ii view: Haleon boosts profit and launches new share buyback
Home to a stable of healthcare brands and with over one-third of sales in emerging market. Buy, sell or hold?
27th February 2025 15:52
by Keith Bowman from interactive investor
Full-year results to 31 December
- Organic sales up 5% (volumes up 1.3% - product prices up 3.7%)
- Adjusted operating profit up 9.8% to £2.5 billion
- A final dividend of 4.6p per share
- Total dividend for 2024 up 10% to 6.6p per share
- Net debt of £7.91 billion, down from £8.51 billion a year ago
Guidance:
- Expects full-year 2025 organic revenue growth of between 4% to 6%
- Expects adjusted operating profit growth to be ahead of organic revenue growth
Chief executive Brian McNamara said:
“I am pleased with our performance in 2024 and the progress we are making to build Haleon into an
agile, competitive and consumer-focused organisation.
“Looking ahead, we are well positioned to drive organic revenue growth within our medium-term guidance range, with strong organic profit growth in 2025.”
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ii round-up:
Healthcare goods maker Haleon (LSE:HLN) today reported growth in adjusted sales and profit, with the maker of Sensodyne toothpaste and Centrum vitamins detailing a new £500 million share buyback programme.
Annual sales stripped of acquisitions and disposals rose 5% year-over-year, driving adjusted operating profit up 9.8% to £2.5 billion. A final dividend of 4.6p per share leaves the total 2024 payment up 10% to 6.6p per share.
Shares in the FTSE 100 company fell 3% in UK trading having come into these latest results up by close to a quarter over the last year. That’s in contrast to a 12% decline at former owner GSK (LSE:GSK). The FTSE 100 index is up close to 14% over that time.
Haleon's product portfolio spans the five categories of Oral Health, Pain Relief, Respiratory Health, Digestive Health, as well as Vitamins, Minerals and Supplements (VMS).
The Weybridge, Surrey headquartered company said it had either maintained or increased market share for 71% of the business in 2024.
Fourth-quarter organic, or adjusted sales rose 6.8%, fuelled by a 4.1% increase in volumes and 2.7% hike in product prices. That’s better than a gain of 6.1% in the third quarter to late September.
Haleon predicts organic revenue growth of 4-6% for 2025. Organic operating profit is expected to grow even faster. A first-quarter trading update is scheduled for 1 May.
ii view:
Operating in more than 170 markets, Haleon brands also include Biotene mouthwash, Polygrip, Advil pain relief and Tums antiacids. Sales of Oral Health products generated most sales in 2024 at 29%, followed by Pain Relief at 23%, Digestive Health at 18%, VMS at 15% and Respiratory Health the balance of 15%. Geographically, the combined Europe, Middle East, Africa and Latin America accounted for the biggest slug of 2024 sales at 41%, followed by North America at 36% and Asia Pacific the balance of 23%.
For investors, variations in the cold and flu season can impact customer demand. Costs broadly for businesses remain elevated. Own brand competition from the supermarkets persists, while currency moves can affect results.
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On the upside, the new share buyback of £500 million sits alongside a forecast yield of over 1.5%. A diversity of product categories and geographical regions allows positives in one area to counter challenges in another. Emerging markets, accounting for around 35% of revenues, delivered organic revenue growth of 10.8%, including a strong double-digit gain in India, while net debt reduced by 7% to £7.91 billion.
In all, and while risks remain, defensive qualities given the sale of health-related products and strong cashflows look to leave Haleon deserving of its place in many investor portfolios.
Positives:
- Diversity of product and geographical region
- Targeting cost savings
Negatives:
- Own brand competition from the supermarkets
- Exposure to currency movements
The average rating of stock market analysts:
Buy
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