TIDMHLN
RNS Number : 1093S
Haleon PLC
02 November 2023
2 November 2023
2023 Q3 Trading Statement(1)
Three months ended 30 September 2023
5% organic revenue growth demonstrating strength and diversity of portfolio
==================================================================================
-- Q3 revenue +5.0% organic growth with price +6.6% and volume/mix (1.6)%;
reported (3.3)%
-- 9m revenue +8.5% organic growth with price +7.2% and volume/ mix +1.3%;
reported +5.6%
-- Strong performance from Power Brands with Q3 organic revenue +9.3%;
9m +9.8%
-- Volume / mix decline in Q3 reflected lower volume in North America in
Digestive Health and Other driven by one-off retailer inventory adjustments
and the expected decline in Emergen-C; Excluding both factors, volume/mix
would have been flat
-- Oral Health delivered high single digit growth, Respiratory reflected
a normal seasonal sell in, and VMS was up slightly driven by strong
Centrum growth
-- Organic revenue in EMEA and LatAm grew 10.8%, APAC increased 5.9% and
North America declined 1.5%
8.8% adjusted operating profit(3) growth; continued strong momentum
==================================================================================
-- Q3 operating profit of GBP584m (+2.6%)
-- Q3 adjusted operating profit growth +8.8% constant currency; reported
down 5.0% at GBP689m
-- Strong Q3 adjusted operating profit margin 24.6% and up +90bps constant
currency reflecting positive operational leverage; down 50bps on a reported
basis
FY 2023 guidance reiterated, completion of Lamisil sale
==================================================================================
-- All FY 2023 guidance unchanged
-- Lamisil sale completed on 31 October 2023
Brian McNamara, Chief Executive Officer, Haleon said:
"I am pleased with our Q3 results, which demonstrate continued
strong momentum across the business.
Despite challenging markets, we have delivered another quarter
of strong organic growth, reflecting the strength of our category
positions and the ongoing ability of our brands to grow or maintain
share.
Our Power Brands grew ahead of the overall portfolio in the
period, with all three Oral Health brands, Panadol and Centrum the
standout performers. In Oral Health, innovation underpinned brand
success alongside excellent execution in market.
The productivity program continues to progress well and remains
on track, as we ensure that Haleon's structure and operations as a
standalone business are optimised to deliver effectively for our
customers and consumers.
Our FY guidance remains unchanged and we expect to deliver
strong growth in both organic revenue and adjusted operating profit
constant currency. Whilst we are mindful of what remains an
uncertain economic and geopolitical environment, we remain
confident in our medium term guidance, and remain committed to
drive long term sustainable growth."
Adjusted results Reported results
Period ended 30 September vs 2022 2023 vs 2022
(unaudited)
============ ====================== ========== =========
Three months organic 5.0% Three months revenue GBP2,798m (3.3)%
revenue growth(2)
Nine months organic revenue 8.5% Nine months revenue GBP8,536m +5.6%
growth(2)
============ ====================== ========== =========
1. All numbers within the release are unaudited and are organic
unless referenced otherwise. The commentary in this announcement
contains forward looking statements and should be read in
conjunction with the cautionary note in the Appendix
2. Reported revenue is calculated at the average rate for the
period. Organic revenue is calculated at constant currency. The
difference between Reported and Organic revenue growth is
predominantly due to adjustment to recalculate the reported results
as if they had been generated at prior year exchange rates. Organic
revenue growth, Adjusted operating profit, Adjusted operating
profit margin are non-IFRS measures; definitions and calculations
of non-IFRS measures can be found in the Appendix
3. At constant currency
Outlook
For FY 2023 the Company continues to expect: -- Organic revenue growth to be 7-8%
-- Adjusted operating profit growth to be 9-11% constant currency
-- Net interest expense of c.GBP350m
-- Adjusted effective tax rate of 23-24%
Foreign exchange
As shared in the Aide Memoire dated 9 October 2023, whilst we do
not guide specifically on foreign exchange, translational foreign
exchange based on spot rates as at 30 September 2023 and using
FY2022 results as a base for FY 2023, would have a negative impact
of c.3.5% on revenue and negative impact of c.6-6.5% on Adjusted
operating profit.
Lamisil
The Lamisil disposal to Karo Healthcare AB announced with HY
2023 results on 2 August completed 31 October 2023. As a reminder
at that time we commented that whilst the disposal is expected to
be dilutive to Adjusted operating margin in 2024, this should be
offset by the productivity program. The impact for FY 2023 is
expected be slightly dilutive to constant currency adjusted
operating profit growth, which is already reflected in the FY 2023
guidance in the Outlook section above.
Presentation for analysts and shareholders:
A short presentation followed by Q&A will be hosted by
Tobias Hestler, Chief Financial Officer and Sonya Ghobrial, Head of
Investor Relations at 9:00am GMT (10:00am CET) on 2 November 2023,
which can be accessed at http://www.haleon.com/investors/.
For analysts and shareholders wishing to ask questions on the
Q&A call, please use the dial-in details below which will have
a Q&A facility:
UK: +44 800 279 3956
US: +1 631 570 5613
All other: +44 20 7107 0613
Passcode: 42874219
An archived webcast of the Q&A call will be available later
on the day of the results and can be accessed at
www.haleon.com/investors/.
Financial calendar
Haleon Highlights: Oral 7 December 2023
Health
FY 2023 Results 29 February 2024
Q1 2024 Trading Statement 1 May 2024
Enquiries
Investors Media
Sonya Ghobrial +44 7392 784784 Zoe Bird +44 7736 746167
Rakesh Patel +44 7552 484646 Nidaa Lone +44 7841 400607
Emma White +44 7792 750133
Email: investor-relations@haleon.com Email: corporate.media@haleon.com
About Haleon plc
Haleon (LSE / NYSE: HLN) is a global leader in consumer health,
with a purpose to deliver better everyday health with humanity.
Haleon's product portfolio spans five major categories - Oral
Health, Pain Relief, Respiratory Health, Digestive Health and
Other, and Vitamins, Minerals and Supplements (VMS). Its
long-standing brands - such as Advil, Sensodyne, Panadol, Voltaren,
Theraflu, Otrivin, Polident, parodontax and Centrum - are built on
trusted science, innovation and deep human understanding.
For more information please visit www.haleon.com
Operational review
Revenue by product category for the three months ended 30
September 2022 and 2023:
Revenue (GBPm) Revenue change
(%)
-----------------
Organic
2023 2022 Reported (1)
-------- ------- --------- --------
Oral Health 790 787 0.4% 9.4%
VMS 410 437 (6.2)% 1.4%
Pain Relief 636 648 (1.9)% 6.2%
Respiratory Health 439 457 (3.9)% 4.2%
Digestive Health and
Other 523 563 (7.1)% 0.9%
-------- ------- --------- --------
Group revenue 2,798 2,892 (3.3)% 5.0%
1. Reported revenue is calculated at the average rate for the
period. Organic revenue is calculated at constant currency. The
difference between Reported and Organic revenue growth is
predominantly due to adjustment to recalculate the reported results
as if they had been generated at prior year exchange rates.
Definitions and calculations of non-IFRS measures can be found in
the Appendix
All commentary below refers to organic revenue growth unless
otherwise stated. Key category performance was as follows:
Oral Health
Organic revenue growth of 9.4%, with all three Power Brands
delivering double digit growth. Sensodyne continued to see strong
growth in the US, LatAm and India. parodontax benefited from
particularly strong growth in Middle East & Africa and some
European markets. Denture Care was strong in LatAm.
VMS
Organic revenue grew 1.4%. Centrum experienced double-digit
growth largely in China, the US and Middle East & Africa,
partly offset by a double digit decline in Emergen-C in North
America as the immunity category continued to revert to
pre-COVID-19 levels. Caltrate declined low single digit following a
strong comparative in the prior year in South East Asia and
Taiwan.
Pain Relief
Organic revenue growth of 6.2% driven by very strong growth in
Panadol in Middle East & Africa, and in APAC, the latter helped
by restocking following improved capacity. Voltaren grew mid-single
digit with strength in Central and Eastern Europe and some other
European markets. Advil declined mid-single digit due to more
competitive market conditions. Fenbid declined double digit
following significant growth in H1 2023 due to the cessation of
COVID-19 lockdown restrictions, with inventory levels normalising
in Q3.
Respiratory Health
Organic revenue increased 4.2% reflecting the normal seasonal
sell in in EMEA and LatAm, and North America, as well as weakness
in allergy. Theraflu increased double digit with strong growth in
Central and Eastern Europe. Robitussin saw strong growth from
improved capacity in North America in contrast to constraints last
year. Flonase declined high single digit given normalisation of
inventory following a weak season.
Digestive Health and Other
Organic revenue growth of 0.9% was adversely impacted by one-off
retailer inventory adjustments in North America and to a lesser
extent by phasing of contract manufacturing sales. Digestive Health
declined mid-single digit with mid-single digit growth in Eno
offset by a double digit decline in Preparation H and Benefiber.
Skin Health brands increased mid-single digit driven by growth in
Bactroban in APAC and Abreva/Zovirax in North America and EMEA and
LatAm, which more than offset a decline in Fenistil. Smokers Health
revenue declined mid-single digit.
Geographical segment performance
Revenue by geographical segment for the three months ended 30
September:
Revenue (GBPm) Revenue change (%)
----------------- ----------------------------------------------
2023 2022 Reported Organic(1) Price(1) Vol/Mix(1)
-------- ------- --------- ----------- --------- -----------
North America 1,018 1,101 (7.5)% (1.5)% 2.6% (4.1)%
EMEA and LatAm 1,155 1,136 1.7% 10.8% 12.7% (1.9)%
APAC 625 655 (4.6)% 5.9% 2.9% 3.0%
-------- ------- --------- ----------- --------- -----------
Group 2,798 2,892 (3.3)% 5.0% 6.6% (1.6)%
1. Reported revenue is calculated at the average rate for the
period. Organic revenue is calculated at constant currency. The
difference between Reported and Organic revenue growth is
predominantly due to adjustment to recalculate the reported results
as if they had been generated at prior year exchange rates.
Definitions and calculations of non-IFRS measures can be found in
the Appendix.
All commentary refers to organic growth unless otherwise
stated.
North America
-- Organic revenue growth in North America was (1.5)%, with 2.6% price
and (4.1)% volume/mix.
-- Volume/mix decline largely reflected reduced volume in Digestive Health
and Other largely driven by a one-off retailer inventory adjustment
and the expected double digit decline in Emergen-C. Removing the impact
of both of these factors volume/mix would have been slightly positive.
-- Oral Health saw mid-single digit growth with high-single digit growth
in Sensodyne reflecting continued strong performance of Sensodyne Pronamel
Active Shield. VMS increased low-single digit with Centrum up double
digit reflecting outperformance of Centrum Silver which continued to
benefit from activation of cognitive function claims. VMS category
growth was reduced by Emergen-C. Respiratory Health declined low-single
digit reflecting limited out of season use and a normal seasonal sell
in; as well as weaker allergy performance. Pain Relief declined mid-single
digit largely driven by Advil. Digestive Health and Other revenue fell
mid-single digit largely reflecting Digestive Health which declined
double digit due to retailer inventory adjustments , mainly on Benefiber
and Preparation H, as well as weakness in Smokers Health.
Europe, Middle East & Africa (EMEA) and Latin America (LatAm)
-- Organic revenue growth in EMEA and LatAm was 10.8%, with 12.7% price
and (1.9)% volume/mix.
-- There was a c.3% impact to Q3 2023 revenue from pricing in Turkey and
Argentina, which impacted the overall Group by c.1%.
-- Negative volume/mix largely reflected a decline in LatAm, predominantly
from weakness in Mexico and Columbia.
-- Oral Health, Pain Relief and Digestive Health and Other all grew double
digit. In Oral Health, revenue increased double digit due to double
digit growth in Sensodyne and Denture Care and high single digit growth
in parodontax. In Pain Relief double digit growth was largely due to
strength in Panadol where revenue grew double digit driven by price
and strong demand in Middle East & Africa. Voltaren grew high-single
digit. Respiratory Health saw mid-single digit growth with particular
strength in Theraflu. In Digestive Health and Other, there was double
digit growth in Digestive Health with Eno particularly strong. Smokers
Health and Skin Health both increased mid-single digit. VMS revenue
declined low-single digit, with double digit growth in Centrum more
than offset by a decline in some Local Brands.
-- Geographically, Middle East & Africa, and LatAm saw strong double digit
revenue growth which was price driven. Central and Eastern Europe was
up high-single digit. Northern Europe, Southern Europe and Germany
increased mid-single digit.
Asia-Pacific
-- Organic revenue growth in APAC was 5.9%, with 2.9% price and 3.0% volume/mix.
-- Respiratory Health delivered double digit growth with strong demand
arising from Cold and Flu season and improved supply, as well as strong
Flonase growth in China. High-single digit growth in Oral Health resulted
from mainly strength in Sensodyne and parodontax which both increased
double digit. VMS grew low-single digit with double digit growth in
Centrum partly offset by a low-single digit decline in Caltrate. Pain
Relief grew mid-single digit with growth in Voltaren and Panadol, up
mid-single and double digit respectively, partly offset by a move to
more normal inventory levels in Fenbid following the exceptional growth
in H1. Digestive Health and Other increased low-single digit with Digestive
Health and Smokers Health up low-single digit and high-single digit
respectively. Skin Health grew high-single digit mainly due to strong
growth in Bactroban in China.
-- Geographically, India grew double digit helped by continued strength
in Sensodyne. Greater China grew mid-single digit with strong results
in Sensodyne and Centrum partly offset by a decline in Fenbid and Contac
following strong sales during H1 2023 and the subsequent normalisation
of stock levels in H2. Australia/New Zealand was up low-single digit.
Operating profit and margin
Operating profit increased by 2.6% to GBP584m (Q3 2022:
GBP569m), and operating profit margin increased by 120bps to 20.9%
(Q3 2022: 19.7%).
Adjusted operating profit declined 5.0% at actual exchange rates
to GBP689m (Q3 2022: GBP725m). Adjusted operating profit at
constant currency increased 8.8% driven by good operating leverage,
particularly through price as well as efficiencies, which were
partially offset by volume/mix decline. Adjusted operating profit
margin of 24.6% declined by 50bps at actual exchange rates and was
up 90bps at constant currency.
Nine months ended 30 September 2023
The information included here is being made public this quarter
in connection with the Registration Rights Agreement entered into
on 1 June 2022 among Haleon, Pfizer, GSK and certain Scottish
limited partnerships controlled by GSK.
Operational review
Revenue by product category for the nine months ended 30
September:
Revenue (GBPm) Revenue change
(%)
------------------
Organic
2023 2022 Reported (1)
------- --------- --------- --------
Oral Health 2,379 2,225 6.9 % 10.3 %
VMS 1,226 1,253 (2.2) % 0.2 %
Pain Relief 2,041 1,896 7.6 % 10.6 %
Respiratory Health 1,278 1,140 12.1 % 14.8 %
Digestive Health and
Other 1,612 1,566 2.9 % 5.3 %
Group revenue 8,536 8,080 5.6% 8.5 %
1. Reported revenue is calculated at the average rate for the
period. Organic revenue is calculated at constant currency. The
difference between Reported and Organic revenue growth is
predominantly due to adjustment to recalculate the reported results
as if they had been generated at prior year exchange rates.
Definitions and calculations of non-IFRS measures can be found on
pages 13-18.
All commentary below refers to organic revenue growth unless
otherwise stated.
Oral Health
Organic revenue growth of 10.3%, with all three Power Brands
delivering double digit growth. Sensodyne performance was largely
due to double digit growth in US, Middle East & Africa, LatAm
and India. parodontax growth was broad based and particularly
strong in Middle East & Africa. Denture Care benefited from
particularly strong growth in LatAm.
VMS
Organic revenue grew 0.2%, with mid-single digit growth in
Centrum and mid-single digit growth in Caltrate largely offset by
the expected normalisation of Emergen-C to pre-pandemic levels in
North America, and weakness in some Local Brands such as Calsource
and Scotts.
Pain Relief
Organic revenue growth of 10.6% driven by very strong growth in
Panadol, particularly in EMEA and LatAm, and also in APAC due to
Fenbid growth in China in H1 2023 with 9m revenue more than double
last year. Voltaren grew mid-single digit helped by strength in
Central and Eastern Europe, as well as Middle East & Africa.
Advil grew low-single digit.
Respiratory Health
Organic revenue increased 14.8% given a strong cold and flu
season at the start of 2023, and some re-stocking in EMEA and
LatAm, and North America given particularly low inventory levels at
the end of last year. Theraflu, Otrivin and Robitussin all saw
revenue up double digit.
Digestive Health and Other
Organic revenue was up 5.3%, with Digestive Health up low-single
digit driven by good growth in Tums and Eno partly offset by a
decline in Nexium. Smokers Health revenue increased low-single
digit and Skin Health brands increased mid-single digit driven by
growth of Bactroban in Asia Pacific and Fenistil in EMEA and
LatAm.
Geographical segment performance
Revenue by geographical segment for the nine months ended 30
September:
Revenue (GBPm) Revenue change (%)
----------------- ----------------------------------------------
2023 2022 Reported Organic(1) Price(1) Vol/Mix(1)
-------- ------- --------- ----------- --------- -----------
(1.5)
North America 3,064 2,974 3.0 % 2.4 % 3.9 % %
13.4 13.0
EMEA and LatAm 3,478 3,205 8.5 % % % 0.4 %
APAC 1,994 1,901 4.9 % 9.6 % 2.5 % 7.1 %
-------- ------- --------- ----------- --------- -----------
8.5 7.2 1.3
Group 8,536 8,080 5.6 % % % %
1. Reported revenue is calculated at the average rate for the
period. Organic revenue is calculated at constant currency. The
difference between Reported and Organic revenue growth is
predominantly due to adjustment to recalculate the reported results
as if they had been generated at prior year exchange rates.
Definitions and calculations of non-IFRS measures can be found on
pages 13-18.
All commentary below refers to organic revenue growth unless
otherwise stated.
North America
-- Organic revenue growth in North America was 2.4%, with 3.9% price and
(1.5)% volume/mix.
-- Volume/Mix declined 1.5% driven by a decline in Q3 from retailer inventory
adjustments and the expected normalisation in Emergen-C. Removing the
impact of both of these factors volume/mix would have been positive.
-- Oral Health increased mid-single digit, with Sensodyne and parodontax
both up double digit offsetting a low-single digit decline in Denture
Care. Respiratory Health revenue increased high-single digit given
sustained incidence of cold and flu at the start of 2023 with particular
strength in Robitussin. Flonase declined mid-single digit given a weak
allergy season. Pain Relief increased low-single digit, mainly driven
by good growth in Excedrin and Voltaren, and with low single digit
growth in Advil. Digestive Health and Other declined low single digit
driven by softer consumption in Nexium partly offset by good growth
in Tums. VMS declined high-single digit largely due to Emergen-C.
Europe, Middle East & Africa (EMEA) and Latin America (LatAm)
-- Organic revenue growth in EMEA and LatAm was 13.4%, with 13.0% price
and 0.4% volume/mix.
-- There was a c.3% impact to 9m 2023 revenue from pricing Turkey and
Argentina, which impacted the overall group by c.1%.
-- Oral Health, Pain Relief, Respiratory Health, and Digestive Health
and Other, all grew double digit. In Oral Health, Sensodyne, parodontax
and Denture Care were up double-digit. Pain Relief grew double digit
with particular strength in Panadol during the third quarter driven
by price and strong demand in Middle East & Africa as well as mid-single
digit growth in Voltaren. In Digestive Health and Other, there was
double digit growth in all categories. Respiratory Health benefited
from a strong cold and flu season at the start of the year. VMS revenues
grew low-single digit underpinned by double digit growth in Centrum
partly offset by weakness in some Local Brands.
-- Geographically, LatAm, Middle East & Africa, Central and Eastern Europe,
and Southern Europe saw double digit growth. Northern Europe was up
high single digit, and Germany grew mid-single digit.
Asia-Pacific
-- Organic revenue growth in APAC was 9.6%, with 2.5% price and 7.1% volume/mix.
-- Double digit growth in Pain Relief and Respiratory Health was driven
mainly by Fenbid and Contac, which saw significant growth due to the
easing of COVID-19 related lockdown restrictions in China in H1. Oral
Health was up high-single digit with mid-single digit growth in Sensodyne
and double-digit in parodontax and Denture Care. Mid-single digit growth
in VMS was underpinned by mid-single digit growth in Centrum and mid-single
digit growth in Caltrate. Digestive Health and Other grew low-single
digit with mid-single digit growth in Skin Health and low single digit
growth in Smokers Health which was partly offset by a low single digit
decline in Digestive Health.
-- Geographically, China was up double digit percent, with results benefitting
from sales of Fenbid and Contac following the easing of COVID-19 related
restrictions. India grew high-single digit with continued strength
in Sensodyne. Australia/New Zealand grew mid-single digit.
Operating profit and margin
Operating profit increased by 17.4% to GBP1,725m (9m 2022:
GBP1,469m), and operating profit margin increased by 200bps to
20.2% (9m 2022: 18.2%).
Adjusted operating profit increased by 2.3% at actual exchange
rates to GBP1,960m (9m 2022: GBP1,916m) and increased by 8.9% at
constant currency. Good operational leverage, particularly through
price, as well as efficiencies was partly offset by adverse
transactional FX earlier in the year and higher standalone
costs.
As a result of the above, adjusted operating profit margin was
23.0%, a decline of 70bps at actual exchange rates and an increase
of 10bps at constant currency.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHSED 30 SEPTEMBER (unaudited)
2023 2022
GBPm GBPm
------------------------------------------------- -------- --------
Revenue 2,798 2,892
Cost of sales (1,082) (1,073)
------------------------------------------------- -------- --------
Gross profit 1,716 1,819
Selling, general and administration (1,058) (1,196)
Research and development (75) (82)
Other operating (expense)/income 1 28
------------------------------------------------- -------- --------
Operating profit 584 569
Net finance costs (88) (74)
Profit before tax 496 495
Income tax (122) (130)
Profit after tax for the period 374 365
------------------------------------------------- -------- --------
Profit attributable to shareholders of the Group 365 345
Profit attributable to non-controlling interests 9 20
------------------------------------------------- -------- --------
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHSED 30 SEPTEMBER (unaudited)
2023 2022
GBPm GBPm
------------------------------------------------- -------- --------
Revenue 8,536 8,080
Cost of sales (3,270) (3,050)
------------------------------------------------- -------- --------
Gross profit 5,266 5,030
Selling, general and administration (3,320) (3,375)
Research and development (217) (218)
Other operating (expense)/income (4) 32
------------------------------------------------- -------- --------
Operating profit 1,725 1,469
Net finance costs (269) (110)
Profit before tax 1,456 1,359
Income tax (352) (450)
Profit after tax for the period 1,104 909
------------------------------------------------- -------- --------
Profit attributable to shareholders of the Group 1,052 862
Profit attributable to non-controlling interests 52 47
------------------------------------------------- -------- --------
Basic earnings per share (pence) 11.4 9.3
Diluted earnings per share (pence) 11.3 9.3
------------------------------------------------- -------- --------
1.
1.
Appendix
Cautionary note regarding forward-looking statements
This document contains certain statements that are, or may be
deemed to be, "forward-looking statements" (including for purposes
of the safe harbor provisions for forward-looking statements
contained in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934). Forward-looking
statements give Haleon's current expectations and projections about
future events, including strategic initiatives and future financial
condition and performance, and so Haleon's actual results may
differ materially from what is expressed or implied by such
forward-looking statements. Forward-looking statements sometimes
use words such as "expects", "anticipates", "believes", "targets",
"plans", "intends", "aims", "projects", "indicates", "may",
"might", "will", "should", "potential", "could" and words of
similar meaning (or the negative thereof). All statements, other
than statements of historical facts, included in this presentation
are forward-looking statements. Such forward-looking statements
include, but are not limited to, statements relating to future
actions, prospective products or product approvals, future
performance or results of current and anticipated products, sales
efforts, expenses, the outcome of contingencies such as legal
proceedings, dividend payments and financial results.
Any forward-looking statements made by or on behalf of Haleon
speak only as of the date they are made and are based upon the
knowledge and information available to Haleon on the date of this
document. These forward-looking statements and views may be based
on a number of assumptions and, by their nature, involve known and
unknown risks, uncertainties and other factors because they relate
to events and depend on circumstances that may or may not occur in
the future and/or are beyond Haleon's control or precise estimate.
Such risks, uncertainties and other factors that could cause
Haleon's actual results, performance or achievements to differ
materially from those in the forward-looking statements include,
but are not limited to, those discussed under "Risk Factors" on
pages 202 to 210 in Haleon's Annual Report and Form 20-F 2022.
Forward-looking statements should, therefore, be construed in light
of such risk factors and undue reliance should not be placed on
forward-looking statements.
Subject to our obligations under English and U.S. law in
relation to disclosure and ongoing information (including under the
Market Abuse Regulations, the UK Listing Rules and the Disclosure
and Transparency Rules of the Financial Conduct Authority ("FCA")),
we undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. You should, however, consult any
additional disclosures that Haleon may make in any documents which
it publishes and/or files with the SEC and take note of these
disclosures, wherever you are located.
No statement in this document is or is intended to be a profit
forecast or profit estimate.
Use of non-IFRS measures (unaudited)
We use certain alternative performance measures to make
financial, operating, and planning decisions and to evaluate and
report performance. We believe these measures provide useful
information to investors and as such, where clearly identified, we
have included certain alternative performance measures in this
document to allow investors to better analyse our business
performance and allow greater comparability. To do so, we have
excluded items affecting the comparability of period-over-period
financial performance. Adjusted Results and other non-IFRS measures
may be considered in addition to, but not as a substitute for or
superior to, information presented in accordance with IFRS.
Constant currency
The Group's reporting currency is Pounds Sterling, but the
Group's significant international operations give rise to
fluctuations in foreign exchange rates. To neutralise foreign
exchange impact and to better illustrate the change in results from
one period to the next, the Group discusses its results both on an
"as reported basis" or using actual exchange rates (AER) (local
currency results translated into Pounds Sterling at the prevailing
foreign exchange rate) and using constant currency exchange rates
(CER). To calculate results on a constant currency basis, prior
year exchange rates are used to restate current year comparatives.
The principal currencies and relevant exchange rates in the key
markets where the Group operates are shown below.
Nine months to 30 September
2023 2022
-------------- -------------
Average rates:
USD/GBP 1.24 1.26
Euro/GBP 1.15 1.18
CNY/GBP 8.75 8.27
Adjusted results
Adjusted results comprise Adjusted cost of sales, Adjusted gross
profit, Adjusted gross profit margin, Adjusted selling, general and
administration (SG&A), Adjusted research and development
(R&D), Adjusted other operating income/(expense), Adjusted
operating expenses, Adjusted operating profit, Adjusted operating
profit margin, Adjusted net finance costs, Adjusted profit before
tax, Adjusted income tax, Adjusted effective tax rate, Adjusted
profit after tax, Adjusted profit attributable to shareholders,
Adjusted diluted earnings per share. Adjusted results exclude net
amortisation and impairment of intangible assets, restructuring
costs, transaction-related costs, separation and admission costs,
and disposals and others, in each case net of the impact of taxes
(where applicable) (collectively the Adjusting items).
Management believes that Adjusted Results, when considered
together with the Group's operating results as reported under IFRS,
provide investors, analysts and other stakeholders with helpful
complementary information to understand the financial performance
and position of the Group from period to period and allow the
Group's performance to be more easily comparable.
Adjusting items
Adjusted Results exclude the following items (net of the impact
of taxes, where applicable):
Net amortisation and impairment of intangible assets
Net impairment of intangibles, impairment of goodwill and
amortisation of acquired intangibles excluding computer software.
These adjustments are made to reflect the performance of the
business excluding the effect of acquisitions.
Restructuring costs
From time to time, the Group may undertake business
restructuring programmes that are structural in nature and
significant in scale. The cost associated with such programmes
includes severance and other personnel costs, professional fees,
impairments of assets, and other related items.
Transaction-related costs
Transaction related accounting or other adjustments related to
significant acquisitions including deal costs and other
pre-acquisition costs when there is certainty that an acquisition
will complete. It also includes costs of registering and issuing
debt and equity securities and the effect of inventory revaluations
on acquisitions.
Separation and admission costs
Costs incurred in relation to and in connection with separation,
UK Admission and registration of the Company's Ordinary Shares
represented by the Company's American Depositary Shares (ADSs)
under the US Exchange Act of 1934 and listing of ADSs on the NYSE
(the US Listing). These costs are not directly attributable to the
sale of the Group's products and specifically relate to the
foregoing activities, affecting comparability of the Group's
financial results in historical and future reporting periods.
Disposals and others
Includes gains and losses on disposals of assets, businesses and
tax indemnities related to business combinations, legal settlement
and judgements, impact of changes in tax rates and tax laws on
deferred tax assets and liabilities, retained or uninsured losses
related to acts of terrorism, significant product recalls, natural
disasters and other items. These gains and losses are not directly
attributable to the sale of the Group's products and vary from
period to period, which affects comparability of the Group's
financial results. From period to period, the Group will also need
to apply judgement if items of unique nature arise that are not
specifically listed above.
The following tables set out a reconciliation between IFRS and
Adjusted Results for the three-month periods ended 30 September
2023 and 30 September 2022:
Net
amortisation
and
impairment of Transaction- Separation Disposals
IFRS intangible Restructuring related and admission and Adjusted
GBPm Results assets(1) costs(2) costs(3) costs(4) others(5) Results
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
2023
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Revenue 2,798 - - - - - 2,798
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit 584 7 60 1 34 3 689
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit margin % 20.9% 24.6%
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
2022
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Revenue 2,892 - - - - - 2,892
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit 569 10 4 - 142 - 725
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit margin % 19.7% 25.1%
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
1. Net amortisation and impairment of intangible assets:
includes impairment of intangible assets GBPnil (2022: GBPnil), and
amortisation of intangible assets excluding computer software GBP7m
(2022: GBP10m).
2. Restructuring costs: includes amounts related to business transformation activities.
3. Transaction-related costs: includes amounts related to acquisition of a manufacturing site.
4. Separation and admission costs: includes amounts incurred in
relation to and in connection with the separation GBP34m (2022:
GBP73m) and listing GBPnil (2022: GBP69m) of the Group as a
standalone business.
5. Disposals and others: includes net loss/(gains) on disposals
of assets and businesses and other items totalling GBP3m (2022:
GBPnil).
Organic revenue growth
Organic revenue growth represents the change in organic revenue
at CER from one accounting period to the next.
Organic revenue represents revenue, as determined under IFRS but
excluding the impact of acquisitions, divestments and closures of
brands or businesses, revenue attributable to manufacture and
supply agreements (MSAs) relating to divestments and the closure of
sites or brands, and the impact of currency exchange movements.
Revenue attributable to MSAs relating to divestments and
production site or brand closures has been removed from organic
revenue because these agreements are transitional and, with respect
to production site closures, include a ramp-down period in which
revenue attributable to MSAs gradually reduces several months
before the production site closes. This revenue reduces the
comparability of prior and current year revenue and is therefore
adjusted for in the calculation of organic revenue growth.
Organic revenue is calculated period-to-period as follows, with
prior year exchange rates to restate current year comparatives:
- Current year organic revenue excludes revenue from brands or
businesses acquired in the current accounting period.
- Current year organic revenue excludes revenue attributable to
brands or businesses acquired in the prior year from 1 January of
the comparative period to the date of completion of the
acquisition.
- Prior year organic revenue excludes revenue in respect of
brands or businesses divested or closed in the current accounting
period from 12 months prior to the completion of the disposal or
closure until the end of the prior accounting period.
- Prior year organic revenue excludes revenue in respect of
brands or businesses divested or closed in the previous accounting
period in full.
- Prior year and current year organic revenue excludes revenue
attributable to MSAs relating to divestments and production site
closures taking place in either the current or prior year, each an
Organic Adjustment.
To calculate organic revenue growth for the period, organic
revenue for the prior year is subtracted from organic revenue in
the current year and divided by organic revenue in the prior
year.
The Group believes that discussing organic revenue growth
contributes to the understanding of the Group's performance and
trends because it allows for a period-on-period comparison of
revenue in a meaningful and consistent manner.
Organic revenue growth by individual geographical segment is
further discussed by price and volume/mix changes, which are
defined as follows:
- Price: Defined as the variation in revenue attributable to
changes in prices during the period. Price excludes the impact to
organic revenue growth due to (i) the volume of products sold
during the period and (ii) the composition of products sold during
the period. Price is calculated as current year net price minus
prior year net price multiplied by current year volume. Net price
is the sales price, after deduction of any trade, cash or volume
discounts that can be reliably estimated at point of sale. Value
added tax and other sales taxes are excluded from the net
price.
- Volume/Mix: Defined as the variation in revenue attributable
to changes in volumes and composition of products in the
period.
The following tables reconcile reported revenue growth for the
three-month periods ended 30 September 2023 and 30 September 2022
to organic revenue growth for the same periods by geographical
segment and by product category.
Geographical Segments
---------------------------------
Three months ended 30 September North EMEA and
2023 vs 2022 (%) America LatAm APAC Total
-------------------------------- ------- -------- ------ ------
Revenue growth (7.5) 1.7 (4.6) (3.3)
Organic adjustments of which: - - 0.1 -
Effect of Acquisitions - - - -
Effect of Divestments - - - -
Effect of MSAs - - 0.1 -
Effect of Exchange Rates 6.0 9.1 10.4 8.3
Organic revenue growth (1.5) 10.8 5.9 5.0
--------------------------------- ------- -------- ------ ------
Price 2.6 12.7 2.9 6.6
Volume/Mix (4.1) (1.9) 3.0 (1.6)
--------------------------------- ------- -------- ------ ------
Geographical Segments
---------------------------------
Three months ended 30 September North EMEA and
2022 vs 2021 (%) America LatAm APAC Total
-------------------------------- ------- -------- ------ ------
Revenue growth 18.5 13.1 17.6 16.1
Organic adjustments of which: 0.1 0.6 (1.3) -
Effect of Acquisitions - - (1.5) (0.3)
Effect of Divestments - 0.2 - 0.1
Effect of MSAs 0.1 0.4 0.2 0.2
Effect of Exchange Rates (15.7) (1.5) (7.3) (8.0)
Organic revenue growth 2.9 12.2 9.0 8.1
--------------------------------- ------- -------- ------ ------
Price 4.2 8.3 2.7 5.5
Volume/Mix (1.3) 3.9 6.3 2.6
--------------------------------- ------- -------- ------ ------
Product Categories
-------------------------------------------------------
Digestive
Three months ended 30 September Oral Pain Respiratory Health and
2023 vs 2022 (%) Health VMS Relief Health Other Total
-------------------------------- ------ ------ ------ ----------- ---------- ------
Revenue growth 0.4 (6.2) (1.9) (3.9) (7.1) (3.3)
Organic adjustments of which: - - 0.2 - (0.2) -
Effect of Acquisitions - - - - - -
Effect of Divestments - - 0.2 (0.2) -
Effect of MSAs - - - - - -
Effect of Exchange Rates 9.0 7.6 7.9 8.1 8.2 8.3
Organic revenue growth 9.4 1.4 6.2 4.2 0.9 5.0
--------------------------------- ------ ------ ------ ----------- ---------- ------
Product Categories
-------------------------------------------------------
Digestive
Three months ended 30 September Oral Pain Respiratory Health and
2022 vs 2021 (%) Health VMS Relief Health Other Total
-------------------------------- ------ ------ ------ ----------- ---------- ------
Revenue growth 12.3 8.2 11.5 40.2 17.8 16.1
Organic adjustments of which: (0.2) (0.5) (0.5) (0.4) 1.4 -
Effect of Acquisitions (0.2) (0.5) (0.8) - (0.1) (0.3)
Effect of Divestments - - 0.3 (0.4) 0.2 0.1
Effect of MSAs - - - - 1.3 0.2
Effect of Exchange Rates (5.4) (9.1) (7.4) (9.6) (10.8) (8.0)
Organic revenue growth 6.7 (1.4) 3.6 30.2 8.4 8.1
--------------------------------- ------ ------ ------ ----------- ---------- ------
Adjusted results for the nine months ended 30 September 2023 and
30 September 2022 (unaudited)
The following tables set out a reconciliation between IFRS and
Adjusted Results for the nine-month periods ended 30 September 2023
and 30 September 2022:
Net
amortisation
and
impairment of Transaction- Separation Disposals
IFRS intangible Restructuring related and admission and Adjusted
GBPm Results assets(1) costs(2) costs(3) costs(4) others(5) Results
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
2023
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Revenue 8,536 - - - - - 8,536
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit 1,725 30 90 8 94 13 1,960
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit margin % 20.2% 23.0%
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
2022
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Revenue 8,080 - - - - - 8,080
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit 1,469 50 24 - 371 2 1,916
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
Operating
profit margin % 18.2% 23.7%
--------------- ------- ------------- ------------- ------------ ------------- --------- --------
1. Net amortisation and impairment of intangible assets:
includes impairment of intangible assets GBPnil (2022: GBP18m), and
amortisation of intangible assets excluding computer software
GBP30m (2022: GBP32m).
2. Restructuring costs: includes amounts related to business transformation activities.
3. Transaction-related costs: includes amounts related to acquisition of a manufacturing site.
4. Separation and admission costs: includes amounts incurred in
relation to and in connection with the separation GBP94m (2022:
GBP259m) and listing GBPnil (2022: GBP112m) of the Group as a
standalone business.
5. Disposals and others: includes net loss/(gains) on disposals
of assets and businesses and other items totalling GBP13m (2022:
GBP2m).
Organic revenue growth for the nine months ended 30 September
2023 and 30 September 2022 (unaudited)
The following tables reconcile reported revenue growth for the
nine-month periods ended 30 September 2023 and 30 September 2022 to
organic revenue growth for the same periods by geographical segment
and by product category.
Geographical Segments
---------------------------------
Nine months ended 30 September North EMEA and
2023 vs 2022 (%) America LatAm APAC Total
------------------------------- ------- -------- ------ ------
Revenue growth 3.0 8.5 4.9 5.6
Organic adjustments of which: - 0.2 (0.1) -
Effect of Acquisitions - - (0.2) (0.1)
Effect of Divestments - 0.2 - 0.1
Effect of MSAs - - 0.1 -
Effect of Exchange Rates (0.6) 4.7 4.8 2.9
Organic revenue growth 2.4 13.4 9.6 8.5
-------------------------------- ------- -------- ------ ------
Price 3.9 13.0 2.5 7.2
Volume/Mix (1.5) 0.4 7.1 1.3
-------------------------------- ------- -------- ------ ------
Geographical Segments
---------------------------------
Nine months ended 30 September North EMEA and
2022 vs 2021 (%) America LatAm APAC Total
------------------------------- ------- -------- ------ ------
Revenue growth 17.8 10.3 16.3 14.4
Organic adjustments of which: 0.4 1.2 (0.9) 0.4
Effect of Acquisitions - - (1.0) (0.2)
Effect of Divestments 0.2 0.6 - 0.3
Effect of MSAs 0.2 0.6 0.1 0.3
Effect of Exchange Rates (10.5) 0.6 (4.2) (4.5)
Organic revenue growth 7.7 12.1 11.2 10.3
-------------------------------- ------- -------- ------ ------
Price 2.9 5.6 2.9 4.0
Volume/Mix 4.8 6.5 8.3 6.3
-------------------------------- ------- -------- ------ ------
Product Categories
-------------------------------------------------------
Digestive
Nine months ended 30 September Oral Pain Respiratory Health and
2023 vs 2022 (%) Health VMS Relief Health Other Total
------------------------------- ------ ------ ------ ----------- ---------- ------
Revenue growth 6.9 (2.2) 7.6 12.1 2.9 5.6
Organic adjustments of which: - (0.1) 0.2 - (0.1) -
Effect of Acquisitions - (0.1) (0.2) - - (0.1)
Effect of Divestments - - 0.4 - (0.1) 0.1
Effect of MSAs - - - - - -
Effect of Exchange Rates 3.4 2.5 2.8 2.7 2.5 2.9
Organic revenue growth 10.3 0.2 10.6 14.8 5.3 8.5
-------------------------------- ------ ------ ------ ----------- ---------- ------
Product Categories
-------------------------------------------------------
Digestive
Nine months ended 30 September Oral Pain Respiratory Health and
2022 vs 2021 (%) Health VMS Relief Health Other Total
------------------------------- ------ ------ ------ ----------- ---------- ------
Revenue growth 8.0 13.3 13.3 46.0 8.5 14.4
Organic adjustments of which: (0.3) (0.2) (0.2) - 2.7 0.4
Effect of Acquisitions (0.3) (0.3) (0.4) - - (0.2)
Effect of Divestments - 0.1 0.2 - 1.1 0.3
Effect of MSAs - - - - 1.6 0.3
Effect of Exchange Rates (2.1) (6.1) (4.2) (6.2) (6.1) (4.5)
Organic revenue growth 5.6 7.0 8.9 39.8 5.1 10.3
-------------------------------- ------ ------ ------ ----------- ---------- ------
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END
TSTNKDBKFBDDKDK
(END) Dow Jones Newswires
November 02, 2023 03:00 ET (07:00 GMT)
Grafico Azioni Haleon (LSE:HLN)
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Grafico Azioni Haleon (LSE:HLN)
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