Multi-billion FTSE newcomer Haleon shows there is life after GSK
The owner of popular health products such as Sensodyne and Panadol said this a.m. its revenues have jumped up by more than 13 per cent, to a record £5.2bn, during the first half of the year.
Healthcare giant Haleon further reported a double-digit hike in profits in the group’s first-ever set of company results since it spun off from pharma giant GSK.
Its revenues were boosted by particularly strong sales across respiratory health products during the cold and flu season, the group reported.
Operating profits grew by more than 22 per cent year-on-year, totalling £900m in the six months to June 30.
Market response
The market reacted positively to the results, pushing the shares over 1 per cent higher in early trading.
Discussing the results with City PM this morning, Steve Clayton, fund manager at HL Select, said that “we were expecting a decent update from Haleon, given their earlier trading statement back in June and they have duly delivered.”
Clayton stressed that “their portfolio is delivering good growth, backed up by buoyant free cash flow coming from a strong stable of consumer healthcare brands. The group’s earnings should be resilient in the face of economic weakness given they address real and recurring consumer needs.”
He pointed out that, with strong cash flows, Haleon should rapidly deleverage, which will help to drive financial returns higher, over and above the growth from the brands portfolio.
“Haleon should have excellent dividend growth potential over the longer term as a result,” Clayton added.
Macro-economic challenges
Haleon said that it is well positioned to navigate the current macro-economic challenges through the second half of the year, including rising inflation and the potential impact of higher prices on consumer buying behaviour.
This is despite cost inflation soaring to 40 per cent in the first half of the year, which the company managed to offset through forward buying and locking in the majority of its materials contracts for the year, it said.
However, the healthcare group said positive momentum continued at a slower rate into the third quarter as expected.
London float
Haleon, which employs around 22,000 staff around the world, split from GlaxoSmithKline in July and floated on the London Stock Exchange in Europe’s biggest listing for more than a decade.
Brian McNamara, Haleon’s chief executive, said: “I am incredibly proud that in the first half Haleon successfully completed its separation from GSK and became an independent listed company.
“I am also pleased that we delivered margin expansion in the first half despite significant cost inflation and absorption of standalone costs for the business.
“Whilst navigating the current macro-economic challenges and uncertainties, positive momentum in our business has continued into the second half.
“This combined with the strength of the business reinforces our confidence that we are well positioned to deliver on guidance this year and over the medium term.”