Sensodyne owner Haleon boosts profit expectations

Haleon has raised its annual sales guidance after higher prices helped offset inflationary pressures in the first half. 

The consumer healthcare company now expects organic revenues to expand by 7 to 8 per cent this year, up from previous guidance of ‘towards the upper end of the 4-6 per cent range’.

Haleon forecasts that full-year adjusted operating profits will increase by 9 to 11 per cent at constant currency levels.

For the six months ending June, the group reported turnover growth of 10.4 per cent to £5.74billion, with price hikes providing the overwhelming majority of gains.

Despite widespread cost-of-living pressures, consumers have prioritised spending on over-the-counter medicines and other healthcare goods.

Sales of respiratory health products like Theraflu and Contac jumped by over a fifth due to a sustained rebound in cold and flu cases, and the loosening of Covid-related restrictions in China.

Haleon also saw purchases of pain relief drug Fenbid more than double in China, while Panadol sales across the Europe, Middle East and Africa, and Latin American markets jumped after the launch of the ‘Release starts here’ campaign.

Meanwhile, growth in its oral health segment was driven by increasing orders for ‘power brands’ Sensodyne and Parodontax.

Higher prices combined with impressive results across all divisions and regions boosted Haleon’s profits by around a third to £687million.

It also helped compensate for escalating commodity and raw material costs, and the costs of splitting from pharmaceuticals giant GSK. 

The Surrey-headquartered group began trading on the London Stock Exchange as a  standalone business in July last year in the largest European listing in a decade.

Brian McNamara, chief executive of Haleon, said: ‘Whilst we continue to expect a challenging environment given further pressure on consumer spending and global geopolitical and macroeconomic uncertainties, we remain confident in the resilience of Haleon’s incredible portfolio of category-leading brands.

‘Our strategy is delivering, demonstrated with the strength of our results, and we remain confident that Haleon is well positioned for the rest of the year, as well as over the longer term.’

The FTSE 100 company’s results come a few weeks after it was reportedly planning to implement hundreds of redundancies as part of a strategy to save £300million over the coming three years.

Haleon has about 1,700 employees in the UK and 24,000 staff in total working across 170 countries. 

Adam Vettese, analyst at eToro, said: ‘In the past, consumer staple brands have tended to be good value-oriented defensive moves for investors in times of economic stress. 

‘Haleon fits this mould well but since it is a spin-off, we don’t have a good past measure from the firm to guide what will happen to its demand during a recession.’ 

Haleon shares were 0.9 per cent, or 3.1p, lower at 326.9p on Wednesday morning, just below its opening trading price in July 2022.