Haleon (HLN) Q3 2024 TU earnings summary

Executive summary

• Q3 organic revenue grew 6.1% year-over-year, balanced between price (3.3%) and volume/mix (2.8%), with all regions and categories contributing to growth and share gains.

• Organic profit grew 7.4% in Q3, with year-to-date organic profit growth at 9.7%, supported by gross margin expansion and strong brand investment.

• Power Brands delivered 5.4% organic growth, led by Sensodyne, parodontax, Advil, and Theraflu.

• Strategic actions included increasing the China JV stake to 88%, divesting the NRT business outside the US, and returning over £1 billion to shareholders through dividends and buybacks.

• FY 2024 guidance reiterated: 4-6% organic revenue growth and high single-digit organic profit growth.

Financial highlights

• Q3 revenue: £2,780m (down 0.6% reported, up 6.1% organic); 9M revenue: £8,474m (down 0.7% reported, up 4.4% organic).

• Q3 adjusted operating profit: £639m (23.0% margin, up 30bps organically, down 160bps reported); 9M adjusted operating profit: £1,932m (22.8% margin, up 120bps organically).

• Q3 reported operating profit rose 20.7% to £705m, including a £121m gain from the NRT divestment.

• FX reduced reported revenue by 4.9% and had a 120bps adverse impact on margin.

• Q3 basic EPS: 13.2p (up from 11.4p in Q3 2023).

Outlook and guidance

• FY 2024 organic revenue growth expected at 4-6%; organic operating profit growth projected at high single digit.

• FX headwinds expected to impact FY 2024 revenue by ~4% and adjusted operating profit by 6-6.5%.

• Net interest expense for FY 2024 estimated at ~£320m; adjusted effective tax rate 24-25%.

• Medium-term guidance: annual organic revenue growth of 4-6%, profit growth ahead of revenue, net debt/EBITDA around 2.5x, and dividend growth at least in line with adjusted earnings.

• Net M&A expected to dilute FY 2024 revenue by ~1.5% and adjusted operating profit by ~4%.