Half Year 2026 Haleon PLC Earnings Call Transcript
Key Points
- Organic sales growth improved sequentially to 3.1% in Q2, with volume/mix up 1.4%, indicating better balance.
- North America showed strong progress with 3.1% growth and 2% volume, driven by shelf resets, innovation, and e-commerce momentum.
- Emerging markets delivered 6.3% growth in Q2, with expectations for high single-digit growth in H2, led by India and Latin America.
- Operating margin improved 120 basis points at constant currency, driven by supply chain efficiency and gross margin expansion of 140 basis points.
- Innovation is performing well, with launches like Clinical Repair in the US and Voltaren 12-hour in China driving growth.
- A&P investment remains strong at 20.9% of sales, with increased digital spend and dynamic allocation to high-growth areas.
- China grew high single-digit in Q2, with Douyin sales up over 100% and strong performance from Centrum and Caltrate.
- Oral care delivered 6.2% growth, with Sensodyne and Parodontax performing well, and a strong innovation pipeline.
- EPS grew 12% in H1, with expectations for strong EPS growth in H2.
- AI and digital tools are improving supply chain efficiency, forecast accuracy, and marketing effectiveness.
- Respiratory health remained weak, shaving 150 basis points off organic growth, with cold and flu still declining.
- Europe is challenging, with low single-digit category declines and Haleon's growth of only 0.4% in the region.
- Middle East markets, particularly Dubai and Pakistan, are experiencing significant declines, impacting emerging market growth.
- Pricing was negative in Asia-Pacific due to hospital channel and Douyin investments, though volume growth offset this.
- VMS business remains volatile, though Centrum is improving in the US.
- Cold and flu season has seen two years of decline, and recovery is expected to be gradual, not reaching 2024 levels.
- COGS inflation from Middle East freight costs is expected to increase in H2, potentially impacting gross margin.
- The company is below its 4-6% medium-term growth ambition, with gaps in Europe and Middle East.
- Competitive activity in cold and flu is increasing, with new launches from competitors.
- Latin America's improvement is partly due to fixing price gaps, which may not be sustainable without continued execution.
Good morning, everyone. Welcome to Haleon's conference call for our half-year results. I'm Jo Russell, Head of Investor Relations; and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.
Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans, and expectations. Please refer to this morning's announcement and the company's UK and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements. We have posted today's presentation on the website this morning, along with a video running through the results in detail, so hopefully, you've all had the chance to see that ahead of this call.
And with that, I'll hand back to the operator and we can open for Q&A.
Questions & Answers
(Operator
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