Sensodyne owner Haleon raises profit expectations

Haleon has raised its annual sales forecast after higher prices helped offset inflationary pressures in the first half.

The consumer healthcare company now expects organic sales to grow 7 to 8 percent this year, compared to its previous expectation of “towards the top of the range of 4-6 percent.”

Haleon forecasts full-year adjusted operating profit to grow 9 to 11 percent at constant currencies.

For the six months ended June, the group reported sales growth of 10.4 per cent to £5.74 billion, with price increases driving the vast majority of profits.

Despite widespread cost-of-living pressures, consumers have prioritized spending on over-the-counter drugs and other health products.

Sales of respiratory health products such as Theraflu and Contac rose by more than a fifth on a continued recovery in cold and flu cases and the easing of Covid-related restrictions in China.

Haleon also saw purchases of the pain-relieving drug Fenbid more than double in China, while sales of Panadol in Europe, the Middle East and Africa and Latin American markets boomed following the launch of the ‘Release starts here’ campaign.

Meanwhile, growth in the oral health segment was driven by increasing orders for power brands Sensodyne and Parodontax.

Higher prices combined with impressive results across all divisions and regions boosted Haleon’s profits by around a third to £687 million.

It also helped offset rising commodity and raw material costs, and the costs of spun off from pharmaceutical giant GSK.

The Surrey-headquartered group began trading as an independent company on the London Stock Exchange last July in Europe’s largest listing in a decade.

Brian McNamara, chief executive of Haleon, said: “While we continue to expect a challenging environment given continued consumer spending pressures and global geopolitical and macroeconomic uncertainties, we remain confident in the resilience of Haleon’s incredible portfolio of leading brands.

“Our strategy is working, as evidenced by the strength of our results, and we remain confident that Haleon is well positioned for the remainder of the year, as well as for the longer term.”

The FTSE 100 company’s results come a few weeks after it reportedly planned to make hundreds of layoffs as part of a strategy to save £300m over the next three years.

Haleon has approximately 1,700 employees in the UK and a total of 24,000 employees in 170 countries.

Adam Vettese, analyst at eToro, said: “In the past, consumer staples brands have often been good value-focused defensive moves for investors during times of economic stress.

“Haleon fits this mold well, but since it’s a spin-off, we don’t have a good benchmark from the company’s past to determine what will happen to demand during a recession.”

Haleon Shares were 0.9 percent, or 3.1 pence, lower Wednesday morning at 326.9 pence, just below the opening price in July 2022.