Haleon plc Q1 FY2026 earnings call

• Navigated a challenging market in Q1, achieving 2.2% organic revenue growth despite a weak cold and flu season impacting group growth by 130 basis points. - Oral health performed strongly with innovation-led premiumization and geographic expansion, with Sensodyne and Parodontax driving success. - VMS showed an improving trend at 1.7% organic revenue growth, largely driven by Centrum. - Productivity initiatives continued to drive strong gross margin improvement. - In March, a 65 million pound investment in a new oral health facility in Shanghai was announced, set to open in early 2028. - Progressed with operating model changes to drive growth and agility. - In North America, growth initiatives are progressing, with team reorganization and a cross-category platform team established. - Emerging markets delivered 4.3% organic revenue growth, with Latin America facing challenges but programs in place to support growth from Q2 onwards.

Organic revenue growth was 2.2% in Q1. Oral health delivered 8.3% growth, contributing significantly. VMS saw 1.7% organic revenue growth. OTC had a mixed performance. Respiratory had a 3.4% organic revenue decline. Digestive health had a 0.4% organic revenue decline. Therapeutic skin health and other grew 3%. North America returned to 1% organic revenue growth, while emerging markets achieved 4.3% organic revenue growth.

Maintained the outlook for the year, expecting organic revenue growth to be between 3% and 5% for the full year. Anticipates improving growth momentum from North America's progress, increased investment in the e-com channel in China, particularly Douyin, and improvement in Latin America. Profitability plans are on track, with confidence in strong gross margin expansion supported by ongoing productivity initiatives, aiming for high single-digit operating growth.

• Macro-economic and consumer backdrop uncertainty, especially the impact of the current conflict and its potential effect on key markets' economies. - Continued weak performance in the cold and flu category affecting overall growth. - Potential changes in consumer spending patterns and their impact on the business. - Monitoring of supply chain costs due to the duration of the Middle East conflict and its potential impact on input costs.

Q: On 2026 guidance with increased macro uncertainty, key moving parts, savings, and confidence in meeting guidance.

A: Guidance remains unchanged, confident in North America's progress, leadership change in Brazil to address challenges, and productivity programs exceeding expectations.

Q: On North America category growth, reasons for negative growth and structural vs cyclical nature.

A: Cold and flu had a halo effect on other categories, considered cyclical, with confidence in outperforming the category.

Q: On Asia, including China, India, and Southeast Asia.

A: China had mid-single digit growth, India had double-digit growth, Southeast Asia is being monitored. Cold and flu impact split by region with significant drag in North America and Asia-Pacific.

Q: On smoker health and portfolio adjustment.

A: Strategy to stabilize smoker health brands with promotions and investment, and open to portfolio adjustments for strengthening the portfolio.

Q: On Asia's growth acceleration, Europe's situation, and Middle East impact.

A: Expect sequential growth improvement, Europe is pharmacy-driven with resilience, Middle East is 5% of the business with monitoring of impact.

Q: On cold and flu season impact and H2 growth rate.

A: Normal cold and flu season expected to improve volume growth in H2, Latin America's performance improvement is consumer-driven.

Q: On Middle East impact magnitude, pricing, and input costs.

A: Middle East softness is below teens, focused on adjusting pricing gaps, and well-positioned with productivity programs to handle input cost risks.