Haleon Plc · LSE:HLN
Haleon — FY2022 Earnings Presentation
44 slides from Haleon's earnings presentation, March 2023
Slide 1: 2022 Full year results
2022 Full year results March 2023
Slide 2: Disclaimer
Disclaimer This document contains certain statements that are, or may be deemed to be, achievements to differ materially from those in the forward-looking statements "forward-looking statements“ (including for purposes of the safe harbor provisions include, but are not limited to, those discussed un
Slide 3: Brian McNamara, CEO
Brian McNamara CEO 2022 Full year results
Slide 4: Extraordinary year, successfully separated and unveiled Haleon
Extraordinary year, successfully separated and unveiled Haleon, a listed 100% consumer heath company Our strategy is working, delivering strong growth with opportunities across the business for this to continue FY22 saw strong top line growth with 6%1 adjusted operating profit growth despite signifi
Slide 5: 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 6: Full year results and Q4 results
Full year results 9.0% 4.3%/4.7% 10.1% Organic sales growth1 Price / volume mix Power brand growth Q4 results Adjusted operating margin1: 22.8% flat on reported and down 60bps CER 5.0% 5.0%/0% Organic sales growth1 Price / volume mix Competitive performance: 2/3 business gained or held share2 Ecomme
Slide 7: Oral Health
Oral Health Outperformance: all three Power Brands gaining share Sales growth running at c.2x the rate of overall market 5.6% Winning innovations: Geo-expansion: FY organic sales growth1 Sensodyne Polident/Poligrip parodontax Complete Protection Power Max Hold+ launch Category held back by new formu
Slide 8: Vitamins, mineral and supplements
Vitamins, mineral and supplements Good growth despite tough H2 comparators 5.0% Growth underpinned by: FY organic sales growth1 Continued new Geo-expansion Leverage science innovations Centrum launched in to differentiate • H2 lapping new capacity Emergen-C Kidz India (online) and Egypt Centrum Silv
Slide 9: Over-the-counter: Pain relief
Over-the-counter: Pain relief Driving growth through agility and execution 8.9% Panadol continuing to outperform Advil continued strong Voltaren trend for topical FY organic revenue growth1 US performance consumption to be lower • Gained market share when analgesics higher • Driven by increased • Ag
Slide 10: Over-the-counter: Respiratory health
Over-the-counter: Respiratory health Well positioned to capitalise on demand 32.6% FY organic revenue growth1 driven by: Meeting demand New innovations Commercial execution Flexibility to maximise output and Theraflu Max Strength launched Gaining share in market meet unprecedented demand in Q3 in US
Slide 11: Over-the-counter: Digestive health & other
Over-the-counter: Digestive health & other Mixed trends across three sub-segments 2.9% Growth typical run rate for category FY organic revenue growth1 • Digestive health faced challenging conditions in preventative antacid market which adversely impacted Nexium • Skin health underpinned by Chapstick
Slide 12: Performance underpinned by strong execution and financial discipline
Performance underpinned by strong execution and financial discipline Demerger, listing Offsetting and separation inflationary pressures Synergies Successful separation Through operating leverage and Technology systems Delivered final Pfizer driving efficiency across the cutover complete synergies ta
Slide 13: Responsible business integral to our strategy
Responsible business integral to our strategy Environmental Health Strong commitment inclusivity Governance Continuing to progress Seeing AI Corporate governance, against environmental Partnership with policies and standard in targets set out at our Microsoft to help place Capital Markets Day in con
Slide 14: Tobias Hestler, CFO
Tobias Hestler CFO 2022 Full year results
Slide 15: Delivering strong results
2022 Delivering strong results £10.9bn £2.5bn 22.8% £1.6bn Revenue Adjusted Adjusted Free cash flow1 operating profit 1 operating profit margin1 9.0% +5.9% Flat AER 3.6x & Organic revenue growth1 CER growth1 (60)bps Net debt / Adjusted EBITDA1 CER 1 Reconciliation of IFRS to Adjusted results can be
Slide 16: Strong FY revenue growth
Strong FY revenue growth Healthy balance of volume / mix and pricing £m +9.0% Organic revenue growth 5.0% 4.3% (0.2%) 4.7% 10,858 Acquisitions, Foreign Price disposals and exchange Volume/mix 9,545 MSA1 +13.8% Reported FY 2021 FY 2022 sales sales 1 Includes 0.3% from acquisitions, (0.2)% from Dispos
Slide 17: Broad based growth across categories
Broad based growth across categories Healthy balance of price and volume / mix FY22 Revenue Organic revenue growth1 £m FY Q1 Q2 Q3 Q4 Oral Health 2,957 5.6% 7.9% 2.0% 6.7% 5.3% VMS 1,675 5.0% 14.9% 9.0% (1.4)% (0.7)% Q4 Decline driven by comparative Pain Relief 2,551 8.9% 18.9% 4.9% 3.6% 8.9% Strong
Slide 18: Respiratory
Respiratory Q4 cold and flu incidences ahead of 2019 and 2021 levels Weekly US market cold and flu sales ($m) Winter season Off season Winter season 2021/22 peak was in late Prolonged strong consumption 2022/23 strong early peak in December/January in ‘off-season’ November/December 400 2022 350 300
Slide 19: VMS – Underlying consumption remains strong
VMS – Underlying consumption remains strong Recent modest growth 72% declines are driven by lapping strong demand in 2021 from both Delta and Omicron variants Haleon plays in a sub-set of VMS growing Consumers have remained post Covid ahead of the overall VMS market Composition of global VMS market
Slide 20: Strong revenue growth across regions
Strong revenue growth across regions Revenue North North America America Asia Pacific 5.9% OSG 1 £4,116m (2021: £3,525m) EMEA & LATAM EMEA & LATAM 10.9% OSG 1 £4,270m (2021: £3,877m) Asia Pacific Developed markets1 Emerging markets1 10.6% OSG 1 £2,472m (2021: £2,143m) 5.7% 16.3% 1 Refers to Organic
Slide 21: North America
North America Healthy balance of price and volume / mix 5.9 2.9 3.0 1 % % % • FY organic growth : 5.9% with 2.9% price and 3.0% volume/mix Organic growth1 Price Volume / mix • Q4 organic growth : 1 1.6% with 3.0% price and (1.4)% volume/mix £4,116m 26.0% • Decline in Q4 volume/mix reflects: – Tough
Slide 22: EMEA & LATAM
EMEA & LATAM Strong organic growth helped by pricing 10.9 6.4 4.5 1 % % % • FY organic growth : 10.9% with 6.4% price and 4.5% volume/mix Organic growth1 Price Volume / mix • Q4 organic growth : 1 6.8% with 8.8% price and (2.0)% volume/mix £4,270m 22.9% • Decline in Q4 volume/mix reflects: – Lower v
Slide 23: Asia Pacific
Asia Pacific Organic growth driven by strong volume growth 10.6 2.6 8.0 1 % % % • FY organic growth : 10.6% with 2.6% price and 8.0% volume/mix Organic growth1 Price Volume / mix • Q4 organic growth : 1 8.3% with 1.5% price and 6.8% volume/mix £2,472 m 20.5 % 1 • Q4 organic growth reflects: – Lower
Slide 24: Adjusted operating profit growth of 6% constant currency
Adjusted operating profit growth of 6% constant currency £m FY 2022 FY 2021 % change Revenue 10,858 9,545 13.8 Power brand organic revenue growth ahead of Haleon organic growth (10.1%) Adjusted gross profit 1 6,772 6,002 12.8 % Adjusted gross margin 1 62.4% 62.9% (0.5)pts Cost inflation largely offs
Slide 25: Navigating cost inflation with positive operating leverage
Navigating cost inflation with positive operating leverage Adjusted operating profit1 £2.2bn +13.8% £2.5bn Standalone costs at the upper 22.8% 22.8% end of £0.2bn guided range Operating Over delivery of Pfizer Transactional Translational leverage FX loses FX impact synergies (>£0.6bn annualised deli
Slide 26: 3% Adjusted EPS growth driven by strong operating profit
3% Adjusted EPS growth driven by strong operating profit, offset by interest costs £m FY 2022 FY 2021 % change Adjusted operating profit 1 2,472 2,172 13.8 Net finance costs (207) (2) n/m Reflects interest of £258m related to bonds issued in March 2022 offset by interest Adjusted tax 1 (506) (469) 7
Slide 27: Adjusting items largely non-cash impairment, separation and admission costs
Adjusting items largely non-cash impairment, separation and admission costs £m FY 2022 FY 2021 % change Adjusted operating profit 1 2,472 2,172 13.8 Net amortisation and impairment Includes £129m impairment related to a (172) (16) Preparation-H and a small brand in the of intangible assets 2 Ukraine
Slide 28: Strong free cash flow generation
Strong free cash flow generation £m FY 2022 FY 2021 Adjusted operating profit 1 2,472 2,172 P&L adjusting items 2 (647) (534) Separation and admission costs peaked in 2022 and a non-cash impairment charge Non-cash movements 3 424 216 Working capital and other movements 4 138 (188) Working capital ma
Slide 29: Debt reduction since demerger
Debt reduction since demerger c.3.1% Cost of debt £bn c. 4.0x 3.6x 87%/13% Net debt / Adjusted EBITDA3 Net debt / Adjusted EBITDA4 Fixed/floating 1 0.1 7.8 years FX 9.9 Movement Duration 2 Net derivatives in cash on and movement hand Term loan Commercial in leases repayments Paper issued £2.5bn Liqu
Slide 30: Outlook for full year 2023
Outlook for full year 2023 Organic revenue growth1 of 4-6% 1 Adjusted operating profit margin broadly flat (FY 2022: 22.8%) after absorbing c.40 bps adverse transactional 2 foreign exchange impact based on current market rates Net interest expense c. £350m Adjusted effective tax rate1 23-24% 1 Defin
Slide 31: Extraordinary year, successfully separated and unveiled Haleon
Extraordinary year, successfully separated and unveiled Haleon, a listed 100% consumer heath company Our strategy is working, delivering strong growth with opportunities across the business for this to continue FY22 saw strong top line growth with 6%1 adjusted operating profit growth despite signifi
Slide 32: HAL=ON
HAL=ON
Slide 33: Appendix
Appendix 2022 Full year results
Slide 34: Glossary
Glossary A number of Adjusted measures are used to report the performance of our business which are • other items. These gains and losses are not directly attributable to the sale of the Group’s non-IFRS measures. Adjusted results, CER and other non-IFRS measures may be considered in products and va
Slide 35: Medium term guidance
Medium term guidance Organic annual sales growth of 4-6%1 Sustainable moderate adjusted operating margin expansion at constant currency 1 per annum Net debt/EBITDA2 expect to be below 3x during 2024 1 See appendix for definition 2 Adjusted EBITDA (see appendix for definition) 35
Slide 36: Considerations on phasing of growth
Considerations on phasing of growth Comments on 2022 performance (unless otherwise stated) 2022 % of revenue Q1 Q2 Q3 Q4 ERP pull forward Reversal of ERP pull - Reduction in forward inventories at major Oral Health 27% retailers Rebound from China lockdown Benefit from - - - VMS 15% Omicron wave Ben
Slide 37: Full Year 2022 translational currency impact
Full Year 2022 translational currency impact 2022 Estimated positive currency translational foreign exchange as % of impact total Average Average Spot Currency revenue 2021 2022 10.2.23 • c. +1.0% on revenue USD 33% 1.38 1.24 1.21 • c. +1.5% on adjusted EUR 16% 1.16 1.17 1.13 operating profit CNY 8%
Slide 38: IFRS and Adjusted Income Statement
IFRS and Adjusted Income Statement Unaudited Net amortisation Transaction Separation Disposals 2022 IFRS and impairment of Restructuring -related and Admission and Adjusted £m Results intangible assets1 costs2 costs3 costs4 others5 Results Revenue 10,858 — — — — — 10,858 Gross profit 6,577 172 19 —
Slide 39: Reconciliation of FY organic growth
Reconciliation of FY organic growth Product Categories Digestive Respiratory Health and 2022 vs 2021 (%) Oral Health VMS Pain Relief Health Others Total Revenue Growth 8.6 11.6 14.0 39.5 7.4 13.8 Organic Adjustments (0.3) (0.2) (0.4) 0.0 2.2 0.2 of which: Effect of Acquisitions (0.3) (0.3) (0.5) - -
Slide 40: Reconciliation of quarterly organic growth
Reconciliation of quarterly organic growth North America 2022 vs 2021 (%) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Revenue Growth 20.1 15.0 18.5 14.1 16.8 Organic Adjustments 0.8 0.1 0.1 0.3 0.3 of which: Effect of Acquisitions - - - - Effect of Disposals 0.5 - - - 0.1 Effect of MSAs 0.3 0.1 0.1 0.3
Slide 41: Reconciliation of quarterly organic growth
Reconciliation of quarterly organic growth APAC 2022 vs 2021 (%) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Revenue Growth 15.8 15.4 17.6 12.2 15.4 Organic Adjustments 0.2 (1.4) (1.3) (1.9) (1.0) of which: Effect of Acquisitions - (1.4) (1.5) (1.7) (1.1) Effect of Disposals - - - - - Effect of MSAs 0.2
Slide 42: Free cash flow
Free cash flow Free cash flow Twelve months to 31 Dec £m 2022 2021 Net cash inflow from operating activities 2,063 1,356 Less: Net capital expenditure (292) (149) Less: Distributions to non-controlling interests (48) (35) Less: Interest paid (163) (15) Add: Interest received 19 16 Free cash flow 1,5
Slide 43: Debt profile
Debt profile Net debt £m Group net debt at 31 Dec 2022 Group net debt at 18 July 20223 c.7.8 years Short-term borrowings 437 332 Duration1 Long-term borrowings 10,003 11,433 Derivative financial liabilities 206 66 Cash and cash equivalents and liquid investments (684) (978) c.3.1% Derivative financi
Slide 44: 2022 full year results
2022 full 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