TIDMHLN
RNS Number : 9097F
Haleon PLC
10 November 2022
2022 Q3 Trading Statement (1)
Three months ended 30 September 2022
Another quarter of strong growth underpinned by positive
volume/mix
-- Q3 Reported revenue +16.1%; organic +8.1% with 5.5% price, 2.6% volume/mix
-- 9m Reported revenue +14.4%; organic +10.3% with 4.0% price, 6.3% volume/mix
-- E-commerce 9% of total revenue with continued growth in the high teens
-- Healthy power brand Q3 organic revenue growth +7.4%; 9m +11.3%
Pricing and efficiencies offsetting inflationary pressures
-- Q3 Reported operating profit +12.2% to GBP569m; margin 19.7% down 70bps
-- Q3 Adjusted operating profit(2) increased 14.9% to GBP725m
o Margin 25.1% down 20bps on a reported basis; down 90bps
constant currency
o Pricing and increased efficiencies fully offset inflationary
pressures
o Decline due to guided standalone costs and adverse
transactional FX
Increased financial flexibility despite adverse currency
-- Net debt GBP10,784m; further GBP250m of GBP1.5bn term loan recently repaid
Upgrade to full year guidance
-- FY22 organic revenue growth now expected at 8.0-8.5%
-- FY Adjusted operating profit margin2 expected to be slightly
above last year at actual exchange rates (FY21: 22.8%), given
recent favourable translational FX movements(3)
Brian McNamara, Chief Executive Officer, Haleon said:
" Haleon delivered another strong quarter of growth in Q3 with
8% organic revenue growth and double digit growth for the nine
months, with increased pricing through the year and continued
positive volume/mix. We saw accelerated growth in the third quarter
in Oral Health, whilst strong comparatives in Vitamins, Minerals
and Supplements resulted in category revenue down slightly overall
sales were similar to earlier quarters. Respiratory performance was
strong given sustained incidences of Covid and cold and flu
combined with successful innovation. Looking ahead given this
positive momentum, we now expect FY organic revenue to be between
8.0-8.5% and have updated margin expectations for more favourable
currency.
Overall Haleon is demonstrating its strength in a challenging
market environment. Whilst macroeconomic conditions remain volatile
and uncertain, we remain confident that the quality of our
portfolio, disciplined execution of our strategy, and continued
investment will enable Haleon to deliver on medium term
guidance."
Adjusted results Reported results
Period ended 30 September
(unaudited) 2022 vs 2021 2022 vs 2021
===== ======= ==================== ========= =======
Three months Organic
revenue growth(2) 8.1% Three months revenue GBP2,892m 16.1%
===== ======= ==================== ========= =======
Nine months Organic revenue
growth(2) 10.3% Nine months revenue GBP8,080m 14.4%
===== ======= ==================== ========= =======
1. All numbers within the release are unaudited and are organic
unless referenced otherwise. The commentary in this announcement
contains forward looking statements and should be read in
conjunction with the cautionary note on page 8
2. Organic revenue growth, Adjusted operating profit, Adjusted
operating profit margin are non-IFRS measures; definitions and
calculations of non-IFRS measures can be found on pages 8-12
3. Assuming spot rates as at 31 October 2022 are sustained
Outlook
FY22 organic revenue growth now expected at 8.0-8.5%.
At H1 Results we guided to FY22 adjusted operating profit margin
slightly down at constant currency. Operational performance remains
as expected with pricing and increased efficiencies fully
offsetting inflationary pressures, albeit we now would expect an
increase in the adverse transactional FX impact from recent
currency movements of up to 30bps.
Adjusted operating margin in FY22 is now expected to be slightly
above last year at actual exchange rates (FY21: 22.8%), given
recent favourable translational FX movements(3) .
Presentation for analysts and shareholders:
A short presentation followed by Q&A will be hosted by
Tobias Hestler, Chief Financial Officer and Sonya Ghobrial, Head of
Investor Relations at 9am GMT (10am CET) on 10 November 2022, which
can be accessed at www.haleon.com/investors.
For analysts and shareholders wishing to ask questions on the
Q&A call, please use the dial-in details below which will have
a Q&A facility:
UK: 0800 640 6441
US: +1 855 9796 654
All other: +44 203 936 2999
Passcode: 724755
An archived webcast of the Q&A call will be available later
on the day of the results and can be accessed at
www.haleon.com/en/investors/
Financial reporting calendar
FY 2022 Results March 2023
Q1 2023 Trading Statement May 2023
HY 2023 Results August 2023
Enquiries
Investors Media
Sonya Ghobrial +44 7392 784784 Zoe Bird +44 7736 746167
Rakesh Patel +44 7552 484646 Nidaa Lone +44 7841 400607
Emma White +44 7823 523562 Gemma Thomas +44 7721 376006
Email: investor-relations@haleon.com Email: corporate.media@haleon.com
About Haleon plc
Haleon (LSE / NYSE: HLN) is a global leader in consumer health,
with brands trusted by millions of consumers globally. The Group
employs over 22,000 people across 170 markets, who are united by
Haleon's purpose - to deliver better everyday health with humanity.
Haleon's product portfolio spans five major categories - Oral
Health, Vitamins, Minerals and Supplements (VMS), Pain Relief,
Respiratory Health, Digestive Health and Other. Its long-standing
brands - such as Advil, Sensodyne, Panadol, Voltaren, Theraflu,
Otrivin, Polident, parodontax and Centrum - are built on trusted
science, innovation and deep human understanding. For more
information please visit www.haleon.com
Operational review
Revenue by product category for the three months ended 30
September 2022:
Revenue (GBPm) Revenue change
(%)
----------------- ----------------------------------
Constant Organic
2022 2021 Reported currency(1) (1)
-------- ------- --------- ------------- --------
Oral Health 787 701 12.3 % 7.0 % 6.7 %
VMS 437 404 8.2 % (1.1 %) (1.4%)
Pain Relief 648 581 11.5 % 4.2 % 3.6 %
Respiratory Health 457 326 40.2 % 30.5 % 30.2 %
Digestive Health and
Other 563 478 17.8 % 7.1 % 8.4 %
Group revenue 2,892 2,490 16.1 % 8.1 % 8.1 %
1. Definitions and calculations of non-IFRS measures can be
found on pages 8-12.
Key category performance was as follows:
Oral Health
-- Sensodyne delivered mid-single digit revenue growth
reflecting underlying brand strength, continued innovation and
strong growth across key markets including Middle East and Africa.
China was up mid-single digit with disruption from COVID-19
lockdowns persisting but with reduced impact. US was down
low-single digit lapping the advance purchasing ahead of pricing in
Q4 2021.
-- Parodontax saw low-double digit revenue growth across key
markets such as the US and UK as well as over thirty-percent growth
in Middle East and Africa.
-- Denture Care revenue was up mid-teens percent helped by a
favourable prior year comparative driven by market conditions and
competitive pressure.
VMS
-- Although Centrum and Emergen-C revenues were in line with
prior quarters, growth was down mid-single and low-teens percent
respectively. This was as expected given last year's particularly
strong comparatives as a result of successful innovations and
improved capacity in the US, that allowed restocking for
retailers.
-- Caltrate sales increased high-single digit driven by China.
Pain Relief
-- Panadol revenue was up low-single digit with good growth in
Australia, India and Central & Eastern Europe offset by a
decline in South East Asia and Middle East & Africa.
-- Advil growth was up high-single digit benefitting from recent
price increases combined with continued market activation.
-- Voltaren growth was stable with double digit growth in China
and US offset by a decline in Germany.
Respiratory Health
-- Strong increased consumption of both cold and flu and nasal
decongestants due to continued elevated incidences of cold and flu
and COVID-19 persisting through Q3 as well as advanced purchasing
ahead of Q4. Cold and flu sales added 3% to group revenue growth in
the third quarter.
-- Otrivin and Theraflu both grew over 35%. Theraflu growth
primarily driven by US and Otrivin up over 80% in Middle East &
Africa.
-- Flonase saw mid-teens percent growth; up over 20% in US.
Digestive Health and Other
-- Digestive Health which is around half of this reported
product category saw mid-single digit growth supported by
high-single digit growth in Tums and Eno.
-- Smokers health and skin health brands grew high-single digit
underpinned by the addition of a new distribution channel for
Chapstick .
Geographical segment performance
Revenue by geographical segment for the three months ended 30
September:
Revenue (GBPm) Revenue change (%)
----------------- -------------------------------------------------------------
Constant
2022 2021 Reported currency(1) Organic(1) Price(1) Vol/Mix(1)
-------- ------- --------- ------------- ----------- --------- -----------
(1.3)
North America 1,101 929 18.5 % 2.9 % 2.9 % 4.2% %
12.2
EMEA and LatAm 1,136 1,004 13.1 % 11.9 % % 8.3% 3.9 %
APAC 655 557 17.6 % 10.1 % 9.0 % 2.7% 6.3%
-------- ------- --------- ------------- ----------- --------- -----------
Group 2,892 2,490 16.1% 8.1 % 8.1 % 5.5 % 2.6 %
1. Price and Volume/Mix are components of Organic Revenue
Growth. Definitions and calculations of non-IFRS measures can be
found on pages 8-12.
North America
-- Organic revenue growth in North America was +2.9%, with +4.2%
price and -1.3% volume/mix. The volume/mix decline was driven by a
tough prior year comparator due to US advance purchasing ahead of
the Q4 price increases in 2021 which added approximately 2% to
growth in Q3 2021 as well as prior year retailer inventory
restocking.
-- Oral Health - revenue down low-single digit, with Sensodyne
down mid single digit lapping the advance purchasing ahead of the
pricing in Q4 2021. Good growth in Denture Care and parodontax.
-- VMS - revenue down high-teens percent due to Centrum and
Emergen-C cycling prior year comparators of over 45% and 55%
respectively as a result of successful innovations and improved
capacity in the US that allowed restocking for retailers.
Underlying consumption remained broadly steady throughout the
year.
-- Pain Relief - high-single digit revenue growth underpinned by
Advil benefitting from recent price increases combined with
continued market activation. Voltaren revenue grew mid-teens
percent.
-- Respiratory Health - revenue up mid-twenties percent h elped
by sustained incidences of cold and flu and COVID-19 along with
favourable retailer stocking patterns, pricing and successful
market activation. Theraflu, Flonase and Robitussin revenue growth
were particularly strong due to successful rollout of new
innovations including Theraflu Max Strength and Flonase Headache
& Allergy Relief.
-- Digestive Health and Other - revenue up mid-single digit
primarily due to adding a new value distribution channel for
Chapstick, strong Tums performance, pricing, and also the benefit
from favourable comparatives last year given supply
constraints.
Europe, Middle East & Africa (EMEA) and Latin America
(LatAm)
-- Organic revenue growth in EMEA and LatAm was 12.2%, with 8.3% price and 3.9% volume/mix.
-- Oral Health - low-double digit revenue growth underpinned by
a double digit increase in Sensodyne and strong growth in both
parodontax and Denture Care.
-- VMS - low-double digit revenue growth supported by high teen
percent growth in Centrum underpinned by continued successful
activation in new markets.
-- Pain Relief - low-single digit revenue decline largely
reflecting a mid-single digit decline in Voltaren. Panadol was down
low-single digit due to a challenging prior year comparator as well
as in quarter shipment phasing.
-- Respiratory Health - revenue up over 35% due to a strong
performance by Otrivin and Theraflu driven by sustained incidences
of cold and flu and COVID-19, as well as increased retailer
stocking ahead of the cold and flu season.
-- Digestive Health and Other - revenue up double digit with good growth across all categories.
-- Continuing the momentum from H1, over 40% revenue growth in
Latin America as well as over 20% growth in Middle East &
Africa underpinned Q3 revenue. Additionally, Europe revenue
increased high single digit, underpinned by high single digit
revenue growth in Northern and Southern Europe as well as
high-teens percent revenue growth in Central and Eastern Europe,
partly offset by a decline in Germany.
Asia-Pacific
-- Organic revenue growth in Asia-Pacific was 9.0%, with 2.7% price and 6.3% volume/mix.
-- Oral Health - low-double digit revenue growth in Oral Health
underpinned by double digit growth in parodontax and Denture Care
and high-single digit growth in Sensodyne.
-- VMS - mid-single digit revenue growth primarily driven by
Caltrate and continued successful consumer education campaigns as
well as premiumisation of the portfolio, partly offset by a
low-single digit decline in Centrum.
-- Pain Relief - revenue grew low double digit reflecting strong
Voltaren growth in China benefitting from distribution expansion,
pricing and digital activation. Over 50% growth in local strategic
brands driven by post lockdown resupply to trade.
-- Respiratory Health -revenue up high-teens percent with
consumer advance purchasing ahead of the cold and flu season.
-- Digestive Health and Other - revenue up mid-single digit.
Skin health up high-single digit offset by weakness in Digestive
and Smokers health.
-- Performance in South-East Asia, Taiwan and India were
particularly strong in Q3. China grew high single digit with
COVID-19 lockdowns and disruption persisting but to a lesser extent
than Q2.
Operating profit and margin
Operating profit increased by 12.2% to GBP569m (Q3 2021:
GBP507m), and operating profit margin was down (70)bps to 19.7% (Q3
2021: 20.4%). Adjusted operating profit increased by 14.9% at
actual exchange rates to GBP725m (Q3 2021: GBP631m), an increase of
4.1% at constant currency.
Adjusted operating margin of 25.1% declined 90 basis points at
constant currency or 20 basis points at actual exchange rates. The
positive benefit from pricing and volume/mix leverage from revenue
combined with efficiencies fully offset commodity costs and
inflationary pressures. The decline in margin was driven by
standalone costs as expected and adverse transactional FX largely
related to the Swiss Franc and US Dollar strength.
Across the regions, Asia Pacific adjusted operating margin
declined driven by higher commodity costs, inflationary cost
pressures, increased freight and new standalone costs only partly
offset by positive leverage from revenue growth. EMEA and LatAm
adjusted operating margin increased helped by broad-based sales
growth and cost efficiencies only partly offset by standalone costs
and incremental freight and commodities inflation. North America
adjusted operating margin declined, as a result of inflationary
impacts on commodity and freight prices as well as standalone
costs.
Overall, cold and flu sell in was indicative of a typical Q3
with associated lower A&P.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHSED 30 SEPTEMBER (unaudited)
2022 2021
GBPm GBPm
------------------------------------- -------- -------
Revenue 2,892 2,490
Cost of sales (1,073) (933)
--------------------------------------- -------- -------
Gross profit 1,819 1,557
Selling, general and administration (1,196) (997)
Research and development (82) (74)
Other operating income 28 21
Operating profit 569 507
Finance income 7 4
Finance expense (81) (4)
--------------------------------------- -------- -------
Net finance costs (74) -
Profit before tax 495 507
Income tax (130) (125)
Profit after tax for the period 365 382
--------------------------------------- -------- -------
Profit for the period attributable
to:
Shareholders of the Group 345 371
Non-controlling interests 20 11
--------------------------------------- -------- -------
Appendix I
Cautionary note regarding forward-looking statements
This document contains certain statements that are, or may be
deemed to be, "forward-looking statements" (including for purposes
of the safe harbor provisions for forward-looking statements
contained in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934). Forward-looking
statements give Haleon's current expectations and projections about
future events, including strategic initiatives and future financial
condition and performance, and so Haleon's actual results may
differ materially from what is expressed or implied by such
forward-looking statements. Forward-looking statements sometimes
use words such as "expects", "anticipates", "believes", "targets",
"plans" "intends", "aims", "projects", "indicates", "may", "might",
"will", "should", "potential", "could" and words of similar meaning
(or the negative thereof). All statements, other than statements of
historical facts, included in this presentation are forward-looking
statements. Such forward-looking statements include, but are not
limited to, statements relating to future actions, prospective
products or product approvals, future performance or results of
current and anticipated products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, dividend
payments and financial results.
Any forward-looking statements made by or on behalf of Haleon
speak only as of the date they are made and are based upon the
knowledge and information available to Haleon on the date of this
document. These forward-looking statements and views may be based
on a number of assumptions and, by their nature, involve known and
unknown risks, uncertainties and other factors because they relate
to events and depend on circumstances that may or may not occur in
the future and/or are beyond Haleon's control or precise estimate.
Such risks, uncertainties and other factors that could cause
Haleon's actual results, performance or achievements to differ
materially from those in the forward-looking statements include,
but are not limited to, those discussed under "Risk Factors" on
pages 17 to 45 of Haleon's prospectus and under "Risk Factors" in
Haleon's Registration Statement on Form 20-F. Forward-looking
statements should, therefore, be construed in light of such risk
factors and undue reliance should not be placed on forward-looking
statements.
Subject to our obligations under English and U.S. law in
relation to disclosure and ongoing information (including under the
Market Abuse Regulations, the UK Listing Rules and the Disclosure
and Transparency Rules of the Financial Conduct Authority ("FCA")),
we undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. You should, however, consult any
additional disclosures that Haleon may make in any documents which
it publishes and/or files with the SEC and take note of these
disclosures, wherever you are located.
No statement in this document is or is intended to be a profit
forecast or profit estimate.
Use of non-IFRS measures (unaudited)
We use certain alternative performance measures to make
financial, operating, and planning decisions and to evaluate and
report performance. We believe these measures provide useful
information to investors and as such, where clearly identified, we
have included certain alternative performance measures in this
document to allow investors to better analyse our business
performance and allow greater comparability. To do so, we have
excluded items affecting the comparability of period-over-period
financial performance. Adjusted Results and other non-IFRS measures
may be considered in addition to, but not as a substitute for or
superior to, information presented in accordance with IFRS.
Adjusted results (unaudited)
Adjusted Results comprise Adjusted gross profit, Adjusted gross
profit margin, Adjusted operating profit, Adjusted operating profit
margin, Adjusted profit before taxation, Adjusted profit after
taxation, Adjusted profit attributable to shareholders, Adjusted
basic earnings per share, Adjusted diluted earnings per share,
Adjusted cost of sales, Adjusted Selling, General and
Administration ("SG&A"), Adjusted Research and Development
("R&D"), Adjusted other operating income, Adjusted net finance
costs, Adjusted taxation charge, and Adjusted profit attributable
to non-controlling interests. Adjusted Results exclude Net
amortisation and impairment of intangible assets, Restructuring
costs, Transaction-related costs, Separation and Admission costs,
and Disposals and other costs, in each case net of the impact of
taxes (where applicable) (collectively, the "Adjusting Items",
which are defined later in this section).
Management believes that Adjusted Results, when considered
together with the Group's operating results as reported under IFRS,
provide investors, analysts and other stakeholders with helpful
complementary information to understand the financial performance
and position of the Group from period to period and allow the
Group's performance to be more easily comparable.
The following tables set out a reconciliation between IFRS and
Adjusted Results for the three-month period ended 30 September 2022
and 30 September 2021:
GBPm IFRS Net amortisation Restructuring Separation Disposals Adjusted
Three months results and impairment costs (2) and and results
ended 30 September of intangible admission others
2022 assets (1) costs (4)
(3)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Revenue 2,892 - - - - 2,892
Cost of sales (1,073) 10 2 - 3 (1,058)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit 1,819 10 2 - 3 1,834
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit
margin % 62.9% 63.4%
Selling, general
and admin (1,196) - 3 142 24 (1,027)
Research and development (82) - (2) - - (84)
Other operating
income 28 - 1 - (27) 2
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Operating profit 569 10 4 142 - 725
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
GBPm IFRS Net amortisation Restructuring Separation Disposals Adjusted
Three months results and impairment costs (2) and and results
ended 30 September of intangible admission others
2021 assets (1) costs (4)
(3)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Revenue 2,490 - - - - 2,490
Cost of sales (933) 15 11 - - (907)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit 1,557 15 11 - - 1,583
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit
margin % 62.5% 63.6%
Selling, general
and admin (997) - 17 73 10 (897)
Research and development (74) 9 10 - - (55)
Other operating
income 21 - - - (21) -
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Operating profit 507 24 38 73 (11) 631
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
1. Net amortisation and impairment of intangible assets:
Includes impairment of intangible assets and amortisation of
intangible assets excluding computer software. Amortisation and
impairment of intangible assets arising from intangible assets
acquired in business combinations are adjusted to reflect the
performance of the business excluding the effect of acquisition
accounting.
2. Restructuring costs: Includes amounts related to business transformation activities.
3. Separation and Admission costs: Includes amounts incurred in
relation to and in connection with the separation and listing of
the Group as a standalone business.
4. Disposals and others: Includes gains and losses on disposals
of assets and businesses and other items.
Constant currency (unaudited)
The Group's presentation currency is Pounds Sterling, but the
Group's significant international operations give rise to
fluctuations in foreign exchange rates. To neutralise foreign
exchange impact and to better illustrate the change in results from
one year to the next, the Group discusses its results both on an
"as reported basis" or using "actual exchange rates" ("AER") (local
currency results translated into Pounds Sterling at the prevailing
foreign exchange rate) and using constant currency exchange rates
("CER"). To calculate results on a constant currency basis, the
Group restates current year comparatives translating the income
statements of consolidated entities from their non-Sterling
functional currencies to Pounds Sterling using prior year exchange
rates. The impact of exchange rate movements related to
transactions entered into by consolidated entities in currencies
other than their functional currency is not adjusted for when
calculating results on a constant currency basis. The currencies
which most influence the constant currency results of the Group and
their exchange rates are shown in the below table.
Nine months
to 30 September
2022 2021
-------- --------
Average rates:
US$/GBP . . . . . . . .
. . . . . . . . . . . .
. 1.26 1.38
Euro/GBP . . . . . . .
. . . . . . . . . . . .
. . 1.18 1.15
Swiss Franc/GBP . . . .
. . . . . . . . . . . 1.19 1.26
CNY/GBP . . . . . . . .
. . . . . . . . . . . .
. 8.27 8.94
Organic revenue growth (unaudited)
Organic revenue growth represents the change in organic revenue
at CER from one accounting period to the next. Organic revenue
represents revenue, as determined under IFRS but excluding the
impact of acquisitions, divestments and closures of brands or
businesses, revenue attributable to manufacturing service
agreements ("MSAs") relating to divestments and the closure of
sites or brands, and the impact of currency exchange movements.
Revenue attributable to MSAs relating to divestments and
production site closures has been removed from organic revenue
because these agreements are transitionary and, with respect to
production site closures, include a ramp-down period in which
revenue attributable to MSAs gradually reduces several months
before the production site closes. This revenue reduces the
comparability of prior and current year revenue and is therefore
adjusted for in the calculation of organic revenue growth.
Organic revenue is calculated period-to-period as follows, with
prior year exchange rates to restate current year comparatives:
- current year organic revenue excludes revenue from brands or
businesses acquired in the current accounting period;
- current year organic revenue excludes revenue attributable to
brands or businesses acquired in the prior year from 1 January of
the comparative period to the date of completion of the
acquisition;
- prior year organic revenue excludes revenue in respect of
brands or businesses divested or closed in the current accounting
period from 12 months prior to the completion of the disposal or
closure until the end of the prior accounting period;
- prior year organic revenue excludes revenue in respect of
brands or businesses divested or closed in the previous accounting
period in full; and
- prior year and current year organic revenue excludes revenue
attributable to MSAs relating to divestments and production site
closures taking place in either the current or prior year, each an
"Organic Adjustment".
To calculate organic revenue growth for the period, organic
revenue for the prior year is subtracted from organic revenue in
the current year and divided by organic revenue in the prior
year.
The Group believes that discussing organic revenue growth
contributes to the understanding of the Group's performance and
trends because it allows for a year-on-year comparison of revenue
in a meaningful and consistent manner.
Organic revenue growth by individual region is further discussed
by price and volume/mix changes, which are defined as follows:
- Price : Defined as the variation in revenue attributable to
changes in prices during the period. Price excludes the impact to
organic revenue growth due to (i) the volume of products sold
during the period and (ii) the composition of products sold during
the period. Price is calculated as current year net price minus
prior year net price multiplied by current year volume. Net price
is the sales price, after deduction of any trade, cash or volume
discounts that can be reliably estimated at point of sale. Value
added tax and other sales taxes are excluded from the net
price.
- Volume/Mix : Defined as the variation in revenue attributable
to changes in volumes and composition of products sold in the
period.
The following tables reconcile reported revenue growth for the
three-month period ended 30 September 2022 and 2021 to constant
currency and organic revenue for the same period by geographical
segment and product category:
Geographical Segments
-----------------------------------------
Three months ended 30 September North America EMEA and APAC Total
2022 vs 2021 (%) LatAm
--------------------------------- -------------- --------- ------ ------
Revenue Growth 18.5 13.1 17.6 16.1
Organic Adjustments 0.1 0.6 (1.3) -
of which:
Effect of Acquisitions - - (1.5) (0.3)
Effect of Disposals - 0.2 - 0.1
Effect of MSAs 0.1 0.4 0.2 0.2
Effect of Exchange Rates (15.7) (1.5) (7.3) (8.0)
Organic Revenue Growth 2.9 12.2 9.0 8.1
--------------------------------- -------------- --------- ------ ------
Price 4.2 8.3 2.7 5.5
Volume/Mix (1.3) 3.9 6.3 2.6
--------------------------------- -------------- --------- ------ ------
Product Categories
------------------------------------------------------------------------
Oral Health VMS Pain Relief Respiratory Digestive Total
Three months ended Health Health and
30 September Others
2022 vs 2021 (%)
------------------------- ------------ ------ ------------ ------------ ------------ ------
Revenue Growth 12.3 8.2 11.5 40.2 17.8 16.1
Organic Adjustments (0.2) (0.5) (0.5) (0.4) 1.4 -
of which:
Effect of Acquisitions (0.2) (0.5) (0.8) - (0.1) (0.3)
Effect of Disposals - - 0.3 (0.4) 0.2 0.1
Effect of MSAs - - - - 1.3 0.2
Effect of Exchange
Rates (5.4) (9.1) (7.4) (9.6) (10.8) (8.0)
Organic Revenue
Growth 6.7 (1.4) 3.6 30.2 8.4 8.1
------------------------- ------------ ------ ------------ ------------ ------------ ------
Net debt (unaudited)
Net debt at a period end is calculated as short-term borrowings
(including bank overdrafts and short-term lease liabilities),
long-term borrowings (including long-term lease liabilities), and
derivative financial liabilities less cash and cash equivalents and
derivative financial assets.
Net debt as at 30 September 2022 was GBP10,784m compared to
GBP10,707m on 18 July 2022 at demerger. This included an adverse
foreign exchange impact from the US Dollar and the GBP750m
repayment of the GBP1.5bn term loan.
Management analyses the key cash flow items driving the movement
in net debt to understand and assess cash performance and
utilisation in order to maximise the efficiency with which
resources are allocated. The analysis of cash movements in net debt
allows management to more clearly identify the level of cash
generated from operations that remains available for distribution
after servicing the Group's debt. Net debt is calculated as
follows:
As at 30 As at 30 June
September 2022
2022
----------- --------------
GBPm GBPm
-------------------------------------- ----------- --------------
Cash and cash equivalents and liquid
investments 1,092 1,334
Short-term borrowings (684) (332)
Long-term borrowings (11,353) (9,918)
Derivative financial assets 321 146
Derivative financial liabilities (160) (66)
Net Debt (10,784) (8,836)
--------------------------------------- ----------- --------------
Appendix II - Nine months ended 30 September 2022
The information included in this Appendix II is being made
public this quarter to satisfy Haleon's obligations under the
Registration Rights Agreement entered into on 1 June 2022 among
Haleon, Pfizer, GSK and certain Scottish limited partnerships
controlled by GSK. The Registration Rights Agreement will terminate
once each of (i) Pfizer and (ii) GSK and the Scottish limited
partnerships, own one percent or less of Haleon's outstanding
ordinary shares.
Operational review
Revenue by product category for the nine months ended 30
September 2022:
Revenue (GBPm) Revenue change
(%)
----------------- ----------------------------------
Constant Organic
2022 2021 Reported currency(1) (1)
-------- ------- --------- ------------- --------
Oral Health 2,225 2,061 8.0 % 5.9 % 5.6 %
VMS 1,253 1,106 13.3 % 7.1 % 7.0 %
Pain Relief 1,896 1,674 13.3 % 9.1 % 8.9 %
Respiratory Health 1,140 781 46.0 % 39.9 % 39.8 %
Digestive Health and
Other 1,566 1,443 8.5 % 2.6 % 5.1 %
10.3
Group revenue 8,080 7,065 14.4 % 9.9 % %
1. Definitions and calculations of non-IFRS measures can be
found on pages 8-12.
Oral Health
-- Sensodyne delivered mid-single digit revenue growth
reflecting underlying brand strength, continued innovation and
strong growth across key markets including Asia Pacific.
-- Parodontax saw high-single digit revenue growth with double
digit growth across Asia Pacific and North America and mid-single
digit growth in EMEA and LatAm.
-- Denture Care revenue was up high-single digit as a result of strong growth in EMEA and LatAm.
VMS
-- Centrum revenue up high-single digit and Emergen-C down
low-single digit. Both brands grew strongly in H1, offset by
declines in Q3 due to challenging prior year comparators.
-- Caltrate revenue increased high-single digit.
Pain Relief
-- Panadol revenue up mid-teens percent reflecting a successful
post COVID-19 vaccination campaign and activation to meet increased
demand during the Omicron wave in H1 offset slightly by low-single
digit growth in Q3.
-- Advil growth up mid-teens percent benefitting from retailer
stocking patterns, recent price increases combined with continued
market activation and retailer stocking patterns in the US.
-- Low-single digit growth from Voltaren primarily driven by
strength in China and US, partially offset by a decline in
Germany.
Respiratory Health
-- A strong H1 cold and flu season, well ahead of the
historically low season in 2021 was supported by continued
incidences of COVID-19 and cold and flu during Q3 underpinning the
results across all regions. Cold and flu sales added 4% to group
revenue growth in the first nine months.
Digestive Health and Other
-- Digestive Health which is around half of this reported
product category saw low single digit growth.
-- Smokers health grew low-single digit and Skin health grew mid-single digit.
Geographical segment performance
Revenue by geographical segment for the nine months ended 30
September:
Revenue (GBPm) Revenue change (%)
----------------- -------------------------------------------------------------
Constant
2022 2021 Reported currency(1) Organic(1) Price(1) Vol/Mix(1)
-------- ------- --------- ------------- ----------- --------- -----------
North America 2,974 2,524 17.8 % 7.4 % 7.7 % 2.9 % 4.8 %
EMEA and LatAm 3,205 2,907 10.3 % 11.0% 12.1% 5.6 % 6.5 %
11.2
APAC 1,901 1,634 16.3 % 12.0 % % 2.9 % 8.3 %
-------- ------- --------- ------------- ----------- --------- -----------
10.3
Group 8,080 7,065 14.4 % 9.9 % % 4.0 % 6.3 %
1. Price and Volume/Mix are components of Organic Revenue
Growth. Definitions and calculations of non-IFRS measures can be
found on pages 8-12.
North America
-- Organic revenue growth in North America was +7.7%, with +2.9% price and +4.8% volume/mix.
-- Oral Health - revenue up low-single digit, with Sensodyne
stable as was adversely impacted by a change in retailer inventory
levels as well as cycling the advance purchasing ahead of pricing
in Q4 2021. Good growth in Denture Care and parodontax.
-- VMS - revenue stable due to strong Centrum and Emergen-C
growth in H1 offset by a decline in Q3 and the challenging prior
year comparators of over 45% and 55% respectively. Underlying
consumption remained broadly steady throughout the year.
-- Pain Relief - double digit revenue growth driven by Advil.
-- Respiratory Health - revenue up nearly 40% helped by a strong
H1 season and sustained incidences of cold and flu and COVID-19,
successful market activation, pricing and favourable retailer
stocking patterns.
-- Digestive Health and Other - revenue up low-single digit with
strong growth in Chapstick offset by weakness in Smokers Health
during H1.
Europe, Middle East & Africa (EMEA) and Latin America
(LatAm)
-- Organic revenue growth in EMEA and LatAm was +12.1%, with +5.6% price and +6.5% volume/mix.
-- Oral Health - high-single digit revenue growth driven by
strong growth across the category , particularly Denture Care.
-- VMS - low-double digit revenue growth driven by double digit
growth in Centrum and local strategic brands.
-- Pain Relief - low-single digit revenue growth largely
reflecting high-single digit growth in Panadol, partially offset by
a mid-single digit decline in Voltaren.
-- Respiratory Health - revenue up mid 40% due to a strong H1
cold and flu season significantly ahead of 2019 levels which
continued into Q3 alongside increased retailer stocking ahead of
Q4.
-- Digestive Health and Other - revenue up double digit with good results in all categories.
-- Continuing the momentum from H1, over 40% revenue growth in
Latin America and over 20% growth in Middle East & Africa
underpinned the first 9 months revenue. Additionally, Europe
revenue grew high single digits with high-single digit revenue
growth in Northern and Southern Europe as well as high-teens
percent revenue growth in Central and Eastern Europe, partly offset
by a decline in Germany.
Asia-Pacific
-- Organic revenue growth in Asia-Pacific was +11.2%, with +2.9% price and +8.3% volume/mix.
-- Oral Health - low-double digit revenue growth in Oral Health
reflected by strong growth in India, partly offset by a mid-single
digit decline in China driven by COVID-19 related lockdowns.
-- VMS - high single digit revenue growth supported by
successful immunity campaigns in China by Centrum and Caltrate and
Centrum in Taiwan.
-- Pain Relief - revenue growth in the low twenties percent
benefitting from successful Panadol activation and execution in
markets including Australia, New Zealand, Malaysia and Taiwan
relating to COVID-19 and a successful vaccination campaign.
-- Respiratory Health - continued rebound in cold and flu season
resulted in revenue up mid twenties percent.
-- Digestive Health and Other - revenue stable due to weakness
in Skin health and Smokers health brands.
-- Performance in South-East Asia and Taiwan and India was
particularly strong in first nine months with revenue up high
twenties and high teen percent respectively. Revenue in China
increased high single digit despite a slow down in the second
quarter due to COVID-19 related lockdowns which started to ease in
the third quarter.
Operating profit and margin
Operating profit increased by 18.1% to GBP1,469m (9 months 2021:
GBP1,244m) and operating profit margin increased by 60bps to 18.2%
(9 months 2021: 17.6%). Adjusted operating profit increased by
18.7% at actual exchange rates to GBP1,916m (Q3 2021: GBP1,614m),
an increase of 11% at constant currency.
Adjusted operating margin of 23.7% increased 30 basis points at
constant exchange rates or 90 basis points at actual exchange
rates. The positive benefit from pricing and volume/mix leverage
from revenue combined with efficiencies more than offset higher
commodity costs, inflationary pressures and new standalone
costs.
Across the regions, Asia Pacific adjusted operating margin
declined driven by higher commodity costs, inflationary cost
pressures, increased freight and new standalone costs only partly
offset by positive leverage from revenue growth. EMEA and LatAm
adjusted operating margin was broadly flat and slightly positive
before foreign exchange movements. Standalone costs, incremental
freight and higher commodity costs offset the positive impact from
sales growth and delivery of synergies. North America saw an
increase in adjusted operating margin at both actual and constant
currency reflecting the benefit of broad based sales growth,
partially offset by standalone costs and incremental freight and
commodities inflation.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHSED 30 SEPTEMBER (unaudited)
2022 2021
GBPm GBPm
------------------------------------- -------- --------
Revenue 8,080 7,065
Cost of sales (3,050) (2,694)
--------------------------------------- -------- --------
Gross profit 5,030 4,371
Selling, general and administration (3,375) (2,975)
Research and development (218) (183)
Other operating income 32 31
Operating profit 1,469 1,244
Finance income 50 13
Finance expense (160) (14)
--------------------------------------- -------- --------
Net finance costs (110) (1)
Profit before tax 1,359 1,243
Income tax (450) (341)
Profit after tax for the period 909 902
--------------------------------------- -------- --------
Profit for the period attributable
to:
Shareholders of the Group 862 862
Non-controlling interests 47 40
--------------------------------------- -------- --------
Adjusted results for the nine months ended 30 September 2022 and
30 September 2021 (unaudited)
The following tables set out a reconciliation between IFRS and
Adjusted Results for the nine-month period ended 30 September 2022
and 30 September 2021:
GBPm IFRS Net amortisation Restructuring Separation Disposals Adjusted
Nine months ended results and impairment costs (1) and and results
30 September 2022 of intangible admission others
assets (1) costs (1)
(1)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Revenue 8,080 - - - - 8,080
Cost of sales (3,050) 50 10 - 2 (2,988)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit 5,030 50 10 - 2 5,092
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit
margin % 62.3% 63.0%
Selling, general
and admin (3,375) - 16 371 31 (2,957)
Research and development (218) - (3) - - (221)
Other operating
income 32 - 1 - (31) 2
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Operating profit 1,469 50 24 371 2 1,916
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
GBPm IFRS Net amortisation Restructuring Separation Disposals Adjusted
Nine months ended results and impairment costs (1) and and results
30 September 2021 of intangible admission others
assets (1) costs (1)
(1)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Revenue 7,065 - - - - 7,065
Cost of sales (2,694) 36 36 - - (2,622)
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit 4,371 36 36 - - 4,443
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Gross profit
margin % 61.9% 62.9%
Selling, general
and admin (2,975) - 71 178 63 (2,663)
Research and development (183) 9 8 - - (166)
Other operating
income 31 - - - (31) -
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
Operating profit 1,244 45 115 178 32 1,614
-------------------------- --------- ----------------- -------------- ----------- ---------- ---------
1. Description of the Adjusting Items can be found on page 9
Organic revenue growth for the nine months ended 30 September
2022 and 30 September 2021 (unaudited)
Geographical Segments
-----------------------------------------
Nine months ended 30 September North America EMEA and APAC Total
2022 vs 2021 (%) LatAm
-------------------------------- -------------- --------- ------ ------
Revenue Growth 17.8 10.3 16.3 14.4
Organic Adjustments 0.4 1.2 (0.9) 0.4
of which:
Effect of Acquisitions - - (1.0) (0.2)
Effect of Disposals 0.2 0.6 - 0.3
Effect of MSAs 0.2 0.6 0.1 0.3
Effect of Exchange Rates (10.5) 0.6 (4.2) (4.5)
Organic Revenue Growth 7.7 12.1 11.2 10.3
-------------------------------- -------------- --------- ------ ------
Price 2.9 5.6 2.9 4.0
Volume/Mix 4.8 6.5 8.3 6.3
-------------------------------- -------------- --------- ------ ------
Product Categories
------------------------------------------------------------------------
Oral Health VMS Pain Relief Respiratory Digestive Total
Nine months ended Health Health and
30 September Others
2022 vs 2021 (%)
------------------------- ------------ ------ ------------ ------------ ------------ ------
Revenue Growth 8.0 13.3 13.3 46.0 8.5 14.4
Organic Adjustments (0.3) (0.2) (0.2) - 2.7 0.4
of which:
Effect of Acquisitions (0.3) (0.3) (0.4) - - (0.2)
Effect of Disposals - 0.1 0.2 - 1.1 0.3
Effect of MSAs - - - - 1.6 0.3
Effect of Exchange
Rates (2.1) (6.1) (4.2) (6.2) (6.1) (4.5)
Organic Revenue
Growth 5.6 7.0 8.9 39.8 5.1 10.3
------------------------- ------------ ------ ------------ ------------ ------------ ------
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END
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November 10, 2022 02:00 ET (07:00 GMT)
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