Haleon (HLN) Q3 2024 TU earnings summary

Executive summary

• Q3 organic revenue grew 6.1%, balanced between price (3.3%) and volume/mix (2.8%), with all regions and categories contributing and Power Brands up 5.4%.

• Adjusted operating profit grew 7.4% in Q3, with YTD organic profit up 9.7% and margin expansion; reported operating profit rose 20.7% to £705m, including a £121m gain from the NRT divestment.

• All three regions—North America, EMEA & LATAM, and Asia Pacific—contributed to growth, with China and India delivering double-digit gains.

• Over £1bn returned to shareholders YTD via buybacks and dividends; £500m share buyback completed.

• Increased stake in China JV to 88% for ~£0.5bn, with a pathway to full ownership, and completed divestments of NRT business outside the US and ChapStick.

Financial highlights

• Q3 revenue: £2,780m (down 0.6% reported, up 6.1% organic); 9M revenue: £8,474m (down 0.7% reported, up 4.4% organic).

• Q3 adjusted operating profit: £639m (23.0% margin, up 30bps organically, down 160bps reported); 9M adjusted operating profit: £1,932m (22.8% margin, up 120bps organically).

• Power Brands grew 5.4% in Q3.

• FX and M&A headwinds reduced reported revenue and profit; net M&A had a £30m negative impact in Q3.

• Q3 basic EPS: 13.2p (up from 11.4p in Q3 2023).

Outlook and guidance

• FY 2024 organic revenue growth expected at 4-6% and high single-digit organic profit growth; guidance reaffirmed.

• FX expected to have a ~4% adverse impact on revenue and 6-6.5% on adjusted operating profit for FY 2024.

• Net interest expense for FY 2024 estimated at ~£320m; adjusted effective tax rate 24-25%.

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

• Confident in continued volume growth and balanced price/volume mix into Q4 and 2025.