29 February 2024
If you are covering Haleon’s 2023 results, please find comments below from Chris Beckett, head of equity research at Quilter Cheviot:
“Haleon, the leading consumer healthcare company, reported a strong finish to 2023, with organic revenue growth of 7% in the fourth quarter. The company demonstrated its ability to gain volume and pricing in a competitive market, outperforming its peer Reckitt, which posted a fall yesterday.
“Haleon’s growth was driven by a broad-based success across its core categories of respiratory, oral health and digestive, which benefited from increased consumer demand and innovation. The pain category was a bit disappointing, as it faced some headwinds from generic competition and regulatory changes.
“The company also improved its operating margin by 50 basis points, reflecting its focus on efficiency and productivity. Haleon continued to deleverage its balance sheet enabling a return of cash to shareholders through the announcement today of a £500m share buyback program.
“Haleon provided a guidance of 4-6% organic revenue growth for 2024, which was in line with expectations. The company expects a slower start to the year, due to the weak US cold and flu season, which was already anticipated by the market. The company trades at a reasonable valuation of 18 times earnings, in an attractive and resilient category of consumer healthcare.
“Haleon’s stock performance has been hampered by the overhang of Glaxo and Pfizer, which still own a combined 36% stake in the company. It would be nice to see them further reduce their holdings and increase the free float of Haleon, which would unlock more value for the shareholders.”
