Haleon Plc raised its full-year sales forecast as consumers stocked up on over-the-counter brands such as Sensodyne toothpaste and Panadol pain relievers.
(Bloomberg) — Haleon Plc raised its full-year sales forecast as consumers stocked up on over-the-counter brands such as Sensodyne toothpaste and Panadol pain relievers.
Revenue rose 10% in the first half on an organic basis, the consumer-health company said Wednesday, beating analysts’ estimates. Growth was driven mostly by higher pricing although volumes held up well. More than half of its business gained or maintained market share year-on-year.
Consumer goods companies have had to carefully balance passing on higher costs to shoppers while limiting the hit to market share or profitability. Haleon was spun off from GSK Plc last year, and is looking to sell some non-core brands and streamline its portfolio under Chief Executive Officer Brian McNamara. It is also running a program to cut costs by £300 million ($383 million) annually over the next three years.
McNamara said he sees a “big opportunity” to simplify Haleon’s businesses, speaking on Bloomberg TV, though he declined to say how many job cuts that may entail.
Haleon said Wednesday it agreed to sell its ringworm and athletes foot treatment Lamisil to Karo Healthcare for £235 million. Haleon however isn’t planning a major divestment program, the CEO said in a phone interview.
The stock fell as much as 3.2%. The company’s shares have been under pressure due to potential share sales by Pfizer Inc. and GSK, which own large minority stakes. That’s overshadowing the improved outlook, analysts said.
Revenue should rise 7% to 8% this year, Haleon said. The previous forecast was for growth of 4% to 6%. Pain relief brands such as Voltaren and Fenbid have been performing well.
The company also forecast 9% to 11% growth in adjusted operating profit at constant currencies for the full year.
Vitamin Slowdown
First-half revenue from vitamins, supplements and minerals fell 0.5% on an organic basis after Covid-19 led to “tremendous spikes” in demand last year for brands like Emergen-C vitamin C products. McNamara blamed the decline in the vitamin category on the US, which accounts for about a third of the business and where demand is returning to more normal patterns.
“We still think it’s a great category,” McNamara said. “It was one growing 5%-plus pre-Covid and we think we’ll get back there, but we are going through a bit of a re-basing period.”
The CEO also forecast relatively flat second-half sales from cold and flu medicines after 22% growth in the first half that was fueled by demand in China during the end of Covid-19 lockdowns. Early signs from Australia indicate an average flu season for the northern hemisphere later this year, though that country’s traditional role as a bellwether may be fading after Covid, McNamara said.
Inflation has probably peaked, the CEO said, though he added that growth in the rest of the year will still be driven by pricing. McNamara also said he hasn’t seen evidence of consumers switching away to private-label brands.
–With assistance from Dani Burger and Mark Cudmore.
(Updates with CEO comments from fifth paragraph)
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