Haleon margins slip on freight, commodity and FX costs
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Haleon margins fall on freight, raw materials and FX costs, but GSK spin-off revenue rises to £10.8bn
- Panadol maker says 9% organic sales growth will slow next year
- Full-year adjusted operating profit rose 13.8% over the period to £2.4 billion
- Haleon said it is well positioned to provide mid-term guidance
Haleon’s revenues rose 13.8 per cent to £10.8 billion in 2022, but higher freight and raw material costs weighed on the consumer health giant’s profit margins.
The GSK spinoff told investors Thursday that its adjusted gross profit margin took a 60 basis point hit from higher freight and raw material costs and unfavorable currency movements.
Haleon, which went public in July last year, posted organic sales growth of 9 percent for the period, but the company warned that would slow to 4 to 6 percent in 2023.
Haleon Shares fell 4.3 percent to 312.6p in early trading. The share price is now down 1.2 percent from Haleon’s share price and 6.8 percent from last month’s peak.
Haleon makes consumer health products such as Panadol and Sensodyne
But its full-year adjusted operating profit rose 13.8 per cent in 2022 to £2.4 billion and Haleon said it was well positioned to deliver on its medium-term expectations.
Overall, the group said two-thirds of the company gained or maintained market share over the 12 months.
Haleon’s respiratory health business was particularly strong, growing organically by 32.6 per cent to £1.6 billion, aided by a protracted cold and flu season with sales in North America and Europe significantly above 2019 levels.
As a result, free cash flow rose from £406 million to just under £1.6 billion for the year, while net debt fell from £10.7 billion at the time of the GSK split to around £9.9 billion.
Haleon’s board of directors has announced a full-year dividend of 2.4 pence, representing approximately 30 percent of adjusted earnings for the period since the listing.
CEO Brian McNamara said: “2022 has been an extraordinary year for Haleon, having successfully spun off from GSK to become the first publicly traded company to focus 100 percent on consumer health.
“In our first FY results, we delivered a strong performance in a highly volatile environment. Our organic sales growth of 9 percent was well balanced between volume and price, with two-thirds of the company gaining or maintaining market share. This performance reflected the quality of our portfolio of leading brands, successful innovation and outstanding execution in the marketplace.”
Victoria Scholar, head of investment at Interactive Investor, said Haleon has tried to offset cost pressures by raising prices and buying over time, but the company risks consumers turning instead to “cheaper unbranded alternatives” amid the crisis of the cost of living. wage’.
She added: “After a bumpy start as a public company, equities have gained ground since September, but in today’s session they are returning some of that gain.”