2 March 2023
2022 Full year results
Twelve months ended 31 December 2022 (unaudited)
| Strong growth with a healthy balance of price and positive volume/mix | |
| â— | FY Revenue +13.8% to £10,858m, organic growth +9.0% with 4.3% price and 4.7% volume/mix |
| â— | Positive Power Brand performance across the portfolio, +10.1% organic growth |
| â— | 2/3 of our business gained or maintained market share1 in the 12 months ended 31 December 2022 |
| Pricing and efficiencies offsetting inflationary pressures | |
| â— | FY Reported operating profit increased 11.4% to £1,825m |
| â— | FY Adjusted operating profit increased 13.8% to £2,472m, up 5.9% constant currency |
| â— | FY Adjusted operating profit margin 22.8%, flat year on year |
| Continued high cash generation | |
| â— | FY net cash flow from operating activities was £2,063m, which included £435m related to the net cash outflow from separation, restructuring and disposals; FY 2022 Free cash flow of £1,579m |
| â— | Net debt at 31 December 2022 was £9,868m, with 3.6x net debt/adjusted EBITDA |
| â— | Inaugural final dividend proposed of 2.4p per share in respect of trading since demerger on 18 July 2022 |
| Positive outlook for 20232, settlement on majority of PPI cases | |
| â— | FY2023 organic revenue growth expected to be 4-6% |
| â— | FY2023 adjusted operating profit margin broadly flat after adverse transactional FX of c. 40bps |
| â— | Settlement reached to resolve the vast majority of PPI cases (Nexium24HR and Prevacid24HR) |
| â— | Positioned well to deliver on medium term guidance |
Brian McNamara, Chief Executive Officer, Haleon said:
“2022 was an extraordinary year for Haleon, having successfully demerged from GSK to become the first listed company 100% focused on consumer health. All the result of significant work and commitment from our colleagues around the world, and I would like to thank them for their tireless efforts and achievements.
In our first FY results, we delivered a strong performance whilst navigating a highly volatile environment. Our organic revenue growth of 9.0% was well balanced between volume and price, with two thirds of the business gaining or holding share. This performance reflected the quality of our portfolio of category leading brands, successful innovation, and excellent execution in market.
Our agility across the business resulted in adjusted operating profit growth of 5.9% constant currency despite significant inflation, standalone costs and adverse transactional FX. Strong free cash flow generation of £1.6bn enabled us to de-lever and provides us with increased confidence in reducing debt faster than originally expected.
As a standalone company we also further developed our Responsible Business agenda, particularly on health inclusivity and made progress delivering on our environmental ambitions.”
| Adjusted results 3 | Reported results | ||||
| Twelve months ended 31 December | 2022 | vs 2021 | 2022 | vs 2021 | |
| Organic revenue growth | 9.0% | Revenue | £10,858m | 13.8% | |
| Adjusted operating profit | £2,472m | 5.9%4 | Operating profit | £1,825m | 11.4% |
| Adjusted operating profit margin | 22.8% | (60)bps,4 | Operating profit margin | 16.8% | (40) bps |
| Adjusted diluted earnings per share | 18.4p | 2.8% | Diluted earnings per share | 11.5p | (23.8)% |
| Free cash flow | £1,579m | £406m | Net cash flow from operating activities | £2,063m | £707m |
1. Market share statements throughout this report are estimates based on the Group’s analysis of third party market data of revenue for 2022
including IQVIA, IRI and Nielsen data. Represents % of brand-market combinations gaining or maintaining share (this analysis covers > 85% of
Haleon’s total revenue).
2. The commentary in this announcement contain forward-looking statements and should be read in conjunction with the cautionary note on page 23.
3. Organic revenue growth, Adjusted operating profit, Adjusted operating profit margin, Adjusted diluted earnings per share and Free cash flow are
non-IFRS measures; definitions and calculations of non-IFRS measures can be found on pages 24 to 31.
4. Change at constant currency.
Outlook
| For FY 2023 the Company expects: | ||
| â— | Organic revenue growth of 4-6% | |
| â— | Adjusted operating profit margin broadly flat after absorbing c.40 bps adverse transactional foreign exchange impact based on current market rates1 | |
| â— | Net interest expense of c. £350m | |
| â— | Adjusted effective tax rate of 23-24% |
1. As at 10 February 2023
Haleon’s evolution into an agile Consumer Health organisation
As a standalone company we are now taking advantage of opportunities to evolve at speed across productivity, growth and portfolio.
| â— | Increasing agility and productivity across the business: We have identified further opportunities to optimise existing processes and structures to become more agile. This will result in annualised gross cost savings of c. £300 million over the next 3 years, with the benefits largely in FY 2024 and FY 2025. We expect to incur c.£150m restructuring costs in both FY 2023 and FY 2024. |
| â— | Growth and portfolio: We have identified further opportunities to drive growth across our strong portfolio of brands and structural growth categories. We will invest behind these opportunities particularly in areas such as innovation and are targeting to grow A&P and R&D ahead of sales. Furthermore, we will be proactive in managing our portfolio and will remain rigorous and disciplined where there are opportunities for bolt-on acquisitions and divestment. |
Taken together, these initiatives give us the capacity to invest and fuel our confidence in delivering 4-6% organic top line growth whilst delivering on our guidance of sustainable moderate margin expansion.
Update on litigation
The Group recently reached a settlement agreement with plaintiffs’ counsel to resolve the vast majority of PPI cases (Nexium24HR and Prevacid24HR) pending against the Group. The financial impact is included in the FY results and is not material to the Group’s financial position, results of operations or cash flows.
Dividend
Consistent with our previous guidance, the Board is declaring a FY 2022 dividend of 2.4 pence which represents approx. 30% of adjusted earnings for the period since listing.
Subject to shareholder approval, this dividend will be paid on 27 April 2023 to holders of ordinary shares and US American Depositary Shares (ADS) on the register as of 17 March 2023 (the record date). The ex-dividend date is 16 March 2023. For ordinary shareholders wishing to participate in the Dividend Reinvestment Programme (DRIP), the election deadline for the DRIP is 4 April 2023.
Reflecting our stated priorities to invest into the business for growth and reduce leverage our current intention is, subject to Board approval, to maintain our pay-out ratio around the current level.
Subject to Board approval, future ordinary dividends are expected to be paid half-yearly with approximately one third of the dividend paid as an interim dividend, following the Company’s half-year results and paid in October, and the balance paid as a final dividend, subject to shareholder approval, following the Company’s Annual General Meeting.
Presentation for analysts and shareholders:
A recorded results presentation by Brian McNamara, Chief Executive Officer, and Tobias Hestler, Chief Financial Officer, will be available shortly after 7am BST (8am CET) on 2 March 2023 and can be accessed at www.haleon.com/investors. This will be followed by a Q&A session at 9:30am GMT (10:30am CET).
For analysts and shareholders wishing to ask questions, please use the dial-in details below which will have a Q&A facility:
UK: 0800 640 6441
US: +1 646 664 1960
All other: +44 203 936 2999
Passcode: 77 03 05
An archived webcast of the presentation will be available later on the day of the results and can be accessed at https://www.haleon.com/investors/
Financial reporting calendar
| Q1 2023 Trading Statement | 3 May 2023 |
| HY 2023 Results | 2 August 2023 |
Enquiries
| Investors | Media | ||
| Sonya Ghobrial | +44 7392 784784 | Zoe Bird | +44 7736 746167 |
| Rakesh Patel | +44 7552 484646 | Nidaa Lone | +44 7841 400607 |
| Emma White | +44 7792 750133 | Louise Pyman | +44 7586 495121 |
| Email: investor-relations@haleon.com | Email: corporate.media@haleon.com |