Haleon plc Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Q3 Performance: Delivered 3.4% organic revenue growth, balanced by 1.8% price and 1.6% volume mix. Regional growth seen in EMEA, LatAm, Asia Pacific; North America outperformed the market with strength in Oral Health, Respiratory, and Digestive Health.
• Innovation Pipeline: Focus on innovation-led premiumization, with new market launches like Otrivin Nasal Mist and Sensodyne Pronamel. Closing incidence treatment gaps, e.g., Otrivin Nasal Mist has over 80% repurchase intent.
• Supply Chain Productivity: Reduced SKUs by 19% since 2024, improved equipment effectiveness, on track to deliver GBP 300 million in cost savings.
• Capital Allocation: Completed GBP 500 million share buybacks in Q3.

Segment Performance

• Oral Health: Grew 6.9% in Q3. Driven by innovation-led premiumization, with Sensodyne showing high single-digit growth (over 2/3 from volume and innovations) and parodontax achieving double-digit growth.
• VMS (Vitamins, Minerals, Supplements): Grew 4.9% in Q3. Centrum had double-digit growth, supported by premium innovations like Centrum Daily Kits in China and Korea, and strength in markets like the Philippines and Latin America.
• Pain Relief: Grew 3.7% in Q3. Panadol saw high single-digit growth, Voltaren improved with innovations, though offset by Advil's performance.
• Respiratory Health: Declined 1.8% in Q3, lapping elevated COVID cases from the prior year. Otrivin performed well with its Nasal Mist innovation.
• Digestive Health: Grew 2.1% in Q3. Tums, Benefiber, and ENO contributed, but offset by Nexium's decline.
• Therapeutic, Skin Health and Other: Declined 1.1% in Q3. Bactroban was strong in China, but Fenistil declined due to a weak mosquito season in Europe.

Guidance

• Organic Revenue Growth: Expect around 3.5% assuming a normal cold and flu season.
• North America: Second half growth expected to be broadly similar to the first half, with Q4 reflecting inventory actions at slower-growing channels.
• Asia Pacific: Anticipate acceleration in Q4 driven by stronger growth in China and India.
• EMEA and LatAm: Good performance with Europe driving market share gains, while closely monitoring the macro environment in LatAm.
• Operating Profit: Expect high single-digit organic operating profit growth.

Risks

• Macro Environment: Soft consumer backdrop in North America, macro pressures in LatAm, and variability in cold and flu season impact on guidance.
• Supply Chain: Short-term supply constraints resolved but need to monitor inventory and channel dynamics.
• Competition: Increased competitive pressure and promo in some markets affecting performance.

Q: About North America performance and Q4 guidance A: Dawn Allen discussed Q3 North America performance, noting the drag from Smokers' Health halved, and Q4 expected to reflect tough comparatives and inventory actions.

Q: On innovation pipeline A: Dawn Allen highlighted strong innovation across categories, e.g., Oral Health's Clinical range, Respiratory's Otrivin Nasal Mist, and VMS's Centrum innovations.

Q: On U.S. consumer and channel dynamics A: Discussed channel growth, with digital (e.g., Amazon) showing double-digit growth, and inventory management across different channels in the U.S.