FTSE 100-listed Haleon’s share price leapt in Thursday trading, as strong sales growth and debt reduction in 2023 prompted it to launch a share repurchase programme.
At 330.6p per share, the consumer giant was last dealing 5.3% higher on the day.
Haleon — whose product stable includes Sensodyne toothpaste, Centrum vitamins and Panadol painkillers — recorded organic growth “across all categories and regions” during 2023, it said.
Full-year revenues rose 4.1% to £11.3 billion, it said, or 8% on an organic basis. The top line was powered by a 7% increase in prices and a 1% volume improvement.
Organic sales of its so-called Power Brands rose 9.1%, with six of its nine labels growing revenues by double-digit percentages on this basis.
This in turn propelled operating profit to £2 billion, a 9.4% year-on-year jump. Pre-tax profits edged 0.6% higher to £1.6 billion.
Debt Falls, Buyback Launched
Haleon, which was spun off from pharmaceuticals giant GSKGSK
back in 2022, also announced solid progress with paying down its large debt pile.
The business recorded a free cash inflow of £1.6 billion in 2023, swinging from the £4 million outflow of a year earlier. As a consequence, net debt dropped to £8.5 billion from £9.9 billion in 2022.
The Footsie firm’s net-debt-to-adjusted EBITA ratio also reduced to 3 times from 3.6 times. Haleon aims to get this down to 2.5 times over the medium term.
This balance sheet improvement encouraged the company to pay a 6p per share total dividend for 2023. It has also announced plans to repurchase £500 million worth of shares.
“Continued Resilience”
After commenting that he is “very pleased with our results,” chief executive Brian McNamara said that Haleon displayed “continued resilience in challenging markets.”
He added that “we will continue to actively manage our portfolio… simplifying the business and increasing focus on our higher growth brands. Our productivity programme is progressing well and the savings from this will enable us to increase investment across the business, underpin operational leverage and support our evolution into a more agile organisation.”
Haleon sold its Lamisil fungal nail infection treatment in October. Last month it announced that its Chapstick brand will also be sold in the coming months.
For 2024, Haleon said it expects to deliver organic dales growth of between 4% and 6%. However, first-quarter growth is tipped to be “just below the lower end of this range” due to strong comparatives of a year earlier.
Haleon also expects “positive operating leverage to deliver organic operating profit growth ahead of organic revenue growth” in 2024.
“Well Positioned”
Hargreaves Lansdown analyst Derren Nathan described Haleon’s progress in 2020 as “impressive,” as volumes held up despite price increases.
He said that “sales growth compared to other recent results in the consumer health space suggests that the brand portfolio is well positioned and further optimisation is underway following the post year-end agreement to dispose of Chapstick.”
Britzman added that “the solid outlook combined with a reducing base of shares and falling interest expense should help to accelerate earnings per share growth in 2024.”
