Haleon revenues soared 13.8 per cent to £10.8billion in 2022, but higher freight and commodity costs weighed on the consumer health giant’s profit margins.
The GSK spin-off told investors on Thursday its adjusted gross profit margin took a 60 basis point hit from higher freight and commodity costs, as well as unfavourable foreign exchange movements.
Haleon, which listed in July last year, posted 9 per cent organic revenue growth for the period, but the firm warned that this was set to slow to 4 to 6 per cent in 2023.
Haleon shares slipped 4.3 per cent to 312.6p in early trading. The share price is now down 1.2 per cent from Haleon’s listing price and 6.8 per cent from the peak reached last month.
Haleon makes consumer health products like Panadol and Sensodyne
But full-year adjusted operating profit jumped 13.8 per cent over 2022 to £2.4billion and Haleon said it was well-positioned to deliver on its medium-term guidance.
Overall the group said two-thirds of the business had gained or maintained market share over the 12 months.
Haleon’s respiratory health business was particularly strong, posting organic growth of 32.6 per cent to £1.6 billion aided by a prolonged cold and flu season with North America and Europe sales significantly above 2019 levels.
As a result, free cash flow jumped from £406million to just under £1.6billion for the year, as net debt fell from £10.7billion a the time of the GSK demerger to roughly £9.9billion.
Haleon’s board has declared a full-year dividend of 2.4p, which represents approximately 30 per cent of adjusted earnings for the period since listing.
CEO Brian McNamara said: ‘2022 was an extraordinary year for Haleon, having successfully demerged from GSK to become the first listed company 100 per cent focused on consumer health.
‘In our first FY results, we delivered a strong performance whilst navigating a highly volatile environment. Our organic revenue growth of 9 per cent 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.’
Victoria Scholar, head of investment at Interactive Investor, said Haleon has been trying to offset cost pressures by raising prices and forward buying, but the firm risks consumers trading down to ‘cheaper unbranded alternatives instead amid the cost-of-living crisis and falling real wages’.
She added: ‘After a bumpy start to life as a public company, shares have been regaining ground since September, but are giving back some of those gains in today’s session.’
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