Haleon Plc · LSE:HLN
Haleon — Investor Presentation (April 2024)
47 slides from Haleon's investor presentation, April 2024
Slide 1: Investor presentation April 2024
Investor presentation April 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: A global consumer healthcare leader delivering sustainable above market growth
A global consumer healthcare leader delivering sustainable above market growth and attractive returns 3
Slide 4: Global leader 100% focused on consumer healthcare with clear purpose
Global leader 100% focused on consumer healthcare with clear purpose Exceptional portfolio of category leading brands with attractive footprint and competitive capabilities Strategy to outperform and run a responsible business, integral to all we do 4-6% annual organic revenue growth1, organic profi
Slide 5: Building our track record
Building our track record Continuing trajectory despite challenging environment Revenue £m Adjusted gross profit £m Organic 2.8% 3.8% 9.0% 8.0% growth1 11,302 7,001 10,858 6,772 9,892 6,173 £0.8bn 9,545 6,003 dividend payments Margin 62.4% 62.9% 62.4% 61.9% to shareholders2 post 2020 2021 2022 2023
Slide 6: World class portfolio of category leading brands
World class portfolio of category leading brands Oral Health VMS Pain Relief Respiratory Health Digestive Health and other £3.1bn revenue1 £1.6bn revenue1 £2.7bn revenue1 £1.7bn revenue1 £2.1bn revenue1 #3 #1 #1 #1 #1 Digestive Health #1 Therapeutic OH2 Power brands Local strategic brands 1 2023 Hal
Slide 7: 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% annual organic brands trusted science revenue growth 1 New and emerging Attractive Proven brand-build
Slide 8: Competitive advantage
Competitive advantage Combining human understanding and trusted science Human Understanding Trusted Science Addressing real consumer everyday Deep technical and scientific talent health needs World class regulatory and medical Educating on better health solutions 100% expertise focused on Deep under
Slide 9: Increasing agility and productivity across Haleon
Increasing agility and productivity across Haleon Strengthening c. £300m pa Partly reinvested Haleon gross cost saving to drive growth for long-term initiatives success • c. one third expected to • Increased automation • 4-6% annual organic be delivered in 2024 and process revenue growth improvement
Slide 10: 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 and • Sustainability • C
Slide 11: Leverage reduced to 3.0x – £2.2bn net debt reduction since de-merger
Leverage reduced to 3.0x – £2.2bn net debt reduction since de-merger £bn c. 4x 3.6x 3.0x c.3.6% Net debt / Adjusted EBITDA Net debt / Adjusted EBITDA1 Cost of bond debt2 -£2.2bn 10.7 77%/23% Fixed/floating 1 9.9 -0.6 Debt repayments -0.4 £1bn cash Cash -0.4 FX £0.4bn increase in FY23 8.5 revaluation
Slide 12: Staggered debt maturity profile supports a strong investment grade balance sheet
Staggered debt maturity profile supports a strong investment grade balance sheet Credit Ratings Long-term rating Short-term rating Currency mix of net debt (incl. swaps) Baa1 BBB P-2 A-2 USD EUR 54% 20% Stable Stable GBP* 11% Moody’s S&P Moody’s S&P CNH 15% * Includes £208m of net cash in other curr
Slide 13: Medium term guidance
Medium term guidance Annual organic revenue growth1 of 4-6% Organic operating profit growth ahead of organic revenue growth Net debt/Adjusted EBITDA1 of around 2.5x 1 See Appendix for definition 13
Slide 14: Outlook
Outlook for full year 2024 Organic revenue growth1 of 4-6% Organic profit growth1 to be ahead of organic revenue growth Net interest expense c. £320m Adjusted effective tax rate1 24-25% 1 See Appendix for definition 14
Slide 15: Full year 2023 results
HAL=ON Full year 2023 results
Slide 16: Strong performance, with 8.0% organic revenue growth and 10.4% adjusted operating profit growth
Strong performance, with 8.0% organic revenue growth and 10.4% adjusted operating profit growth1 Our strategy is delivering, with growth across all categories and regions demonstrating portfolio resilience Implementing change to become more agile Proactively managing portfolio with disposals of Lami
Slide 17: Full year 2023 results Q4 results
Full year 2023 results 8.0% 7.0%/1.0% 9.1% Organic revenue growth1 Price / Volume Mix Power Brand growth Q4 results 6.7% 6.4%/0.3% Adjusted operating profit 1: Organic revenue growth1 Price / Volume Mix Increased 10.4% constant currency and 10.8% organic growth Strong cash generation Strong FCF gene
Slide 18: Oral Health
Oral Health Outperformance: Exceptional Power Brand performance Winning innovations 10.6% Sensodyne parodontax Gum + Sensitivity & Breath Polident/Poligrip Power Max Hold+ FY organic sales growth1 Top two 2023 innovations in US Strong performance driving Launched in 2022 and now toothpaste market2:
Slide 19: Vitamins, minerals and supplements
Vitamins, minerals and supplements Return to growth in second half Centrum Emergen-C 0.9% Leveraging science Geo-expansion New delivery formats FY organic revenue growth1 - Clinical trials showing - Further expanded Centrum - Launched Emergen-C participants taking Centrum distribution in India throu
Slide 20: Over-the-counter: Pain Relief
Over-the-counter: Pain Relief Performance supported by improved capacity and strong execution Advil Voltaren Panadol 7.4% New pain indication Driving new formats Strong activation FY organic sales growth1 - Advil Dual Action Back: - Launch of Voltaren liquid - Success of ‘Release starts Tapping into
Slide 21: Over-the-counter: Respiratory Health
Over-the-counter: Respiratory Health Performance underpinned by strong first half and excellent execution Capturing demand 13.7% Otrivin Nasal Mist Robitussin Theraflu - Launched in first three - Launch of dual-action - Theraflu Max Strength FY organic sales growth1 European markets; Good lozenge La
Slide 22: Over-the-counter: Digestive Health & Other
Over-the-counter: Digestive Health & Other Broad based growth across all three sub-categories 6.5% - Digestive Health Tums and ENO leveraged innovation to capture strength in the immediate FY organic sales growth1 relief sub-category - Skin Health underpinned by Bactroban growth - Smoking Health rev
Slide 23: Strong execution and financial discipline
Strong execution and financial discipline Initiatives to Continued financial improve efficiency Strong go-to-market discipline execution - Ongoing initiatives such as dual - Active portfolio management; sourcing and complexity - New distribution model in place with disposal of Lamisil1 and reduction
Slide 24: Strong FY revenue growth
Strong FY revenue growth Driven by price with positive volume/mix £m +8.0% Organic revenue growth 7.0% 1.0% (0.1%) (3.8%) Price Net M&A2 11,302 Foreign 10,858 Volume/mix exchange Includes c.1% Driven by Sterling impact from strengthening high inflation against emerging countries1 market currencies +
Slide 25: Respiratory
Respiratory 2023 – 2024 cold and flu season to-date returning to pre-COVID levels Weekly US market cold and flu (million units) Trends in Europe similar to US. Geographies which lifted COVID- 25 C&F Season 19 restrictions later, such as China, saw elevated demand in 2021-22 Q4 2022 and Q1 2023 which
Slide 26: Vitamins, Minerals and Supplements
Vitamins, Minerals and Supplements Market share1 gains across the three largest VMS brands YTD2 Market growth 15.0% Haleon growth 10.0% Three key brands (c.85% of VMS revenue) outperforming the market2 5.0% Emergen-C return to growth last 0.0% three months3 Well positioned for future growth in -5.0%
Slide 27: Broad based growth across all regions
Broad based growth across all regions North America 2.7% ORG 1 Asia Pacific Revenue: £4,195m (2022: £4,116m) EMEA & LATAM 9.0% ORG 1 12.6% ORG 1 Revenue: £2,562m (2022: £2,472m) Revenue: £4,545m (2022: £4,270m) Developed markets Emerging markets 4.9 % OSG 1 14.5 % OSG1 67% of group sales 33% of grou
Slide 28: North America
North America FY growth driven by price; more favourable volume/mix in Q4 Revenue Adjusted operating profit and margin Organic growth1 Price Volume / mix CER2 Organic growth1 FY 2.7% 3.6% (0.9)% FY 4.7% 4.8% Q4 3.5% 2.8% 0.7% £m £m Oral Health, Respiratory -14 Pricing Health, Pain Relief FX and FX a
Slide 29: EMEA & LATAM
EMEA & LATAM Strong price underpinning double digit organic growth Revenue Adjusted operating profit and margin Organic growth1 Price Volume / mix CER2 Organic growth1 FY 12.6% 12.8% (0.2)% FY 12.6% 13.4% Q4 10.1% 11.9% (1.8)% £m £m All categories growing Pricing with Oral Health, Respiratory Health
Slide 30: Asia Pacific
Asia Pacific Good organic growth more volume/mix driven Revenue Adjusted operating profit and margin Organic growth1 Price Volume / mix CER2 Organic growth1 FY 9.0% 2.7% 6.3% FY 17.8% 17.6% Q4 6.8% 3.5% 3.3% £m £m Strong operating Oral Health, Respiratory leverage Health and Pain Relief (particularl
Slide 31: Adjusted operating profit +10.4% CER
Adjusted operating profit +10.4% CER % change £m FY 2023 FY 2022 % change (CER) H1: Cost inflation not fully offset by Revenue 11,302 10,858 4.1 7.9 pricing and efficiencies H2: Headwinds eased with gross Adjusted gross profit 1 7,001 6,772 3.4 7.3 margin expansion in Q4 % Adjusted gross margin 1 61
Slide 32: FY Adjusted operating profit growth
FY Adjusted operating profit growth +10.4% at constant exchange rates;+60bps operating leverage 266 (8) (181) £m Net +10.8% M&A2 Organic operating profit +10.8% (0.4)% with negative impact from M&A of (7.3)% (0.4)% Translational 2,549 FX Operating A&P up c.3%; targeted on key 2,472 leverage growth a
Slide 33: Adjusted EPS growth driven by strong operating profit partly offset by annualisation of interest costs
Adjusted EPS growth driven by strong operating profit partly offset by annualisation of interest costs % change £m FY 2023 FY 2022 % change (CER) Adjusted operating profit 1 2,549 2,472 3.1 10.4 Net finance costs (368) (207) 77.8 77.3 Annualisation of interest Adjusted tax 1 (512) (506) 1.2 9.7 % ta
Slide 34: Operating profit margin +90bps due to reduction in adjusting items
Operating profit margin +90bps due to reduction in adjusting items £m FY 2023 FY 2022 % change Adjusted operating profit 1 2,549 2,472 Net amortisation and impairment of Includes ChapStick impairment4 (224) (172) intangible assets 2 Increase largely due to productivity Restructuring costs 2 (169) (4
Slide 35: Strong free cash flow generation
Strong free cash flow generation £m FY 2023 FY 2022 Adjusted operating profit 1 2,549 2,472 P&L adjusting items 2 (553) (647) Working capital reduction largely due to lower Non-cash movements 3 586 424 receivables given reduced debtor days partially offset by higher inventory Working capital and oth
Slide 36: Appendix
Appendix 2023 Full year results
Slide 37: Glossary
Glossary A number of adjusted measures are used to report the performance of our business which are • Disposal and other adjusting items: Gains and losses on disposals of assets, businesses and tax non-IFRS measures. Adjusted results, CER, organic and other non-IFRS measures may be indemnities relat
Slide 38: Haleon history
Haleon history 2015 2018 2020 2022 2 JV formation Buy out JV formation Divest Full buy out Exit of non- 2012 of Novartis strategic categories from JV to Unilever1 Divest Non-strategic OTC 2013 2019 2021 Divest Exit of beverages: Lucozade and Ribena to Suntory Significant divestment programme Non-str
Slide 39: Broad based growth across categories
Broad based growth across categories FY23 Revenue Organic revenue growth1 £m FY Q1 Q2 Q3 Q4 Oral Health 3,136 10.6% 6.6% 15.4% 9.4% 11.5% VMS 1,640 0.9% (3.7)% 2.7% 1.4% 3.1% Pain Relief 2,652 7.4% 11.0% 14.9% 6.2% (1.8)% Respiratory Health 1,736 13.7% 33.0% 9.2% 4.2% 10.9% Digestive Health and Othe
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: Translational currency impact
Translational currency impact FY 2023 currency as % Average Average Spot Spot Currency of total revenue 2022 2023 31.12.23 16.2.24 2023 unfavourable USD 33% 1.24 1.24 1.27 1.26 translational foreign EUR 16% 1.17 1.15 1.15 1.17 exchange impact CNY 8% 8.31 8.81 9.06 9.08 • c. (3.8)% on revenue CAD <5%
Slide 42: IFRS and Adjusted Income Statement
IFRS and Adjusted Income Statement Unaudited Net amortisation Transaction Separation Disposals 2023 IFRS and impairment of Restructuring -related and Admission and Adjusted £m Results intangible assets1 costs2 costs3 costs4 others5 Results Revenue 11,302 11,302 Gross profit 6,747 224 26 — 4 — 7,001
Slide 43: Reconciliation of FY organic growth
Reconciliation of FY organic growth Product Categories Digestive Oral Pain Respiratory Health and 2023 vs 2022 (%) Health VMS Relief Health Other Total Revenue Growth 6.1 (2.1) 4.0 9.9 2.0 4.1 Organic Adjustments - - 0.2 - 0.5 0.1 Effect of Exchange Rates 4.5 3.0 3.2 3.8 4.0 3.8 Organic Revenue Grow
Slide 44: Reconciliation of quarterly organic growth
Reconciliation of quarterly organic growth North America EMEA & LatAm Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY 2023 vs 2022 (%) 2023 2023 2023 2023 2023 2023 vs 2022 (%) 2023 2023 2023 2023 2023 Revenue Growth 14.0 4.4 (7.5) (1.0) 1.9 Revenue Growth 13.3 11.2 1.7 0.2 6.4 Organic Adjustments - - 0.1 - Organic A
Slide 45: Free cash flow and Adjusted EBITDA
Free cash flow and Adjusted EBITDA Free cash flow Adjusted EBITDA2 Twelve months to 31 Dec Twelve months to 31 Dec £m £m 2023 2022 2023 2022 Net cash inflow from operating Adjusted operating profit2 2,100 2,063 2,549 2,472 activities Less: Capital expenditure1 Add: Depreciation – Property Plant and
Slide 46: Debt profile
Debt profile Net debt Group net debt at Group net debt at £m Short-term borrowings1 31 Dec 2023 656 31 Dec 2022 437 c.7.0 years Long-term borrowings 8,800 10,003 Duration2 Derivative financial liabilities 190 206 c.3.6% Cash and cash equivalents and (1,044) (684) liquid investments Derivative financ
Slide 47: HAL=ON
HAL=ON