GSK Spinoff Haleon Delivers On First Full-year Forecasts

Haleon, the world's biggest standalone consumer health business with brands such as Sensodyne toothpaste and Advil painkillers, reported its first full-year results on Thursday which analysts said were in line with expectations.

Shares in London-listed Haleon, which was created last July when British drugmaker GSK spun off its consumer health business in the biggest listing in Europe for more than a decade, fell almost 3% in early trading after the earnings.

Analysts said on Thursday that Haleon has had a strong start to 2023, and its full-year revenue growth forecast of 4% to 6% was in line or just ahead of consensus estimates.

The momentum from the fourth quarter of 2022 has continued into the first of 2023, with pain and respiratory growth despite "tough comps", Barclays analyst Iain Simpson wrote in a note.

He said he expected growth in the first quarter to be largely driven by price given the macroeconomic landscape.

Margin, financing and tax guidance for 2023 is likely to prompt earnings per share consensus downgrades, Jefferies analysts wrote in a note.

VOLATILE ENVIRONMENT

Chief Executive Brian McNamara said Haleon had navigated a highly volatile environment.

Players in the consumer health field, like other sectors, have had to contend with sharp cost increases across the business, including raw materials, transport and energy linked to the war in Ukraine and lingering COVID-19 disruptions.

Rivals with consumer health operations, such as Bayer and Reckitt, have charged higher prices to partly offset broader falls in sales volumes.

"Our organic (full-year) revenue growth ... was well balanced between volume and price, with two thirds of the business gaining or holding share," McNamara said.

Haleon, which is made up of assets previously owned by GSK and Pfizer reported organic revenue growth of 9% last year, just ahead of the 8-8.5% increase it predicted for 2022.

Haleon's respiratory health unit saw organic growth of 32.6% to 1.6 billion pounds in 2022, helped by a strong cold and flu season with sales significantly above 2019 levels in North America and Europe in the fourth quarter, the company said.

Respiratory viruses have returned with a vengeance in the Northern hemisphere in the first winter free of COVID-19 restrictions since the start of the pandemic.

On Thursday, Haleon affirmed its medium term guidance, saying it expects to incur 150 million pounds in restructuring costs in 2023 and 2024 to generate savings of about 300 million pounds over the next three years.

As of December, Haleon cut its debt to about 9.9 billion pounds, from roughly 10.7 billion pounds three months earlier.