Haleon Plc · LSE:HLN
Haleon — H1 2024 Earnings Presentation
49 slides from Haleon's earnings presentation, August 2024
Slide 1: 2024 Half year results
2024 Half year results August 2024
Slide 2: Disclaimer
Disclaimer This presentation contains certain statements that are, or may be These forward-looking statements and views may be based on a number deemed to be, “forward-looking statements” (including for purposes of of assumptions and, by their nature, involve known and unknown risks, the safe harbor
Slide 3: Brian McNamara, CEO
Brian McNamara CEO 2024 Half year results
Slide 4: Increasingly confident in medium term guidance and continue to build track record of delivery
Good first half 3.5% H1 organic revenue growth1, with 4.1% in Q2, and very strong organic operating profit growth1 of 11.0% Strategy driving strong competitive market share with 69% of business having gained or maintained market share2 Continued evolution, implementing change to become more agile Fu
Slide 5: Clear approach to deliver on growth ambitions
Clear approach to deliver on growth ambitions World class Competitive Strategy to Growth portfolio capabilities outperform ambitions Category-leading Human understanding + Household penetration 4-6% organic annual brands trusted science revenue growth 1 New and emerging Attractive Proven brand-build
Slide 6: Half year 2024 results
Half year 2024 results 3.5% 4.3%/(0.8)% 5.6% Organic sales growth1 Price / Volume Mix Power Brand growth Q2 results Organic operating profit 1: 4.1% 3.4%/0.7% Increased 11.0% Organic sales growth1 Price / Volume Mix Adjusted operating margin1: Strong cash generation 22.7% up 160bps organically and u
Slide 7: Portfolio delivering good H1 performance
Portfolio delivering good H1 performance Organic H1 2024 H1 2023 revenue revenue revenue growth1 £m £m H1 Strong Power Brand performance supported by innovations including Sensodyne Clinical White and parodontax Active Gum Repair + Breath Oral Health 1,683 1,589 9.9% Double-digit Centrum and Caltrat
Slide 8: Oral Health
Oral Health Outperformance: Continued strength in Power Brands Winning innovations 9.9% Sensodyne parodontax Polident H1 organic sales growth1 Clinical White number one Launch of parodontax Gum Power Max Hold + launched innovation in US Oral Health Strengthen and Protect in in 2022 and now in over 4
Slide 9: Vitamins, minerals and supplements
Vitamins, minerals and supplements Sustained positive momentum driving good performance and share gain Centrum Caltrate 9.2 % Leveraging science – Further Clinical trials showing Geo-expansion and access – Centrum launched in Vietnam; Leveraging science – Driving performance of H1 organic sales grow
Slide 10: Over-the-counter: Pain Relief
Over-the-counter: Pain Relief Performance adversely impacted by comparatives Voltaren Advil Panadol (4.4)% New formats driving growth Recovery underway Driving brand advocacy – 2% formulation in convenient – Elevating brand equity – Roll out of “Listen to Pain” H1 organic sales growth1 pack size lau
Slide 11: Over-the-counter: Respiratory Health
Over-the-counter: Respiratory Health H1 performance as expected Capturing demand (2.3)% Otrivin Nasal Mist – Rolled out in 4 markets; Theraflu – Continued uplift from Phenylephrine – Reduced shipments to US H1 organic sales growth1 Strong consumer feedback naturals including Theraflu retailers durin
Slide 12: Over-the-counter: Digestive Health & Other
Over-the-counter: Digestive Health & Other Growth across all three sub-categories 4.9% - Digestive Health low-single digit growth underpinned by strength in Tums and ENO H1 organic sales growth1 - Skin Health high-single digit growth driven by Bactroban in China and Fenistil in EMEA & LatAm - Smoker
Slide 13: Strong execution and financial discipline
Strong execution and financial discipline Initiatives to Continued improve efficiency Strong go-to-market financial discipline execution - Ongoing initiatives such as dual - Active portfolio management; sourcing and complexity reduction - Driving expert engagement with agreement to dispose of throug
Slide 14: Increasing agility and productivity across Haleon
Increasing agility and productivity across Haleon Strengthening c. £300m Partly reinvested Haleon productivity to drive growth for long-term programme1 success • One third expected to be • Increased automation • Supporting medium-term delivered in 2024 and process guidance improvement • Restructurin
Slide 15: Making progress on our environmental goals
Making progress on our environmental goals Tackling environmental issues affecting everyday health Carbon Carbon Packaging • Reduce our net Scope 1 & 2 carbon Launched Haleon Sustainability Less virgin petroleum-based emissions by 100% by 20301 Supply Chain Programme pledge plastic • Reduce our Scop
Slide 16: Health inclusivity – a key differentiated focus for Haleon
Health inclusivity – a key differentiated focus for Haleon Groupwide aim to empower 50 million people a year by 2025 to be more included in opportunities for better everyday health InKind partnership Sevamob in India Amity in China Driving awareness of Oral Health Partnered with Sevamob (NGO) in Ind
Slide 17: Tobias Hestler, CFO
Tobias Hestler CFO 2024 Half year results
Slide 18: Half year 2024 results
Half year 2024 results 3.5% 4.3%/(0.8)% 5.6% Organic sales growth1 Price / Volume Mix Power Brand growth Q2 results Organic operating profit 1: 4.1% 3.4%/0.7% Increased 11.0% Organic sales growth1 Price / Volume Mix Adjusted operating margin1: Strong cash generation 22.7% up 160bps organically and u
Slide 19: Well positioned for stability and high growth
Well positioned for stability and high growth Haleon driving resilient volume growth supporting everyday healthcare needs 3-year CAGR H1 2021 – H1 2024 DEVELOPED EMERGING GROUP Medium term MARKETS MARKETS guidance Price 3.4% 8.7% 5.2% Balanced with volume/mix Volume / mix 40-60% and 2.0% 6.0% 3.2% t
Slide 20: Resilient volume/mix with pricing normalising
Resilient volume/mix with pricing normalising 2022 OSG1 2023 OSG1 2024 OSG1 FY 9.0% FY 8.0% HY 3.5% OSG1 11.6% 6.6% 10.4% 5.8% 3.0% 4.1% Pricing & volume/mix Price 3.7% normalising 7.5% Volume/mix 7.9% 4.7% 6.5% 5.0% 3.4% 1.9% 2.9% 0.7% (0.7)% (2.0)% Resilient volumes H1 2022 H2 2022 H1 2023 H2 2023
Slide 21: Solid H1 revenue growth
Solid H1 revenue growth Underpinned by good pricing across regions; solid volume growth in EMEA & LatAm and Asia-Pacific £m OSG1 +3.5% (0.9)% (3.4)% (0.8)% 4.3% Net M&A2 Translational 5,738 Price foreign 5,694 Volume / mix exchange (4.5)% North America 3.2% 1.5% EMEA & LATAM 6.4% Q1 2024 (4.6)% 1.3%
Slide 22: North America
North America Strong VMS and Oral Health performance; Volume/mix impacted by destocking and improving in Q2 Revenue Q1 Q2 H1 Adjusted operating profit2 2024 2024 2024 £m H1 2023 H1 2024 Revenue £996m £960m £1,956m OSG1 (3.3)% 1.0% (1.3)% 471 3.2% Operating 4.5% leverage M&A FX 416 1.7% (0.7)% Price
Slide 23: Haleon US growing ahead of market in volume and value
Haleon US growing ahead of market in volume and value US consumption (sell-out) Overall US market improving, Market growth however still in slight volume Haleon growth decline H1 2024 5.0% Haleon positive volume growth in H1 2024 4.0% 3.0% Haleon gaining share in both 2.0% across value and volume 1.
Slide 24: EMEA & LATAM
EMEA & LATAM Pricing normalising in Q2 and resilient volume/mix; strong operating leverage Revenue Adjusted operating profit2 Revenue £1,241m £1,176m £2,417m £m H1 2023 H1 2024 OSG1 8.6% 7.2% 7.9% 6.4% M&A FX 627 542 Operating leverage 7.5% 5.3% 1.5% 1.1% 1.9% +24% (4)% (5)% Price 23.3% 25.9% Q1 Q2
Slide 25: Asia-Pacific
Asia-Pacific Solid growth; volume adversely impacted by challenging China comparative Revenue Adjusted operating profit2 Revenue £682m £639m £1,321m £m H1 2023 H1 2024 OSG1 3.3% 3.7% 3.5% 2.2% M&A 318 Operating leverage FX 306 1.7% 2.8% 1.3% 1.6% 0.9% Price Q1 Q2 H1 +9% (2)% (10)% Volume/Mix 2024 20
Slide 26: Growth algorithm delivering
Growth algorithm delivering Adjusted operating profit +11.0% organically % % change £m H1 2024 H1 2023 change (Organic) Revenue 5,694 5,738 (0.8) 3.5 Margin expansion driven by pricing, lower cost inflation and a number of Adjusted gross profit1 3,630 3,577 1.5 6.3 other initiatives % Adjusted gross
Slide 27: Strong H1 profit growth and margin increase
Strong H1 profit growth and margin increase Adjusted operating profit1 (£m) and margin 11.0% organic operating profit3 £m (30) growth driven by solid revenue 136 Net (84) growth, savings and efficiencies M&A2 A&P spend up 9%4 in H1; Translational 1,293 increased investment to drive 1,271 Operating F
Slide 28: Adjusted EPS growth up 5.9%
Adjusted EPS growth up 5.9% Driven by strong operating profit growth, lower finance costs, lower non-controlling interests as well as reduced share count £m H1 2024 H1 2023 % change Adjusted operating profit1 1,293 1,271 1.7 Reduced net financing costs due to Net finance costs (162) (181) (10.5) low
Slide 29: Adjusting items driven by productivity and efficiency programmes
Adjusting items driven by productivity and efficiency programmes £m H1 2024 H1 2023 % change Adjusted operating profit1 1,293 1,271 1.7 Net amortisation and impairment 4 (23) Includes £17m reversal of ChapStick impairment of intangible assets1 Increase largely due to productivity programme Restructu
Slide 30: Strong free cash flow generation
Strong free cash flow generation H1 H1 £m 2024 2023 Adjusted operating profit1 1,293 1,271 P&L adjusting items1 (142) (130) Non-cash movements2 233 196 Working capital and other movements3 (229) (354) Improved payment terms with some key vendors Taxation (paid) (313) (234) Net interest (paid) (188)
Slide 31: Leverage reduced to 2.9x; c.£700m returned to shareholders in H1
Leverage reduced to 2.9x1 c.£700m returned to shareholders in H1 £bn c.3.6% c. 4x 3.0x 2.9x Net debt / Net debt / Adjusted EBITDA2 Adjusted EBITDA2 Cost of bond debt3 £(2.3)bn 77%/23% 10.7 Fixed/floating 4 8.5 8.4 (0.8) 0.4 0.6 £0.5bn cash Free Cash (0.6) 0.3 Other cash Flow Debt Dividend movements
Slide 32: Updated guidance FY 2024
Updated guidance FY 2024 Organic revenue growth expected to be 4-6% Organic operating profit growth expected to be high single digit Net M&A impact expected to dilute FY 2024 revenue and adjusted operating profit by c.1.5% and c.4% respectively1 Foreign exchange2: • Translational FX in 2024 expected
Slide 33: Brian McNamara, CEO
Brian McNamara CEO 2024 Half year results
Slide 34: Medium term guidance
Medium term guidance Annual organic revenue growth of 4-6%1 Organic operating profit growth ahead of organic revenue growth Net debt/EBITDA2 of around 2.5x Dividend to grow at least in line with adjusted earnings 1. See appendix for definition 2. Adjusted EBITDA (see appendix for definition) 34
Slide 35: Increasingly confident in medium term guidance and continue to build track record of delivery
Good first half 3.5% H1 organic revenue growth1, with 4.1% in Q2, and very strong organic operating profit growth1 of 11.0% Strategy driving strong competitive market share with 69% of business having gained or maintained market share2 Continued evolution, implementing change to become more agile Fu
Slide 36: Appendix
Appendix
Slide 37: Glossary
Glossary A number of adjusted measures are used to report the performance of our business which are • Restructuring costs: Include personnel costs associated with restructuring programmes, non-IFRS measures. Adjusted results, organic revenue growth, organic profit growth, and other impairments of ta
Slide 38: Historic quarterly growth across the categories
Historic quarterly growth across the categories Organic revenue growth1 2024 2023 Q1 Q2 HY Q1 Q2 Q3 Q4 FY Oral Health 10.6% 9.1% 9.9% 6.6% 15.4% 9.4% 11.5% 10.6% VMS 9.9% 8.5% 9.2% (3.7)% 2.7% 1.4% 3.1% 0.9% Pain Relief (4.8)% (4.0)% (4.4)% 11.0% 14.9% 6.2% (1.8)% 7.4% Respiratory Health (2.7)% (1.5
Slide 39: Disciplined capital allocation to deliver growth and attractive returns
Disciplined capital allocation to deliver growth and attractive returns Investing for growth M&A Shareholder returns • Brand investment • M&A • Grow ordinary dividends at least in line with adjusted earnings • R&D • Commercially compelling • Potential participation in Pfizer • Sustainability • Consi
Slide 40: Considerations for phasing of growth
Considerations for phasing of growth Key Weak comparative Considerations for 2024 performance (unless otherwise stated) Challenging comparative 2023 % of revenue Q1 Q2 Q3 Q4 Oral Health 28% VMS 15% Strong Fenbid demand Strong Fenbid demand Fenbid destocking (China) (China) Pain Relief 23% Strong Adv
Slide 41: Debt profile
Debt profile Group Net debt £m 30 June 2024 31 Dec 2023 31 Dec 2022 18 July 20224 c.6.9 years Short-term borrowings 1,451 656 437 332 Duration1 Long-term borrowings 7,407 8,800 10,003 11,433 Derivative financial liabilities 193 190 206 66 Cash and cash equivalents and liquid investments (531) (1,044
Slide 42: Significant change in share register since listing
Significant changed in share register since listing Largest 20 shareholders % Market Capitalisation1 Passive Increased free float now c.77% Active from c.55% 50.0 41 40.0 Active ownership now c.75% of 10 largest 20 shareholders1 vs 30.0 c.60% at listing 22 20.0 US shareholders now c.55% of 8 the lar
Slide 43: Translational currency impact
Translational currency impact FY 2023 As at 31 currency as % December As at 30 June Average rate Average rate Currency of total revenue 2023 2024 H1 2023 H1 2024 2024 estimated USD 33% 1.27 1.27 1.23 1.27 unfavourable translational EUR 16% 1.15 1.18 1.14 1.17 foreign exchange impact CNY 8% 9.06 9.19
Slide 44: IFRS and Adjusted Income Statement
IFRS and Adjusted Income Statement Unaudited Six months ended 30 June Gross Profit Operating Profit Income tax £m 2024 2023 2024 2023 2024 2023 IFRS Results 3,548 3,550 1,151 1,141 (242) (230) Net amortisation and impairment of intangible assets1 (4) 23 (4) 23 2 (4) Restructuring costs2 86 3 132 30
Slide 45: IFRS and Adjusted Income Statement
IFRS and Adjusted Income Statement Unaudited Six months ended 30 June Profit attributable Diluted earnings per to shareholders share (pence) £m 2024 2023 2024 2023 IFRS Results 726 687 7.9 7.4 Net amortisation and impairment of intangible assets (2) 19 — 0.2 Restructuring costs 100 24 1.1 0.3 Transa
Slide 46: Reconciliation of H1 organic revenue growth
Reconciliation of H1 organic revenue growth Product Categories 6 months to 30 June Digestive Oral Pain Respiratory Health and 2024 vs 2023 (%) Health VMS Relief Health Other Total Revenue Growth 5.9 5.0 (7.3) (6.1) (2.4) (0.8) Organic Adjustments - - - - 4.8 0.9 Effect of Exchange Rates 4.0 4.2 2.9
Slide 47: Reconciliation of quarterly organic revenue growth
Reconciliation of quarterly organic revenue growth North America EMEA & LATAM Q1 Q2 HY Q1 Q2 HY 2024 vs 2023 (%) 2024 2024 2024 2024 vs 2023 (%) 2024 2024 2024 Revenue Growth (7.1) (1.4) (4.4) Revenue Growth 3.6 4.5 4.0 Organic Adjustments 0.2 1.0 0.6 Organic Adjustments 1.0 1.7 1.3 Effect of Exchan
Slide 48: Free cash flow
Free cash flow Free cash flow Adjusted EBITDA2 Six months to 30 June Six months to 30 June £m 2024 2023 £m 2024 2023 Net cash inflow from operating 842 749 activities Adjusted operating profit2 1,293 1,271 Less: Capital expenditure1 (112) (144) Add: Depreciation – Property Plant and Equipment 82 75
Slide 49: 2024 Half year results
2024 Half year results Sonya Ghobrial Rakesh Patel Emma White Head of Investor Relations Director Director Sonya.x.Ghobrial@Haleon.com Rakesh.x.Patel@Haleon.com Emma.x.White@Haleon.com +44 7392 784784 +44 7552 484646 +44 7823 523562