and the result includes substantial accounting consequences from past decisions and investments. We've not sought to minimise those issues, but to address them. Considerable work remains, but the company is now simpler and focused on execution. Commercial initiatives in Bering are beginning to show progress, and Securus continues to gain share in seasonal influenza vaccines. At the same time, V4 faces significant and unavoidable portfolio headwinds and these will continue to affect group growth. For FY27, we expect Bering to deliver mid-single-digit revenue growth. IGs expected to grow in line with the market at mid-to-high single-digit rate. The commercial initiatives implemented during FY26 are expected to support improved execution. We expect continued strong uptake of Andenbury and consistent uptake of hemgenics. We also anticipate a modest improvement in Behring's gross margin, driven by plasma cost efficiency, manufacturing initiatives and portfolio mix. V4 will face significant headwinds with revenue declining by around 25%. These headwinds include continued generic competition in iron and the conclusion of the Velforo to Dapa period. With the EU decision to revoke the marketing authorisation for Tavneos we have no sales for Tavneos in FY27 guidance. The V4 cost base is being adjusted accordingly, but the scale of the revenue decline means the business will remain a material headwind to group performance. For Securus, we expect low single-digit revenue growth. The business should benefit from momentum in newer markets and targeted customer segments. Ex-US influenza immunisation rates have stabilised. and the rate of decline in the US is slowing. At the group level, the transformation program will deliver further cost savings in FY27. We will reinvest a portion of those savings in opportunities that meet our strict return criteria, principally within the core bearing franchise. For FY27, we expect group revenue to be broadly in line with FY26 on a constant currency basis. We expect NPAT growth, excluding the restructuring impairment items, of approximately 5% at constant currency. At current exchange rates, we estimate an FY27 foreign exchange headwind of approximately $50 million should those rates remain unchanged for the balance of the financial year. The Board has authorised a new share buyback of $1.1 billion Australian dollars. The actions taken during FY26 have re-established the foundation. Our focus on FY27 is to maintain momentum and demonstrate measurable progress. I'll now hand back to Michelle to take your questions.
Thank you Gordon and Ken. The line is now open for questions to Gordon, Ken and Diego. To allow as many participants as possible to ask a question, please limit your questions to 2. If you have a further question, you are welcome to rejoin the queue. I'll now hand over to the operator.
Operator
Thank you. Once again, if you wish to ask a question, you may press star and then 1 on your telephones and wait for your name to be announced. If you wish to cancel your request, you may press star and 2. If you are on a speakerphone, we ask that you please pick up the handset to ask your questions. Our first question today comes from David Lowe from UBS. Please go ahead with your question.
Thanks for taking my question. If we could just start with the bear and gross margin expectations, can I get you to talk through a little bit what the drivers are there? I mean, one of the observations I'd make is that the one-off contribution was quite a significant benefit in FY26. And if I could throw into the same question some commentary about last-liter economics, given what's happened with Albumin, please.
Sure. Thanks, David. So in FI26, as I mentioned before, the bearing gross margin contracted by about 70 basis points. Underlying that outcome was benefits that we continue to generate with efficiency gains in plasma collection and manufacturing. And that continues into FI27. Given the top-line result that we reported in Bering and FI26, that's where we had some headwinds, which led to the margin contraction. Looking forward into 27, we'll see the same efficiency benefits continue to play through, with the portfolio now supporting some margin growth into 27. and our objective is to gain back roughly the 70 basis points that we lost in FY26. In relation to your question about balanced leaders, the first comment I'd make is that we are seeing volumes in China, Albumen, starting to stabilise, so that's encouraging. And then ultimately, it's a question of how we are able to balance the mix between IG and Avelman in order to grow margins. And we've taken into account all of those dynamics in the guidance which we've given today, including the modest gross margin expansion in bearing.
Okay, thank you for that. Look, my other question, just the switch to Haymanetics new equipment, sort of could you get just a little bit of insight as to why the switch is being made and what it means for the relationship or the current usage of the RECA device, please.
Hey, Dave, it's Gordon. So I guess the context here is the focus upon productivity and efficiency in plasma. And so we have quite a number of initiatives that Steve and I are looking at to drive that, and it's strategically quite important to us. So one of those is the machines. so where we have agreed to, with Hermonetics, to transition a portion of the fleet over to explore that platform as we look for new frontiers to further improve the productivity of that operation.
Okay, thank you very much.
Operator
Our next question comes from Andrew Goodsall from MST Marquis.
Please go ahead with your question. well good morning thanks very much for taking my questions uh just uh switching over to sequiris just um a bit forward looking um obviously you've got two products in the market now for the world and flusovacs just trying to understand how you see the landscape just with those two products with i think you've taken a bit of price increase certainly can see that in the us uh and just uh just with with moderna's recent approvals just just uh if you can sort of pull that together for your outlook we had a bit we had a bit of trouble understanding what were the products that you mentioned yeah go on it's the line's not great do you want me to repeat a bit slower yeah we'll try it we'll try a lot um andrew just repeat we just had a poor line that's all oh okay so sequiris um just just forward looking uh you've you've shrunk down to two products fluid fluid and flu silvax and we can see you've taken a bit of price increase in flu silvax in the us so just trying to understand sort of how you're thinking about that into 27 and just throwing in Moderna into that landscape and just your outlook there.
So Gordon mentioned our expectation that the business will grow at low single digit. There is a few key parts within that guidance. So first of all in the US vaccination rates are still declining but we do see the rate of decline moderating so as we look ahead into the current 26-27 season our expectation is that vaccination rates will decline by low single digit which is considerably slower than where they were a year or two ago. As a result of that the US business we expect to be broadly flat, with the growth being driven by the ex-US markets, driven by the initiatives that we've discussed, including the increased penetration into new markets, new enhanced recommendations for Fluad, and the first season of Orgym Flu in the UK.
Thank you, and just a quick one on the, you obviously had a one-off in this period, we noticed there was a sale, I think it was Novartis, to buying Myricks, which you've gotten a stake in. So that presumably will create a one-off benefit in FY27, just trying to understand the materiality of that.
I don't think we are calling out any one-off benefits in FY27, Andrew. We had a one-off benefit in FY26 as a result of the Eli Lilly transaction, but the underlying growth that Gordon mentioned is driven by the core recurring business.
Operator
Our next question comes from David Bailey from Morgan Stanley. Please go ahead with your question.
Yeah, thanks. Good morning. I'm just looking at the guidance commentary again and obviously a fairly significant revenue decline coming through for V4. Essentially, I'm trying to understand the contribution of that in terms of a drag to group impact growth for 27. So maybe some commentary around how you're thinking about gross margin for that particular division or any sort of sense as to what you think the drag of V4 is on group and underlying impact growth for fiscal 27.
Well, thanks for the question. So Gordon mentioned an expectation that the V4 top line will decline by around 25%. And the market dynamics which drive that are principally price. So we do expect the vast majority of that price decline to also impact the V4 gross margin. So that needs to be set alongside the growth that we're expecting in Bering and Securus. So we've already mentioned the bearing revenue guidance, gross margin expansion. For Securus, there'll be top-line growth with broadly flat gross margins. And so at a group level, when we consolidate all of V4, you get some offsetting impacts, which is what contributes to the flat overall top-line guidance for the group. The dynamic that I'll highlight as you move down through the P&L is to remind you that a considerable portion of the sales for V4 are executed through our joint venture, where we have a 55% share. So there's a 45% minority interest in V4, which means that when we work through those adjustments down to NPAT, a significant portion of the V4 sales and margin decline actually accrue to the minority interest.
Yes, that's clear. Thank you. And maybe just thinking about R&D, you've touched on the VARMEX candidate which is interesting in the context of index no longer being in the market but can you maybe talk to VMX C001 and then also if there's any potential candidates that have popped up as part of your revised R&D strategy.
Thank you. So we're really pleased with the progress we're making on reshaping the R&D capability and we are taking cost out of the business while also reinvesting where we see attractive returns. So in FY26, we did make investments in the Vimex candidate which is going to shortly start enrolling. In FY27, we expect R&D for the group to be up a small amount as we continue to make those investments. So there's a number of promising Phase 3 candidates that will be progressing. We spoke about Vimex, I think, in Gordon's remarks. He also talked about CSL300, a candidate in end-stage kidney disease that's also in an ongoing phase three study.
Operator
Our next question comes from David Stanton from Jefferies. Please go ahead with your question.
Good morning, team, and thanks very much for taking my questions. Perhaps if I could ask firstly in terms of first half, second half, and specifically the trajectory of expected albumin and IG revenues in 27, should we be thinking, given what you've called out and what happened in 26, that first half will look lower compared to second half for both IG growth and albumin growth. Thank you.
Hi, this is Diego. Thank you for the question. So when we think about the IG prognosis for fiscal year 27, what you see is a continuous performance based on our current momentum. So you've seen half over half growth in the second half of fiscal year 2026. And when it comes to albumin, we call that we see the market going back to stable levels of volume growth. So with a still declining price also, although a slower rate. So when you think about the half over half, I would say a pretty stable first versus second half for IG and potentially a small decline in albumin driven by the China market conditions.
Thank you. And perhaps one for Ken. Can you give us any kind of guide in F27 for acquired IP post-tax? You know, you had that $3.22 in F26.
Can you talk to what you're thinking for F27, please? uh for which line item uh uh acquired ip post tax okay so um we actually provided some detail uh in appendix e uh around uh amortization uh and i won't go all through all the detail now but you'll see in that supporting slide that amortization for the group we expect to to be lower by around $90 million in FY27 versus what we reported in FY26.
Operator
Our next question comes from Leanne Harrison from Bank of America. Please go ahead with your question.
Yeah, good morning, Gordon. Good morning, Ken. Can I come back to IG again? And, you know, obviously, as it was mentioned, strong growth in the second half of 26. And I just wanted to understand, you know, what's really driven that? Has there been any sort of contract wins that you can call out? And if so, what was the differentiating factor, do you think, in terms of CSL winning those contracts?
Hi, good morning. This is Diego. So when it comes to IG, we see a pretty consistent situation to the one that we described in May. So what you see is the result of our ongoing investments. Just as a reminder, we did increase our field footprint in the U.S. We did invest in direct-to-patient, looking for a request of brand. And also, as market leaders in the SCIC category, we're investing in increasing diagnosis. So what you see is the momentum that is created by those investments that we've been doing for some time. And we see, and again, I want to reiterate that the prognosis for fiscal year 27 is based on the current momentum. It's not expecting any acceleration from today. When it comes to contracts, look, we have a complex portfolio, very diverse. We win, and sometimes we lose contracts, but it's part of our renewed tender strategy that includes some hedge levers as well. So this is all part of the plan and what we are projecting for fiscal year 27.
Okay. And my second question, can I talk about guidance? You know, I hear what you say about revenue being, you know, relatively flat on a constant currency basis. I hear what you're saying about gross margins. So it sounds like that impact growth is going to come from operating costs. Can you talk about where you expect some of that cost out to come from? Obviously, you're expecting quite a significant transformation initiative gains in that time frame.
I would say thanks, Leanne. It's Ken. The principal drivers of the earnings growth are actually the growth that we're seeing in Bearing and Securus. So that is incorporated into the group guidance with some offsets that I've mentioned before in relation to V4, and including the minority interest dynamic that I mentioned before. In addition to that, we are taking further costs out of the business. I mentioned in my presentation that versus fiscal 26, we'll see around another $220 million of costs coming out. The contributors to that are R&D, plasma collections, manufacturing and commercial, so across a number of different areas of the business. We will be reinvesting about half of that back into growth opportunities, so that will be principally in R&D and commercial, so around $100 million plus being released to the P&L. and that will principally manifest itself in the gross margin line.
Operator
Our next question comes from Saul Hadassin from Baron Joey. Please go ahead with your question.
Yeah, good morning. Thanks for taking my questions. If I can just turn to IG growth, you know, the mid to high single digits, I'm wondering if you can talk to your expectations around volume versus price versus mix and i'm particularly interested in understanding what was your collect plasma collections growth over the last second nine months um to be able to work out what volume growth should look like for ig in terfi 27. uh so ken i'll talk about uh collections and then um hand over to diego to make any additional comments on um on the commercial side uh so in plasma collections uh we are both increasing our plasma collections while reducing cost per litre so this is fundamental
to the efficiency strategies that we've had in play for quite some time, and that continues to deliver. We've closed the underperforming centres without seeing a reduction in overall collection volume, so that's been really pleasing. We will now focus a lot on other initiatives to drive increased efficiencies. So Gordon touched on a little bit of this on the call, but we think there's a lot of opportunity and how we engage with donors using AI to be more sophisticated with how we target donors, moving donors more efficiently through the centres. So all directed towards driving down cost per litre. So that's, I think, on the collection side. Hand over to Diego for any other comments on the top line.
Yeah, thank you, Ken. So in terms of the IG franchise growth, As we mentioned, what we are projecting is growing with the market, so that's a pretty stable dynamic that we see. You ask about the price. We see the market being very robust, the players kind of recognizing the value of plasma economics and how the value change works, and we see the price to be pretty stable. When it comes to, you also ask about the mix, it depends on the geography, but if you think about the SKIC versus IVIG, SKIC, we are market leaders. We are clearly kind of following that market growth trend. And in the IVIG space, particularly in some markets, it's growing slightly faster than SKIC, so we might see a slightly higher rate on IVIG, but in balance. both of them growing with the market.
Thanks. Maybe I'm going to follow up because I don't think I've really got an answer to the question, and that is what did your collections grow by over the last nine months that feed into the FY27 IG growth assumption? Are you saying that revenue growth effectively matches volume growth for IG in FY27? The reason I ask you is that there's obviously been some questions around oversupply, and I'm wanting to get a sense of if you've just been collecting at the same rate which you think your IG will grow at Intel 527, i.e. mid to high single digits. There's a bit of a difference between 5% and 10%. Thanks.
We're collecting the plasma that we need to support the end market demand that Dioga mentioned before.
All right, thanks. That's all I had.
Operator
Our next question comes from Steve Wien from Jordan. Please go ahead with your question.
Yeah, thanks very much. Good morning. I just was wanting to just touch on IG as well. Was there something that you saw in April that announced that that forced you to announce the downgrade of 300 million dollars that didn't quite pan out the way you expected? It just seems to be, you know, ultimately where you ended up is a much stronger end to the second half that probably wasn't expected at the time of that downgrade. Just trying to understand what changed there.
Hi, Steve. It's Ken. So the outcome for IG, I think, is completely consistent with what we called out in May, where we said that IG for the full year is likely to be flat. What we called out in May was an issue with inventory in the channel that we purposefully normalized. so to prevent that inventory continuing to accumulate which is what actually then drove the flat result. So I'll just pause there in case Diego has any additional comments. No, nothing to add, thank you.
Okay. And the second question I had was just with regards to the amortisation of IP. You've obviously done significant impairment of the V4 business which is what that acquisition is where this disclosure came from. Just trying to understand why it's only a $90 million reduction in the amortisation of IP when you've impaired it by something like $7.5 billion before tax.
Sure. So thanks for the question, Steve. there's quite a lot of detail in Appendix E to this presentation as well as to the notes of the account. So you'll see all of the various assets that have been impaired. Just in relation to your question on what you're drawing out, what you think is a little bit of a surprise, a big part of the impairment is goodwill. So there's a 1.7 billion dollar impairment to the V4 goodwill, so that's not amortized. So I'll draw that to your attention in case that helps you reconcile the various numbers.
Yeah. Okay. Thanks a lot.
Operator
And our next question comes from Davin Philanathan from Goldman Sachs. Please go ahead with your question. Thanks. Morning, team.
I guess a question on your bearing gross margin, thinking about the guide for FY27 where you're essentially guiding to the business being back to where it was in FY25. And also then thinking about the IG guide where you're guiding to about mid to high single digit. Now, if I think about those moving parts, it would suggest FY27 and FY25, your IG business doing that sort of 7% type mark in growth, but you are getting a lot of efficiencies on your cost basis as you've called out today but yet your gross margin is back to where it was in FY25. So if I think about the headwind there is it largely China that's driving that or is there any other drivers we should be considering to give us conviction into the periods beyond FY27 please?
Thanks Darwin. So you've quickly called out some of the drivers and I'll add a few comments. So the IG guide for mid to high single digit growth underpins the margin. IG, though, is not a high margin product versus some of the non-plasma products that we have. We also have, as Diego indicated, uncertainty in China with albumin flat to potentially a little bit down. And so the overall guide for the margin enhancement does depend upon those deficiency initiatives that I mentioned previously, as well as ongoing growth in some non-plasma products, including Andembri and Hemgenics.
Okay, thanks. And then maybe a follow-up then on the albumin piece. So the guide is for flat to slightly down, if I'm understanding that right, for FY27. I guess the question also is about your channel inventory, because this comes up a fair bit with discussions with investors. Just your thoughts there, given you have sold a fair bit to a distributor across F426, how do we think about any potential implications there from the channel's perspective?
Hi, this is Diego. Thank you for the question. So in the case of China, Alvimin, as you mentioned, we have the partnership with Bahil Medical on the retail channel, And we continue to promote with our own field force in the hospital channel, very consistent with what we mentioned in May. We're monitoring very closely inventory levels, both in the distributor level, but also with Bahil. We're working with them very closely. And we have a very close monitor, and it's on a very appropriate level. So we don't see any implications of swings in the inventory for fiscal year 27.
Operator
Our next question comes from Laura Sutcliffe from Citi. please go ahead with your question.
Hello, thank you for taking my question. Firstly, just on your guidance for next year, you've guided to 5% underlying impact growth. I realize you're not going to give us guidance for anything after that, but are the activities you're engaged in now designed to eventually push it back up beyond that? And in particular, at what point do you think you can get V4 to stop being a material headwind and let the performance of the other two divisions drive things again. I do realise that not all of V4's products pass through the JV mechanics in an identical fashion.
Sure, thanks, Laura. It's Ken. So Gordon discussed some of the headwinds that we're experiencing in V4. Many of those headwinds are at their most acute in fiscal 27, but many of them also have some way to play out over the medium term. So we're not giving any further guidance on V4 for beyond 27, but just to call out that there's an ongoing dynamic that will just have to work its way through.
Okay, and then a second question on your recent news on the need for clinical trials for the Horizon 2 process. I think you mentioned at your Capital Markets Day last year that FDA had said that if the validation data you have in hand had appropriate comparability with the existing process, then they would accept it. So has the FDA moved the goalposts or is there something that they don't like comparability-wise that has motivated the need for human child?
Hello, it's Ken, I'll take that question. So you referenced the announcement we made a couple of weeks ago about undertaking clinical studies. We remain very excited about Horizon 2 and the potential of that extraction technology to meaningfully increase the yields we still need to have some further discussions with the relevant regulators on what the design and timing of those clinical studies will look like and so we need to harmonize the various requirements so that we undertake those studies in the most efficient way our intention is that those studies will progress in parallel with the construction of the Horizon 2 facility in Kankakee as well as Broadmeadows in Australia.
Okay sorry I was just trying to understand why you need them at all because it sounded like last year as though you had a plan that meant that you wouldn't require them.
It's just to provide the data that the regulators need around the comparability of the IG that we make with the existing process and the Horizon 2 process.
Operator
Our next question comes from Andrew Payne from CLSA. Please go ahead with your question.
Yeah, morning. Thanks for taking my questions. Just coming back to the V4 discussion around the gross margin, I believe you said that the cost base is being adjusted materially. Is that the case? And I'm just trying to wonder if there's a bit of an offset here that you can pull through, given that, you know, the drop in revenue is probably passes through to the gross profit fully, given that headwind on price rather than volume.
Andrew, it's Ken. Was your question about the cost base in V4?
Okay, sure. So I've talked about the revenue and the gross profit impact. The V4 cost base is something that we are looking at very, very closely. the principal cost there is the commercial and medical capability we have now integrated those teams with the pre-existing commercial and medical teams within CSO bearing and what that has allowed us to do which you see in the numbers for fiscal for fi 26 and we'll continue to see for FI27, is our ability to invest in commercial initiatives that drive growth, but with minimal impact on the overall commercial spend for the group. So in FI26, group commercial spend increased very, very marginally, about 2%, and that includes very, very significant investments that we made in the US and in China and to support growth products such as Endembri. Looking ahead into 27, we will continue to make similar investments, but the overall commercial spend for the group in 27 should be relatively flat to 26.
Okay, so that comment was more around OPEX as opposed to any reductions you can pull through and gross margins of V4.
So that's how we're looking to minimise the impact of the V4 gross margin on overall group profitability.
Thank you. And then just another one. You mentioned you closed underperforming centres without reduction in overall volumes. And I know your previous comments around, you know, you collect what you need in terms of demands. And I'm just trying to understand, you know, where you're sitting at the moment in terms of, you know, the supply you have, how you view the kind of ramp-up in demand over the next few years and, you know, trying to marry that off between, you know, yield gains coming through and requirements for, you know, any sort of collection centre build-outs or, you know, are you happy where you are at the moment?
Sure. So I guess just broadly, The whole idea is that the volume of plasma we collect is intended to match the demand that we're forecasting with the obvious delay in the production process and inventory hold and so on. And that's true operationally and also strategically. So it just follows. There's no incentive whatsoever to speculatively collect plasma nor to have a situation where you constrain sales. So we try and get that balance right all the time. And as I say, it's both operationally and strategically. I don't think we see any significant constraints upon our ability to grow the business.
I guess, so, I mean, that would imply, I think, that there's some, you know, you can ramp up these collection centres and, you know, you're essentially not running at full capacity or, you know, collecting the level you think you can if that demand continues to grow.
Yeah, as Ken said, we've got quite a number of levers to pull to increase production, but the other objective is to do so efficiently. And so that's a trade-off which we're constantly making.
Okay, that's great. Thanks.
Operator
And our next question comes from Craig Wong-Pan from RBC. Please go ahead with your question.
Thank you. In relation to the Horizon 2 clinical trials, you said you're still in discussions with regulators on what exactly is required, but can you say whether the cost for this could be a material cost? Could you provide any parameters around that?
At the moment, we don't expect a material cost, so we'll be able to absorb that within in the normal R&D spend that we are incurring. When we have more certainty on what those trials look like, then we'll come back with more to report. But at the moment, that's as much guidance as we can give.
And then second question, just there was a comment made earlier that you're seeing IVIG growing faster than SCIG. Just wanted to see, yeah, to understand that, why that's happening. And also, if you're seeing any competitor effects there, given that they've been growing their SCIG revenues quite strongly.
Hi, this is Diego. Thank you for the question. So my comment is that we see actually both markets growing at very close rates. My comment was that given that we are clear market leader with SCIG, you always have a little bit more room for the product. You're not the market leader, and in this case, it's IBLG. So it's a relative market dynamic, one versus the other. But the two markets are actually growing very tightly together, and the difference that I'm referring to are pretty marginal.
Operator
Our next question comes from Sasha Karain from Evans & Partners. Please go ahead with your question.
Good morning. Thanks for taking my questions. This question on the PP&E write-down, first of all, I'm just wondering if you can share what sort of depreciation benefit that that gives you in FY27?
We don't really anticipate a great deal of depreciation benefits, so depreciation will still increase year on year. As I mentioned before, the major impact is on amortisation, which you'll see in Appendix E. Great.
And then second question, just on bearing gross margin, you've given some colour on IG and albumin. Just wondering if you can also provide some output commentary on some of the key specialty products, probably Idelvian and K-Centra. And then related to that, within HAE, you're seeing a clear shift, obviously, from Hay Garda and Barron A2 and Denbury. I'm just wondering what the margin impact is from that shift.
So I'll make some initial comments on margins, and then Diego will fill in on what's happening on the top line. but broadly the inframarginal plasma products aren't adding to overall gross margin at the moment so some of those products are declining we are encouraged that Kcentra which has historically been declining I think we saw about a 17 percent decline in FY26 that's starting to moderate but the inframarginals aren't benefiting gross margin into 27.
Thank you, Ken. And a little bit of revenue dynamics in this space. So you mentioned Haemophilia B with Idalbeon. We're very pleased with the durability of the Haemophilia B franchise with Idalbeon holding leadership in the Factor 8 replacement and with Hemgenix coming in. We haven't seen a big disruption in this market and we see it flat for next fiscal year with K-Centra. Ken mentioned that we see a slow rate of decline. Our job now is to continue to expand the usage of K-Centra. We actually have seen a very nice growth in the accounts that we are contracting K-Centra in terms of the use of a factory replacement. With Andembry, very pleased with the uptake, definitely outperforming benchmarks. And although we obviously see with the new innovation and impact for Hergarda, overall the franchise is growing and the percentage of patients that we see coming off Hergarda are kind of balanced with the market share that Hergarda has. But very pleased with the trajectory of Andembry. and we see that they continue in 27.
Operator
Once again, if you would like to ask a question, please press star and one. Our next question comes from Christine Trinh from Macquarie. Please go ahead with your question.
Morning, everyone, and thank you for squeezing me in. I know we're running over time. Just piggybacking off of a previous question on price, we said current price dynamics are stable. It seems like there are a number of new IG products, label expansions across your competitors, and potentially some hospitals under pressure with the 340B changes over the next 12 months. Just can you hear your thoughts on how, I guess, pricing complication may intensify over the medium term, especially in the US?
Sure. Happy to take that question. This is Diego. So first, starting with the second part of your question, the 340B dynamics. 340B is a very complex and wide topic, but probably you've heard about the reform that CMS is putting forward in terms of reimbursement, and that reform actually is not material to CSL, and the reason for that is that first it doesn't change the price that we sell 340B volume to, but also is looking at the reimbursement to 340B institutions on the outpatient volume that is a small portion of IG 340B volume overall. In terms of the broader price dynamics, what we see is a market that is robust and a set of players that are recognizing in the IG space the value of IG to patients. So we see broadly a flat price, and we see the growth coming from volume moving forward.
Operator
And there are no further questions at this time. I'll hand the floor back over to Michelle for closing remarks.
With no further questions, we will now close the meeting. Thank you for your interest in CSL.
