Haleon (HLN) H1 2024 (Q&A) earnings summary

Executive summary

• H1 2024 organic revenue grew 3.5% (Q2 4.1%), with 11% organic operating profit growth and 69% of business gaining or maintaining market share; strong performance in Oral Health and VMS, and continued portfolio optimization.

• North America saw a slight H1 decline of just over 1%, but returned to 1% growth in Q2, with strong underlying consumption and market share gains despite inventory reductions and proactive phenylephrine stock management ahead of FDA decisions.

• Power Brands delivered 5.6% organic growth, with Sensodyne, parodontax, and Centrum up double digit; Eroxon OTC erectile dysfunction cream launch planned before year-end.

• Updated FY 2024 guidance: organic revenue growth of 4-6% and organic operating profit growth now expected to be high single digit, with increased confidence in medium-term guidance.

• Continued progress on sustainability, health inclusivity, and productivity initiatives.

Financial highlights

• H1 2024 revenue: £5,694m (down 0.8% reported due to FX and M&A); organic revenue growth 3.5%.

• Adjusted operating profit up 11% organically to £1,293m; adjusted margin 22.7% (+160bps organically); adjusted EPS up 5.9% to 9.0p.

• Gross margin expanded by 150bps in H1, driven by pricing, easing inflation, and operational efficiencies.

• Free cash flow rose to £831m; net debt/EBITDA at 2.9x, progressing toward 2.5x target.

• Share buyback: £315m of £500m allocation completed in H1.

Outlook and guidance

• FY 2024 organic revenue growth expected at 4-6%; organic operating profit growth now guided to high single digit.

• Net M&A expected to dilute FY 2024 revenue by ~1.5% and adjusted operating profit by ~4%; FX expected to impact revenue by ~-2.5% and profit by ~-3.0%.

• Medium-term: annual organic revenue growth of 4-6%, operating profit growth ahead of revenue, net debt/EBITDA target ~2.5x, and dividend growth at least in line with adjusted earnings.

• A&P and R&D spending will increase in H2 to support new launches and ongoing brand investments.

• Margin progression in H2 will be impacted by higher A&P, R&D phasing, and the absence of prior year one-off tax credits.