Haleon Plc · LSE:HLN
Haleon — H1 2023 Earnings Presentation
43 slides from Haleon's earnings presentation, Aug 2, 2023
Slide 1: 2023 Half year results
2023 Half year results August 2023
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 2023 Half year results
Slide 4: Clear approach delivering our growth ambitions
Clear approach delivering our 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-buil
Slide 5: Half year 2023 results and Q2 results
Half year 2023 results 10.4% 7.5%/2.9% 10.1% Organic sales growth1 Price / Volume Mix Power Brand growth Q2 results 11.0% 7.9%/3.1% Organic sales growth1 Price / Volume Mix Adjusted operating profit : 1 Increased 8.9% constant currency E-commerce: Adjusted operating margin1: Double digit growth, 9.0
Slide 6: Oral Health
Oral Health Outperformance: All three Power Brands up strongly and gaining share Winning innovations 10.8% Sensodyne Pronamel Active Shield parodontax Active Gum Repair Polident/Poligrip Power Max Hold+ H1 organic sales growth1 2x defence against dietary acids Clinically proven to help reverse Launc
Slide 7: Vitamins, mineral and supplements
Vitamins, mineral and supplements Performance impacted by tough comparatives (0.5)% Innovation: Emergen-C crystals Geo-expansion: India and Egypt Leveraging science H1 organic sales growth1 - Launched Q2 2023 - Continued momentum with - Clinical trials showing Impacted by tough Centrum in India and
Slide 8: Over-the-counter: Pain Relief
Over-the-counter: Pain Relief Performance driven by agility in China, excellent execution and innovation 12.9% Panadol New launches Advil Strong innovation Voltaren Recovery in performance H1 organic sales growth 1 - Launched PanaNatra in - Advil Dual Action Back: - Strong performance in US Strong g
Slide 9: Over-the-counter: Respiratory Health
Over-the-counter: Respiratory Health Performance underpinned by innovation and commercial execution Capturing demand 22.0% Contac Theraflu Max Strength Theraflu ProNatural Syrup H1 organic sales growth1 - Significant uplift in Contac - Launched in Q3 2022 in US - Launched 2020 and now 12% Strong col
Slide 10: Over-the-counter: Digestive Health and Other
Over-the-counter: Digestive Health and Other Broad based growth across all three sub-categories - Digestive Health saw strength in immediate relief benefitting Tums 7.7 % and Eno. Challenging conditions in preventative antacid market impacted Nexium. H1 organic sales growth1 - Skin Health underpinne
Slide 11: Strong execution and financial discipline
Strong execution and financial discipline Initiatives to Continued financial improve efficiency Driving A&P and discipline effectiveness in market - Agility in supply chain to meet - Active portfolio management; strong Contac and Fenbid - A&P up 4% constant currency, with disposal of Lamisil1 and de
Slide 12: Running a responsible business integral to strategy
Running a responsible business integral to strategy Continuing to progress against responsible business targets set out at our Capital Markets Day in 2022 Focus on Scope 3 Packaging recycle ready Health inclusivity Reduce our Scope 3 carbon emissions All product packaging to be recycle Aim to empowe
Slide 13: Tobias Hestler, CFO
Tobias Hestler CFO 2023 Half year results
Slide 14: Delivering strong performance
H1 2023 Delivering strong performance Revenue Adjusted operating profit 1 Cash generation £5.7bn 10.4% £1.3bn 22.2% £0.4bn Revenue Organic revenue Adjusted Adjusted Free cash flow 1 growth1 operating profit 1 operating profit margin1 6.7% (80)bps 7.5 % 2.9 % AER 3.4 x & AER & Price Volume/mix +8.9 %
Slide 15: Strong H1 revenue growth
Strong H1 revenue growth Both strong price and positive volume/mix £m +10.4% Organic revenue growth 7.5% 0.2% 2.9% 0.0% Translation Price Acquisitions, foreign 5,738 Volume / mix exchange 5,188 disposals and MSA1 Includes c. +1% impact Q1 2023: +3.8% from Argentina and Q2 2023: (3.4)% Turkey +10.6%
Slide 16: Strong H1 performance across categories
Strong H1 performance across categories Organic H1 2023 H1 2022 revenue revenue revenue growth1 Strong performance across all three Power Brands £m £m H1 Decline in North America due to strong comparative given increased capacity last Oral Health 1,589 1,438 10.8% year and weaker immunity sub-catego
Slide 17: Strong revenue growth across regions
Strong revenue growth across regions Revenue North North America America Asia Pacific 4.7% OSG 1 £2,046m (H1 2022: £1,873m) EMEA & LATAM EMEA & LATAM 14.9% OSG 1 £2,323m (H1 2022: £2,069m) Asia Pacific Developed markets1 Emerging markets1 11.6% OSG 1 £1,369m (H1 2022: £1,246m) 6.7% 17.8% 1. Refers t
Slide 18: North America
North America Organic growth driven by price • H1 organic growth1: 4.7% with 4.7% price and flat volume/mix 4.7 % 4.7 % flat • Q2 organic growth1: 4.3% with 5.8% price and (1.5)% volume/mix Organic growth1 Price Volume / mix • Q2 organic growth reflects: + Strong growth in Oral Health underpinned by
Slide 19: EMEA & LATAM
EMEA & LATAM Very strong organic growth driven by pricing and positive volume/mix • H1 organic growth1: 14.9% 13.3% 1.6% 14.9% with 13.3% price and 1.6% volume/mix • Q2 organic growth1: Organic growth 1 Price Volume / mix 16.8% with 13.9% price and 2.9% volume/mix • Q2 organic growth1 reflects: £2,3
Slide 20: Asia Pacific
Asia Pacific Organic growth driven by strong volume growth 11.6% 2.3% 9.3% • H1 organic growth1: 11.6% with 2.3% price and 9.3% volume/mix Organic growth1 Price Volume / mix • Q2 organic growth1: 11.5% with 1.1% price and 10.4% volume/mix £1,369m 23.2% • Q2 organic growth1 reflects: Sales Adjusted o
Slide 21: China
China A leading market position, growth underpinned by favourable structural drivers Diversified portfolio Strong track record to date Significant opportunity for weighted towards VMS Revenue (£m); Organic growth (%) 1 future growth Revenue composition (2022) OTC/VMS per capita consumption (£)2 Oral
Slide 22: Adjusted operating profit growth of 8.9% constant currency
Adjusted operating profit growth of 8.9% constant currency % change £m H1 2023 H1 2022 % change (CER) Revenue 5,738 5,188 10.6 10.4 Cost inflation largely offset by pricing; Adjusted gross profit 1 3,577 3,258 9.8 9.1 negative impact from transactional FX % Adjusted gross margin 1 62.3% 62.8% (0.5)p
Slide 23: H1 Adjusted operating profit growth
H1 Adjusted operating profit growth +8.9% at constant exchange rates £m 160 (54) (26) Higher standalone costs as prior year 1,271 Translational was as segment of GSK ((100)bps) 1,191 Incremental Operating FX standalone costs leverage Strong operating leverage (+60bps) Q1: £39m across business more t
Slide 24: Adjusted EPS driven by strong operating profit
Adjusted EPS driven by strong operating profit, offset by annualisation of interest costs and higher tax rate % change £m H1 2023 H1 2022 % change (CER) Adjusted operating profit 1 1,271 1,191 6.7 8.9 Net finance costs (181) (36) n/m n/m Increase due to bonds issued in March 2022 Adjusted tax 1 (256
Slide 25: Significant reduction in adjusting items driven by lower separation costs
Significant reduction in adjusting items driven by lower separation costs £m H1 2023 H1 2022 % change Adjusted operating profit 1 1,271 1,191 6.7 Net amortisation and impairment (23) (40) of intangible assets 2 Charges relate to productivity programme implementation. Continue to expect c. £150m Rest
Slide 26: Free cash flow impacted by annualisation of interest payments and tax
Free cash flow impacted by annualisation of interest payments and tax £m H1 2023 H1 2022 Adjusted operating profit 1 1,271 1,191 P&L adjusting items 2 (130) (291) Non-cash movements 3 196 158 Driven by higher sales and inventory build for H2 Working capital and other movements 4 (354) (240) As guide
Slide 27: Continued progress on debt reduction
Continued progress on debt reduction £bn c. 4x 3.6x 3.4x Net debt / Adjusted EBITDA1 Down £1.2bn 10.7 9.9 -0.4 0.1 0.2 -0.3 9.5 Net debt 1 Net debt 1 FCF generation Dividends Other movements FX revaluation on debt Net debt 1 at demerger 31 Dec 30 Jun 2022 2023 1. Definitions of adjusted measures can
Slide 28: Staggered bond maturity profile no near term refinancing needs
Staggered bond maturity profile no near term refinancing needs Bond maturity profile (£bn) Total gross debt of BBB Baa1 No major refinancing until 2025 £10bn1 Stable Stable outlook outlook Over £2bn revolving credit facilities in place, split across a $1.4bn short term facility and £1bn medium term
Slide 29: Outlook for full year 2023
Outlook for full year 2023 Organic revenue growth1 7-8% Adjusted operating profit growth1 9-11% constant currency Net interest expense c. £350m Adjusted effective tax rate 23-24% 1. Definitions of adjusted measures can be found in the Appendix 29
Slide 30: Brian McNamara, CEO
Brian McNamara CEO 2023 Half year results
Slide 31: Medium term guidance
Medium term guidance Organic annual sales growth of 4-6% 1 Sustainable moderate adjusted operating margin expansion at constant currency per annum 1 Net debt/EBITDA expect to be below 3x during 2024 2 1. See appendix for definition 2. Adjusted EBITDA (see appendix for definition) 31
Slide 32: Strategy is delivering strong growth
Strategy is delivering strong growth Quality growth in H1 with organic growth of 10.4% and positive volume mix. Delivered positive operating leverage as well as good cash generation. Competitive performance: 55% of business gaining or maintaining share Increase FY revenue guidance with Adjusted oper
Slide 33: Appendix
Appendix 2023 Half year results
Slide 34: Glossary
Glossary A number of Adjusted measures are used to report the performance of our business which are These gains and losses are not directly attributable to the sale of the Group’s products and vary non-IFRS measures. Adjusted results, CER and other non-IFRS measures may be considered in from period
Slide 35: Growth focused disciplined capital allocation
Growth focused disciplined capital allocation Investing Strengthen Shareholder M&A for growth balance sheet returns • Brand investment • De-lever to <3x net • Bolt-on M&A • Ordinary dividend debt/Adjusted EBITDA • R&D • Commercially • Return surplus capital during 2024 compelling to shareholders • S
Slide 36: Debt profile
Debt profile Net debt £m Group net debt at 30 June 2023 Group net debt at 31 Dec 2022 Group net debt at 18 July 20224 c.7.5 years Short-term borrowings 1,097 437 332 Duration1 Long-term borrowings 8,768 10,003 11,433 Derivative financial liabilities 214 206 66 Cash and cash equivalents and liquid in
Slide 37: Translational currency impact
Translational currency impact FY 2022 currency as % of total Average Average Average Spot Currency revenue 2022 H1 2022 H1 2023 30.06.23 Estimated unfavourable translational foreign USD 33% 1.24 1.30 1.23 1.26 exchange impact EUR 16% 1.17 1.19 1.14 1.17 • c. (4)% on revenue CNY 8% 8.31 8.38 8.59 9.1
Slide 38: IFRS and Adjusted Income Statement
IFRS and Adjusted Income Statement Unaudited Net amortisation Transaction Separation Disposals H1 2023 IFRS and impairment of Restructuring -related and Admission and Adjusted £m Results intangible assets1 costs2 costs3 costs4 others5 Results Revenue 5,738 — — — — — 5,738 Gross profit 3,550 23 3 — 1
Slide 39: Reconciliation of H1 organic growth
Reconciliation of H1 organic growth Product Categories Digestive Respiratory Health and H1 2023 vs H1 2022 (%) Oral Health VMS Pain Relief Health Others Total Revenue Growth 10.5 - 12.6 22.8 8.6 10.6 Organic Adjustments - (0.1) 0.2 - - - of which: Effect of Acquisitions - (0.1) (0.3) - - (0.1) Effec
Slide 40: Reconciliation of quarterly organic growth
Reconciliation of quarterly organic growth North America EMEA & LatAm 2023 vs 2022 (%) Q1 2023 Q2 2023 H1 2023 2023 vs 2022 (%) Q1 2023 Q2 2023 H1 2023 Revenue Growth 14.0 4.4 9.2 Revenue Growth 13.3 11.2 12.3 Organic Adjustments - - - Organic Adjustments 0.4 0.1 0.3 of which: of which: Effect of Ac
Slide 41: Reconciliation of quarterly organic growth
Reconciliation of quarterly organic growth APAC Group 2023 vs 2022 (%) Q1 2023 Q2 2023 H1 2023 2023 vs 2022 (%) Q1 2023 Q2 2023 H1 2023 Revenue Growth 13.7 6.0 9.9 Revenue Growth 13.7 7.5 10.6 Organic Adjustments (0.6) 0.2 (0.3) Organic Adjustments - 0.1 - of which: of which: Effect of Acquisitions
Slide 42: Free cash flow
Free cash flow Free cash flow Six months to 30 June £m 2023 2022 Net cash inflow from operating activities 749 680 Less: Net capital expenditure (133) (88) Less: Distributions to non-controlling interests (43) (47) Less: Interest paid (220) (4) Add: Interest received 16 12 Free cash flow 369 553 Fre
Slide 43: 2023 half year results
2023 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