Buoyed by higher prices, Haleon raises forecast

Jun 14, 2024

Haleon reported better-than-expected sales as consumers opened their purses to purchase well-known products such as Sensodyne toothpaste and Panadol painkillers at higher prices despite the cost of living crisis, according to a Financial Times report.

Haleon, which was spun off from GSK last year, reported a 10.4% increase in like-for-like revenue to £5.7B in the six months to June, beating analysts’ expectations of an increase of 8.2%, the report noted.

According to the report, three-quarters of Haleon's revenue growth was a result of price rises, but consumers also purchased products such as Advil and Voltarol in higher volumes despite the higher prices.

Furthermore, Haleon raised its expectations for revenue growth in 2023 from a range of 4-6% to 7-8%. The company said 55% of its products gained or maintained market share, the report said.

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Chief executive Brian McNamara said he was confident in Haleon’s resilience, despite “a challenging environment given further pressure on consumer spending and global geopolitical and macroeconomic uncertainties,” the report said.

"Sales volume increases accounted for 2.9% of growth, bucking the trend for falling sales across the consumer goods sector as shoppers traded down to cheaper and private label products. Manufacturers of consumer health products have been more resilient to down-trading than other consumer categories during the cost of living crisis," the report said.

The report also noted that Haleon’s rival Kenvue reported better than expected profits earlier this month in its first results announcement since it spun off from Johnson & Johnson earlier this year. “Together with pet food, consumer health is the only category that shows no cyclicality and almost no down-trading during economic turmoil,” Bernstein analysts wrote in a recent research note on the sector.

Speaking to analysts, McNamara said, “To date we are not seeing [downtrading]. We have very little private label dynamics in Europe. Obviously these are unprecedented times so we are looking out for any signs.”

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Haleon’s respiratory health division was the best performing with like-for-like sales up 22% thanks to a strong cold and flu season in the first three months of the year and growth in China following the lifting of COVID-19 lockdowns, the report said, noting that "painkiller sales also were given a boost by China’s reopening, up 12.9% compared with the year before. However, vitamins, minerals and supplements sales were flat, particularly in the immunity category “as consumers became less concerned about COVID-19."

Haleon recently made job cuts as part of a £300M cost-cutting drive over the next three years. The company also shared that it had sold Lamisil athlete’s foot cream to Swedish company Karo Healthcare for £235M, according to the report.