Advil pain relief
The FTSE 100 firm behind Sensodyne, Panadol and Advil has demonstrated its ability to raise prices and drive volume growth / Image source: Adobe
  • Broad-based growth delivered in 2023
  • Slow first quarter expected
  • £500 million buyback launched

Shares in Haleon (HLN) were marked 6% higher to 332.1p on Thursday after the consumer health colossus reported a robust finish to 2023, with fourth quarter organic sales growth of 7%, and said it will allocate £500 million to share buybacks in 2024.

Despite competitive market conditions, the FTSE 100 firm behind trusted brands including Sensodyne, Panadol, Advil and Theraflu demonstrated its ability to raise prices and drive volume growth.

This contrasted with peer Reckitt Benckiser (RKT), whose shares plunged yesterday following another sales miss.

However, Haleon did warn organic growth for the first quarter of 2024 will slow due to the combined effects of a weak US cold and flu season and cooling demand in China.

IN RUDE HEALTH

Revenue rose 4.1% to £11.3 billion in the year to December 2023, while adjusted operating profit increased 10.4% to over £2.5 billion, as 58% of Haleon’s business gained or maintained market share.

Annual organic growth of 8% was driven by price increases of 7% and 1% volume growth, reflecting broad-based success across Haleon’s core respiratory, oral health and digestive categories, which benefited from robust consumer demand.

However the performance of the pain category, which faced headwinds from generic competition and regulatory changes, proved mildly disappointing.

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WHAT DID THE CEO SAY?

Thanks to its impressive deleveraging progress, driven by strong cash generation and the disposal of non-core brands ChapStick and Lamisil, Haleon proposed a total dividend of 6p per share for 2023 and said it will set aside £500 million for share buybacks in 2024.

CEO Brian McNamara said his charge saw ‘positive volume/mix in the full year, up slightly in Q4, demonstrating continued resilience in challenging markets. Importantly, we saw organic growth across all regions and categories, with healthy momentum in our Power and Local Growth Brands.’

McNamara continued: ‘In 2024, we expect the operating environment to remain challenging. We are confident however, that we are well positioned to deliver on both guidance for 2024 and over the medium term.’

THE EXPERT’S VIEW

Chris Beckett, head of equity research at Quilter Cheviot, commented: ‘Haleon provided a guidance of 4% to 6% organic revenue growth for 2024, which was in line with expectations. The company expects a slower start to the year, due to the weak US cold and flu season, which was already anticipated by the market. The company trades at a reasonable valuation of 18 times earnings, in an attractive and resilient category of consumer healthcare.’

He added: ‘Haleon’s stock performance has been hampered by the overhang of GSK (GSK) and Pfizer (PFE:NYSE), which still own a combined 36% stake in the company. It would be nice to see them further reduce their holdings and increase the free float of Haleon, which would unlock more value for the shareholders.’

LEARN ABOUT HALEON

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Issue Date: 29 Feb 2024