Haleon revenues slow amid currency headwinds

Haleon revenue growth slowed last year as foreign exchange headwinds and weaker demand for a popular dietary supplement dented momentum. 

The consumer healthcare giant, whose brands include painkillers Advil and Panadol, revealed turnover rose by 4.1 per cent to £11.3billion in 2023, compared to 13.8 per cent the previous year.

While the firm’s organic revenues increased by 8 per cent, it took a £416million hit from adverse currency movements, predominantly from sterling appreciating against emerging market currencies like the Argentine peso and Chinese renminbi.

Trading was further impacted by lower sales of Emergen-C, particularly across North America, which the company attributed to shrinking worries about the coronavirus.

But operating profits still increased by 9.4 per cent to £2billion, while net debt shrank by more than £1.3billion to £8.5billion. 

Haleon also announced a hike in its dividend payouts to 35 per cent of available cash, alongside plans for £500million in share buyback this year. 

Haleon shares jumped 7.15 per cent to 336.25p in early trading as the FTSE 100 group’s organic revenues expanded across all regions and categories.

Respiratory health products saw the largest percentage growth in turnover following a heavy cold and flu season and higher demand for Contac in China after the end of Covid-related lockdown restrictions.

Haleon also experienced much stronger orders for its oral health goods, such as denture cleanser Polident and toothpaste brands Sensodyne and Parodontax.

Brian McNamara, chief executive of Haleon, said he was ‘very pleased’ with the results, although he warned that the firm expects ‘the operating environment to remain challenging.’

For the current year, the group expects organic revenue to rise by an additional 4 to 6 per cent, with sales partly diluted by the disposals of Chapstick and Lamisil.

Haleon sold Lamisil, an athlete’s foot treatment brand, for £235million last October to Karo Healthcare and agreed last month to offload the Chapstick lip balm business to private equity house Yellow Wood Partners for $430million.

The two deals formed part of Haleon’s efforts to simplify its portfolio and reduce net debts, which fell by over £2billion in the first 18 months following its demerger.

Haleon was spun off by GSK in July 2022, soon after the pharmaceutical firm turned down a £50billion takeover offer by Hellman’s Mayonnaise owner Unilever.

GSK retained a 12.9 per cent holding in Haleon after the spin-off, but has gradually whittled it down to just 4.2 per cent, having sold a stake for £978million last month.