Haleon Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = £28.83b | Revenue (TTM) = £11.15b
Market Cap = £28.83b | Estimated Revenue = £11.72b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = £36.26b | Revenue (TTM) = £11.15b
Enterprise Value = £36.26b | Forward Revenue = £11.72b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🧮 Calculation
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders or uses to reduce debt relative to its market capitalization. It goes beyond dividend yield by also including share buybacks and debt reduction.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. Companies can also return capital through share buybacks, while reducing debt can strengthen the balance sheet. Shareholder Yield combines all three components into one metric, giving investors a broader view of how a company uses its capital.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield generally indicates more capital being returned to shareholders or used to reduce debt.
- The mix matters: dividends, buybacks, and debt reduction can affect shareholders in different ways.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends, buybacks, and debt reduction are sustainable over time.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Haleon Stock Analysis
Analyst Opinions
26 Analysts have issued a Haleon forecast:
Analyst Opinions
26 Analysts have issued a Haleon forecast:
Haleon Events
Past Events
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JUL
30
Q2 2026 Earnings Call
2 months ago
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JUL
29
Q2 2026 Earnings Call
2 months ago
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JUN
24
Special Call - Haleon plc
3 months ago
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JUN
3
23rd annual dbAccess Global Consumer Conference
4 months ago
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APR
29
Q1 2026 Earnings Call
5 months ago
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FEB
25
Q4 2025 Earnings Call
7 months ago
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FEB
24
2025 Pre Recorded Earnings Call
7 months ago
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OCT
30
Q3 2025 Earnings Call
11 months ago
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StocksGuide Free
Haleon — Q2 2026 Earnings Call
1. Management Discussion
Good morning. Thank you for attending today's Haleon Half Year 2026 results. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I'd like to pass the conference over to our host, Joe Russell, Head of Investor Relations. Please go ahead.
Thank you very much. Good morning, everyone. Welcome to Haleon's conference call for our half year results. I'm Joe Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.
Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements.
We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had the chance to see that ahead of this call. And with that, I'll hand back to the operator, and we can open for Q&A.
[Operator Instructions] Our first question is from Cedric Besnard with Citi.
2. Question Answer
Just a couple of questions, please. One on top line and one on margin. The one on top line will be about North America. Could you just shed some light on the progress you've made there, especially maybe quantify the shelf reset benefits and also how we should think about the organic growth sequence for the rest of the year with the various building blocks?
And then on margin, I mean, I guess, another profit beat. But how would you assess whether the business actually remains invested enough? And what are the KPIs you would have internally to make sure no category and no market starts over earning?
Great. Thanks, Cedric. Listen, I'll take the first question, and I'll probably kick off the second and then pass to Dawn. So first of all, I feel good about the progress in North America. Maybe I'd just start with a bigger step back, Cedric.
So as you all saw, 3.1% organic sales growth in the quarter. So that's a sequential improvement from Q1, which was 2.2%. And we definitely saw a better balance of price and volume mix with volume mix at 1.4%. So a few other maybe highlights. Emerging markets, obviously, another sequential improvement at 6.3%. And we do look to see that strengthen in the back half.
One of the drags to the emerging markets was Middle East, where we have a disproportionately kind of large market share versus the balance of our business there. And we've just seen significant market declines in places like Dubai and Pakistan. Now we believe that will get better in the back half based on our plans, not counting on the market to do anything different or the war to end. So I would say those are 2 key building blocks.
And then Europe. Europe has been more challenging. What I'd say is we ended the quarter where we expected in line, but probably a bit stronger in North America, a bit weaker in Europe. So we've definitely seen a Europe market, which is declining, and we were relatively flat, up, I think, 0.4% or so, so in the corner.
So now getting to North America, 3.1% growth with 2% volume. I maybe put it in 3 buckets of what we're seeing. One is the stronger execution, and we've talked about that. That's the shelf resets, the self placements across key categories and key customers. The second, I'd say innovation is delivering. We've launched the third pillar of our clinical range and clinical repair in the U.S., and that's doing extremely well.
But it's beyond that. We've launched things like Centrum Age Defy, et cetera Rapid Relief and innovation is performing well. Maybe the third pillar is around e-commerce. So we're seeing good momentum in e-commerce, strong double-digit growth and twice the market rate. So for me, listen, good progress in the U.S. I feel good about that. Still more work to do, very encouraged by the progress.
And certainly, we're going to have a stronger second half than first half, and we're confident in that. And that's obviously embedded in our guidance of -- holding our guidance of 3% to 5%.
Now maybe moving to your margin question. I'm going to pass it to Dawn to maybe talk a bit of the margin and the building blocks, but maybe I'd start with a bit of your question on investment, just my perspective.
So I think we are investing in the business. I mean A&P in the first half grew 3.2%, broadly in line with sales, slightly ahead, but broadly in line with sales. And our A&P is roughly just below about 21% as an A&P -- percentage of A&P. So I think it's strong investment in growth. And there are specific areas where we've increased investment, and we're constantly doing resource allocation to ensure that we're investing behind the key growth areas that we believe we have won ring room and key innovations. So I feel like we're invested well in the business.
Now that said, our priority is growth. We don't want to invest in the business just for the sake of investing. We want to invest where we see growth opportunities. Listen, in the second half, we expect a step-up in investment in growth, and that will show up in A&P. It will also show up in different areas like we're investing in China and on Douyin because we have a good business on Douyin. Our portfolio is a bit less exposed to that channel, but we're growing 100%, and we see more opportunities there.
So we're going to invest more there. And we're going to invest some more in activations in the U.S. where we see opportunity, we're going to drive things. So let me leave it there. The only other thing I'd say before I pass it to Dawn is what the gross margin and productivity has enabled us to do is have the P&L flexibility to invest where we need to but also drive strong EPS growth if it makes sense.
But to be clear, we're not holding back on investing in the business. We feel like we're investing where we need to be, and we see opportunities, we'll invest more. Dawn, maybe a bit on the margin.
Yes. Good morning, everyone. So look, I think what's important to say on the margin is we have delivered the margin through efficiency. We are driving long-term sustainable improvements in our supply chain.
So to Brian's point, the margin has not come from cutting investment. It's not come from taking too much price. When you look at our pricing, we -- our pricing is in line with inflation. And this is a really important point that it is coming from efficiency. So the 120 basis points improvement in margin -- in operating margin at constant currency is coming from gross margin, up 140 basis points.
And we also have a 40 basis points benefit coming through FX, which if you think about, it's quite nice to have a tailwind from FX for a change. And to Brian's point, that is pulling through and driving strong EPS in the business, and it is giving us flexibility and agility.
And why that's important is when you look at the second half, from -- we will start to see costs come through from the Middle East impact as we roll off fixed price contracts and our hedging positions. And it means that given that we've got the strength in the supply chain productivity program, it means we won't have to take exceptional pricing to cover it. We will be able to absorb that cost, which means from a margin perspective, we also expect in half 2 that we will deliver high single-digit operating margin growth as we have operating profit growth as we have in half 1.
So let me take your second part of the question, which was about A&P and the KPIs and how we think about A&P. So people buy our brands because they are superior, meaningful, differentiated and salient, which means that people are aware of them. And therefore, continued strong investment in A&P at 20.9% as it is today, is really important for our brands.
And the way that we think about that, there's probably 3 main areas in how we think about it. So the first question is, are we buying efficiently? And if you look at the first half, we have mitigated the majority of our inflation in terms of how we are buying that media.
The second piece is, are we spending effectively. We have quite a sophisticated market mix modeling tool where we look at the incremental retail sales growth and ROI around that spend, and both of those are up in the first half. And the third question is, are we driving growth through reach and relevance. And when we think about this, we're trying to match our spend with where consumers are consuming that media or where they're getting their media from. 60% of our spend is allocated to digital, and we continue to increase that spend behind social and expert, which are both up in the first half.
So when we think about A&P, we keep it quite dynamic. So in areas where we're performing really well, like oral health, China, India, we increased our investment. And in areas where it needs less investment. So for example, when cough, cold and flu season was weak in Q1, obviously, that's an area where we would shift investment to other areas. So all the time, it's very dynamic so that we're ensuring that we're making our money work harder. And we continue to look for opportunities to invest.
Our next question is from Guillaume Delmas with UBS.
A couple of questions for me. The first one on Respiratory Health. We had another weak quarter in Q2. I think it shaved off 150 basis points of your organic sales growth. So my question is, of the 3 buckets of cough and cold, allergy, smokers health, which are the ones where you would expect an improvement materializing relatively quickly?
And is your confidence in OSG, Organic Sales Growth accelerating in the back half largely underpinned by an expected sequential pickup in Respi? Or do you think the acceleration should be more broad-based than that in the back half?
And then second question, just China, high single-digit growth in the second quarter despite low incidence of cough and cold and some negative pricing. So maybe can you touch on what is driving what seems to be, I guess, double-digit volume growth in China? And how should we think about this pricing pressures? Is it more of a one-off? Is it the cost of competing in that hospital channel? And does this have any negative implications for your margins in the region?
Great. Thanks, Guillaume. Listen, I'll take the first question on respiratory, and I'll pass the China question to Dan. So listen, on Respiratory Health, you're right, 3 buckets in Respiratory Health, cough and cold, allergy and the smallest piece being smokers health. So first of all, on cold and flu, cold and flu is about half the size of -- in Q2 than it is in Q1. It's off-season, so it tends not to be as volatile.
You are right that Contac, which is a very big cold and flu brand in China, just saw very little, if any, pickup in the quarter. We believe that's just an extension of what was a very difficult cold and flu season. And I'll get back to cold and flu in the back half in a second.
Then you have allergy, which did well in Q1. It was down a little bit in Q2, just the phasing of the season piece, and you just expect that, that's normal. You tend to see some seasonal swings in allergy, but it's never to the degree of cold and flu and the impact.
And then third is Smoker's Health. Listen, Smokers' Health still declined in the quarter, but it's declined at a lower rate than it did in Q1. So we're starting to see a stabilization of that business as we go forward. And we have plans in place where we're -- like most things, like in the U.S. in general, we're seeing better execution, and we're seeing improvement as they go.
Now on cold and flu, as we look at the back half in cold and flu, we know that we've had 2 years of decline in cold and flu. And I think I've said in the past, been associated with the category for over 20 years. It's not necessarily common that, that happens, but it's not unheard of.
We've obviously done all the work to understand, is that a cyclical or a structural thing. We believe it's cyclical. What we're assuming in the back half is we see growth off of this 2 years of decline. We still don't expect it to be at the level it was from 2 years ago. And obviously, in cold and flu, that's more Q4 weighted because that's when the cold and flu season is. So that's a bit of the frame around respiratory and what we're seeing. Dawn, do you want to talk a bit about China?
Yes. So let me take the question. Let me take the question in 3 parts. So let me talk about Asia Pac, then I'll talk about China, and then I'll come on to your specific question around hospital channel and price. So -- when we look at Asia Pac, when you look at the growth profile of Asia Pac, over the last few years, more than 80% of that growth is coming from volume.
And that's a really good growth profile for that region. I think, obviously, and you see that also coming through in the year-to-date and actually even stronger, even stronger growth in Q2. China is a really important driver of that. So China was up high single digit in Q2, main drivers. So we increased investment in Douyin.
Douyin grew more than 100% in the quarter and key brands that underpin that were in Centrum, Caltrate really strong in terms of driving growth in Douyin. And we have actually doubled the amount of content creation in that channel. So that's a really strong driver of performance. The other strong driver of performance was actually on Voltaren, where we increased our presence, Voltaren 2%.
Innovation continues to do really well. And we have actually put that now through the hospital channel. Hospital channel is a channel that we have always been in, in China. That's not new. What's new is now Voltaren is in that channel, which is a real positive. If I put all of that together and then talk about pricing, so you're right, pricing was negative in Asia Pac in Q2.
I'm not worried about that. It was driven by going into hospital channel where we have a volume-based procurement pricing model as well as investment in Douyin. But when you look at the gross profit growth in Asia Pac, that's strong.
And when you look at the margin improvement in Asia Pac at constant currency, that's also strong. So for me, this is -- it's a real positive. It shows that the investment that we're putting in to drive growth in China and in Asia Pac is actually coming through. And as I said, we're still seeing margin improvement overall in that region.
Our next question is from Nicolas Ceron with Bank of America.
Just 2 questions from me, please. The first one is on your VMS business. Do you think there's any consumer need that your current portfolio is not really able to address? And do you think that you need to do M&A to do that? It's a bit of a thorny question. And the second one is going back to the pain relief, big acceleration in Q2 versus Q1. Maybe if you could just explain to us the key drivers behind the acceleration and whether you think mid-single digit is the growth for that business going forward?
Great. Thanks, Nicolas. First, on the VMS business, Listen, I think, first of all, we like our portfolio. And we have seen, by the way, if we look at Centrum in the U.S. specifically, we've seen improvement in the first half of the year, so mid-single-digit growth.
And actually, if I look at latest consumption data, so now we're into July, you're starting to see double-digit consumption behind the activations and the shelving resets and everything we're doing on that business. So we do like the portfolio we have.
Listen, there are higher growth spaces within VMS we don't participate in, and we're looking at that also organically, how can we introduce new products under Centrum, how can we drive that? One example I would give you is our GLP-1 variant on Centrum, which we launched in the U.S. as part of our broader GLP-1 effort to support consumers on that journey and activate in retail.
So I've always said every portfolio can benefit potentially from a bit of bolt-on M&A, a bit of divestment as we go. But I feel good about the portfolio we have. And I'm confident that while the VMS has been a bit of an up and down business for us over the last few years to acknowledge that we have plans in place where we feel like we're going to get that to a place where it can deliver the growth that we would like. On Pain Relief, it was a stronger quarter in pain relief.
And I think that links to a few things. First, I'd say we saw strength in Voltaren, and that linked to a launch in China, by the way, of a Voltaren 12-hour variant that's doing very well. Also in the U.S., we're seeing some strength in Voltaren behind some of those changes we've talked about across shelving because we also saw benefits from shelving across Voltaren.
Panadol has grown healthy growth and ahead of our global number, and that's behind good activations, but also the rollout of Panadol Dual Action, which is the combination of acetaminophen and ibuprofen. We market that under Advil Dual Action in the U.S., but outside the U.S., we market that, and we've launched that under Panadol.
And overall, I'd say a stabilization and slight growth of share in Advil. So we're starting to see some -- we're starting to see share growth in Advil, which we'd expect, although the category is still a bit muted, but we're ahead of the category. So overall, I feel there's some fundamental things that are happening in pain relief that helped drive those numbers.
Our next question is from Warren Ackerman with Barclays.
Warren here at Barclays. Apologies if this question has been asked before because I just jumped on late, multiple results today. So I just wanted to just dive a little bit deeper on a couple of places. Latin America, Brian, looks like it's accelerated from low singles to high singles. Can you talk a little bit about the new team that you've got in LatAm and kind of what you're doing differently in terms of price pack architecture and understanding kind of local consumers better?
And do you think this kind of step-up in Latin America is sustainable? Is it a one-timer? Or do you see kind of real legs for the improvement in that region? And then the other region I just wanted to touch on was, again, Europe. Sorry, if this has been asked already, but it just seemed a little bit softer in the quarter sequentially in Q2 versus Q1.
Just wondering whether you can sort of outline -- is there anything happening in the pharma channel? Is it Germany? What are you seeing in terms of kind of consumer dynamics in that region? That would be super helpful.
Yes. Thanks, Warren. I don't think either of those questions were asked. So I'll take them both. Listen, on Latin America, you're right. What we saw was kind of flattish in Q1, and we're seeing high single-digit growth in Q2.
I would say, is that sustainable in the back half? I'd expect to see similar results to that high single digits, albeit maybe a bit of phasing Q3, Q4 just because of some base effects and stuff. So to take a step back on January 8, when we announced the new operating model, we also announced a new leader in Latin America, Andres, who has spent many years at a company in a Colombian-based company called Quala in Latin America and then spent some time at Unilever once that company was acquired.
Clearly, deep, deep, deep understanding of the Latin American markets. and the consumer. And I think he has come in and has done a very robust assessment of what is happening and has taken actions. One of the actions we've talked, Warren, that I believe I've mentioned in the past is very quickly identified a bit of an opportunity in Brazil and a few other markets on our price gaps on Sensodyne, very quickly did a pilot test.
And so that would drive double-digit volume growth. We've executed against that. So we've taken pricing down. And again, it wasn't broad-based pricing on Sensodyne. It was a particular skew on Sensodyne and the price gap versus one of our competitors that got a little out of whack. But we've made that change and we moved.
And I'd say just purely on execution across the region, understanding moves we need to make and looking as we go forward a better capitalizing on the low-income consumer, where, obviously, we have a tremendous case study in India on the low-income consumer that's driven now over 20% growth on Sensodyne and also huge opportunities we're seeing in Centrum and area.
So I think he's making good progress, again, on all this stuff, encouraged with the progress. You never want to declare victory. We're not complacent. But I feel like the back half, what we're seeing in Q2 is sustainable in the back half. On Europe, there's no question what I said earlier, Warren, you may not have been on, is that if I look at where we ended up in the quarter, it was broadly -- it was in line with our expectations of what we thought we would deliver in the quarter. It was a bit better in the U.S., but it was a bit tougher in Europe.
So there's no question that we're seeing a tougher market in Europe, and we're seeing kind of low single-digit declines in the categories. Now that said, as you saw, we delivered roughly flat results, up 0.4% or so. We are growing market share in Europe. Sensodyne continues to perform well and broadly, we're performing. I feel like, listen, as we look at the balance of the year, we're not counting on anything changing in the Europe dynamic.
Obviously, we're just very focused on driving our execution, driving our innovation, delivering the growth that we think we can get in that market. But we certainly have seen a tougher backdrop in Europe than we had seen in -- as the year has gone on.
Our next question is from Misha Omanadze with BNP Paribas.
So one question on cold and flu, please. Can you please remind us what's the time line for the sell-in for the season? And also one of your competitors speaks a lot about a major innovation in cold and flu coming. Do you see this as a bit of a challenge for you?
The second question would be on price/volume split for H2. You did say that you're not intending to take any material pricing. But should we think about H2 being a bit balanced between price and volume? And the last question would be on one-offs. Were there any notable one-offs benefiting your Q2 delivery?
Good. What I'll do is let me take the cold and flu question, and then I'll pass on to the second part of that question and then the one-off question. So listen, on cold and flu, the sell-in, the sell-in happens as we speak. So July and August typically is when sell-in happens in cold and flu. as expected.
Typically in cold and flu, the big potential for any seasonality effect happens later in the year in Q4. As far as competitive activity, listen, nothing we were unaware of. And we feel like we have good plans in the U.S. and combined with all the executional improvements that we are seeing and then the plans we have behind our cold and flu portfolio, again, never take -- never complacent, never take anything for granted. So we're aware of launches of multiple competitors. And we feel good about our cold and flu plans in the back half. Dawn?
Yes. So if we think about the price/volume mix, I mean, we have been working hard to improve that balance, the price/volume mix. And you've seen in the quarter the step-up in volume performance with volume mix at 1.4% -- where is that coming from?
We have obviously talked about Asia Pac and significant volume growth in Asia Pac in the quarter. We also saw a big step-up in North America to 2% in terms of volume mix on the back of all of the execution activities, innovation that Brian has talked about.
Those 2 step-ups in the quarter were offset by EMEA, where volume mix was down on the back of a very tough macro picture in Europe and obviously softness in the Middle East given what's happening there.
If we look to the second half, I mean, we continue to focus on a balanced price/volume mix. We would expect to see a step-up in volume mix half 2 versus half 1, particularly given that we have cough, cold and flu in Q4. And as I said, from a pricing perspective, I would expect pricing to be broadly similar second half versus first half.
And then to come to the third part of your question, I mean, I guess there have been activities, whether it's Amazon Prime Day, whether it's World Cup, where we've had activities in terms of U.S. soccer. What I would say is, obviously, they've both been successful for us. If I think about kind of phasing Q2, Q3 or sell-in, sellout, there's nothing significant to call out in that respect.
Our next question is from David Hayes with Jefferies.
So 2 from us. Just coming back to the growth profile in the second quarter, obviously doing a 3%, but still that 4-plus ambition midterm remains a loof in what is a relatively benign cold and flu season.
So I guess the question is, there's lots of moving parts, as you talked about, Brian, Asia cold and flu was an effect, Middle East, U.S. momentum is building, Brazil execution improvement. So just that gap, can you kind of quantify what broadly the big ones are that leaves that gap there?
And I guess where that leads me is, would you expect to do 4% plus through the second half as those gaps are resolved as you're kind of alluding to? And then the second question, just on the margin. Obviously, very impressive margin delivery. You talked again about some of the drivers of that.
So the question is, a, is the supply chain delivery a little bit lumpy? Was it a little bit -- you got a lot of savings in the first half, might be a bit less in the second. And then on the cost of goods sold inflation, I guess some of the contract manufacturing rolls off in terms of the agreements. Can you just give us a sense of cost of goods sold inflation in the first half versus what you might expect in the second...
Thanks, David. Listen, I'll take the first one, and then I'll pass the questions on margin and supply chain over to Dawn. So listen, on the growth profile, by the way, you are right that we are below our 4% to 6% medium-term ambition, and we are very focused on getting back to there.
If you take a step back, David, on what we need to be to get to that 4% to 6% ambition and then maybe what is the difference between that and Q3. I think in one area is emerging market growth, which we saw sequential improvement at 6.4% in the quarter. We do expect that, that can get to high single digits. And we would expect that to get there in the second half. So -- and what is driving that?
Certainly, we've seen mid-teens growth in India. We're confident that will continue. We talked about Latin America and the improvement we've seen in Q3. We talked about a bit about China in high single digits in Q2. The other piece that's been a drag to that high single-digit growth has been Middle East. So our Middle East, Africa business was flat.
In Middle East, we are disproportionately big in the Middle East. So if I look at my market shares in the Middle East, in many cases, they're double where they are in the market. So brands like Panadol and Pakistan is an 80-plus kind of share. And what we've seen is we've seen declines in the market in both Dubai and Pakistan.
That said, versus Q2, we expect that to improve in the back half and not expecting wars to stop or anything like that based on our plans and what we're going to do and the activations we're going to drive. So we'd expect to see an improvement on that as we go into the back half. The other piece is we've said, listen, U.S. for us to get to that to that growth number needs to be in that 3% to 4% range.
I'm very encouraged by the progress we're seeing in the U.S. Again, not complacent, not declaring victory, but really feel good about the progress that they're making, and we think it's very encouraging. And then Europe, you would expect Europe to be in a kind of low single-digit kind of 2% to 3% growth.
Obviously, it's a bit lower than that as we look at the back half. That's the algorithm to get us into that 4% to 6% range in a confident way. On the back half, listen, I'm not going to guide beyond what we've already said, which is confidence in the 3% to 5% and the building blocks that I've laid out, which is you see the progress in North America.
We expect to have less of that drag from the Middle East going forward. And then obviously, cold and flu, which will be more Q4 focused, what we're expecting to see is growth versus a year ago versus 2 years of decline, not expecting to see it as high as it was in 2024, just as a benchmark. And then Dawn, maybe I'll pass it over to you to the margin question.
Yes. So, as I said earlier, in terms of the margin progression, this is coming from the productivity savings in supply chain. And just as a reminder, there's 3 parts to that. The first one is around complexity reduction. So harmonizing packaging, formulations, optimizing the number of SKUs. Operational, the second one is operational efficiency. So this is all about debottlenecking in the plants, process improvement, equipment optimization.
And the third one is about optimizing our broader network in terms of what we do in-house, what we co-manufacture. And when I think about that holistic program, it continues to deliver incredibly well. I don't see it as lumpy. We track the pipeline of potential future savings. So we track that into the future.
When I look at half 2 versus half 1, that's looking good. In terms of the COGS piece and increase in costs, so we have seen a small increase from Middle East in the first half, particularly in freight. As I said earlier, I would expect that to increase in the second half as we come off some of the contracts. So when I look at the gross margin, we've had 140 basis points improvement in the first half.
I would still expect us to deliver improvement in the second half. Will it be to the same extent given that we'll be absorbing some of the Middle East costs? I think that depends on how much those costs are. But as I said, we would expect to absorb that. So I think some growth in gross margin. I think the other things to talk about, we will continue to invest in the business. So you saw us in the first half, A&P, we increased ahead of revenue.
Second half, we'll continue to invest. The other thing that we will have in the second half is the benefit from the operating model changes. And we said at full year that we expected that in total to be in the range of GBP 175 million to GBP 200 million, of which 1/3, broadly 1/3 we expect to be in this year. And a bit similar to the supply chain productivity savings, we'll decide how much of that do we reinvest in terms of future capabilities and how much do we drop through.
So when you look at that overall, as I've said, I would expect half 2 operating profit to also be high single digit, but different moving parts in the P&L. And when you look from an EPS perspective. I mean, 12% growth in EPS in the first half is very strong. I would also expect strong EPS growth in the second half.
Our next question is from Callum Elliott from Bernstein.
I wanted to start with Oral Care, please. The 6.2% is obviously objectively a fantastic growth number. But at the same time, I think it's also the slowest quarterly growth for nearly 4 years.
On one of your biggest oral care competitors reported yesterday a mid-single-digit decline in organic sales for their oral care business. And so I guess you're probably benefiting from their struggles as I think you have been for the past several quarters. But they're not a bad company, I don't think, and I don't think anybody would say that they are. So I think it would be dangerous to assume that they will continue to be such a big share donor over the longer term.
And so I guess what I'm getting at here is, can you talk a bit about the sort of the moving pieces, the drivers of longer term, what the sustainable growth rate for that Oral Care business should be?
And then my second question, I was really interested in your comments around what Andres is doing to fix LatAm, Brian, without meaning to be too pejorative. It sort of strikes me that fixing price gaps really should be bread and butter for a company of your size. And so I guess I'm surprised that you need to be poaching senior leaders from Unilever to do that.
And I guess my question is, can you speak a little bit to the infrastructure in your business around this kind of competitive intelligence? Do you think this Brazil Sensodyne pricing example is just an isolated incident? Or do you systematically need to be doing more to improve this kind of infrastructure across the company?
Okay. Thank you, Callum. So I'll take these questions. So on Oral Care, 6.2%, still feel very good about that. I expect that, that will improve in the back half. Nothing really to see from the 7.3% on half year to the 6.2% in Q2.
And within that, Sensodyne continues to be very strong. Parodontax continues to be very strong and mid-single-digit kind of growth on Denture Care, which is kind of what we expect.
Listen, this is a business that's grown at this level for years in the past. And if I think about our competitors, our competitors in oral care are both fantastic companies and fantastic competitors and have a ton of respect for both of them.
A lot of times, what you see is what we're driving is incremental category growth and incremental consumers into the more premium segment of the category via the innovation we have. So again, if I look at Clinical White, then Clinical Enamel and then Clinical Repair this year, in all 3 cases, they were the largest innovations in the U.S. market in that given year in the toothpaste category. And there's more to come.
So I look forward and I see more innovation coming that we already have in the can. And then post the clinical range, we already have a very clear view of what that pipeline looks like, and I really feel good about that. A lot of times, when you see our competitors moving around on stuff, it tends to be because they're fighting each other. And again, do not take any of them lightly, but we've been consistently driving that growth through new users, new penetration. And it's the very simple thing, which is now half the people in the world have sensitive teeth, a bit more than 1/3 of those people use a sensitivity toothbrush, toothpaste, and we continue to drive that growth.
And by the way, well beyond the U.S., by the way. I mentioned earlier, India. India, our second largest market, second only to the U.S., over 20% growth. Two years ago, we introduced a low-income consumer SKU in India at INR 20. It took a bit of time for that to kind of gain critical mass.
In the last quarter, it was over 40% of our volume was driven by that low-income compute and half our growth is coming from that. So I think we have a very broad-based program. And also, there's Parodontax, by the way, which grows consistently in the mid-teens. So overall, do not complacent, but the ups and downs of our competitors in any given quarter tend to be less relevant to us than just our agenda and what we're driving on that because the other piece is we're also a much less promotion-driven business, to be clear.
We invest quite heavily in advertising and promotion and dental detailing. So we don't necessarily get into the fray on fighting the promotion game. So that's what I'd say. Listen, in Latin America, as I said when we created the new operating model, I was aware that we needed to make a change in Latin America. I want to be very clear. Also made the decision that having Latin America, Middle East, Africa, in India, given the growth profiles and the opportunities and having the right talent in those businesses, I think, was very -- was a decision I made, and I think it's going to pay dividends for the longer term. I understand your comment and I agree with your comment.
But like anything else, Callum, when people are trying to run the business and drive the business and taking different pricings, every now and then you have a misstep. Would we have caught that if Andres didn't go in?
I would expect we would have. It happened at some point in the back half of last year. He happened to be put in place and do it. What -- so listen, he's a great talent. I'm really happy to have him. I'm happy to have him happy to have him and Kedar and Ozlem, which are our new leaders across our 3 regions. on my leadership team and reporting directly to me, and it's all part of this operating model change we've made, which is all about driving growth and agility. happens to be providing also some efficiencies that Dawn mentioned, which will help us in the back half, but it's all about streamlining and simplifying what we do.
Our last question is from Edward Lewis with Rothschild & Co Redburn.
A couple for me, more bigger picture. I guess first one, Brian, if I think about the Investor Day last May, you talked about wanting to treat or wanting to reach 1 billion more consumers. You've made investments in India, you made investments in China this year.
But the world has got a bit more volatile. So just sort of an update on how you're thinking about that longer-term view. And then, Dawn, when I think about Investor Day, things like AI were obviously mentioned, but it's just made so much more impact on our lives now. I presume all of us are using it so much more. So when I think about your sort of outlook in terms of how you're thinking about driving margins, how much more of a benefit are you seeing from sort of deploying these kind of capabilities than you would have thought before?
Thanks for the question, Ed, and I'll pass it to Dawn on that AI question. Listen, we set out a strategy that had 2 ambitions, billion more consumers and delivering industry-leading shareholder returns. I think both of those were really important.
What that did in the organization is opened up the opportunity and strategically for us to go after the low-income consumer where we see opportunities that haven't been addressed before. Now some of this low-income consumer stuff does take time to build momentum. If I talk about India and the INR 20 pack, you just have to sell a lot of INR 20 packs to start having an impact on that business.
That is having an impact on that business, 20% growth, half that growth is coming. And it's so much more than just offering packs, by the way. It's the route to market. It's the communication, it's the education, it's the dental detailing. So that strategic shift for us is really important because that's something that we see as a long-term -- medium-term, long-term growth opportunity in emerging markets.
We have some really good proof points of where it's working, and we are now evaluating how we can make that. We are in the process of making that broader in other areas. And we've done much more than India, but I've talked about India because it's the one that started and now we're 2 years in.
Listen, I think this is -- listen, the volatility in emerging markets is always there. I don't think that will change the consumer need that we see in the low-income consumer. And it's about providing -- by the way, it is about providing really great products at accessible price points in a way that helps meet their needs. And we're still -- we still believe that opportunity is there. Dawn, on AI?
Yes. So I think you're right. Look, AI is obviously a fast-moving space, and we are investing in AI, and we are seeing the benefits. So let me give you just a sense of that. And I'll give you an example across supply chain, across our demand space in terms of growth and then maybe just broader productivity. So in terms of supply chain, we have built quite a connected chain of AI interventions from consumption-based forecasting to production scheduling, preventative maintenance and inventory deployment.
So examples of that would be on our consumption-based forecasting, this has improved our forecast accuracy by 5% to 6%. It's also reduced our stock cycle times as well, which is obviously important in terms of our levels of inventory. And if I look at our AI scheduling and digital twins, for example, at our Neon site, that's our digitally enabled work process solution has delivered a 5 percentage point in operational effectiveness.
And similarly, in terms of preventing unplanned shutdowns, for example, at our Dungarvan site, that's also delivered a similar level of operational improvement. So from a supply chain, we are definitely -- that is definitely embedded, as I said, in terms of a holistic space -- if we look from a demand perspective, we have embedded AI across insights, innovation, marketing and commercial execution. So all of the steps along that path.
So from an insights perspective, we have a great tool that is enabling us faster and deeper access to actionable insights. From an innovation perspective, we're leveraging AI in terms of faster claims generation. And in terms of marketing, we're actually leveraging AI in terms of reducing the cost of our content production.
And then in commercial execution in terms of AI around tools such as next best action that we talked about Capital Markets Day, that's also driving sales growth. So actually quite an end-to-end demand space AI capability that we're embedding. And then the third area, just more broadly across the organization, obviously, tools like Copilot, language translation with our tools like Lingo.
And even if I think about finance in terms of some of our core finance processes like optical recognition in terms of invoices are also driving process improvements and savings. So look, I guess, like everybody else, we're on a journey with AI. It is changing quite quickly.
I think all of the things I talked about earlier, what that is enabling us to do in terms of supply chain productivity, the benefits that we're getting from the operating model changes, that's enabling us to test and learn in this space and build capabilities for the future.
Great. Thanks, Dawn. So well, that was the last question. So thanks, everyone, for joining us today. I look forward to catching up with you at upcoming roadshows and meetings. And as always, feel free to reach out to the IR team with any further questions. Thanks for your interest and continued support. Enjoy the rest of your day.
Thank you. That concludes Haleon Half year 2026 results. Thank you for your participation. You may now disconnect your lines.
Haleon — Q2 2026 Earnings Call
Haleon held FY guidance, delivered margin improvement from supply‑chain efficiency while continuing to invest in growth and emerging markets.
📊 Quarter at a Glance
- Organic sales: 3.1% in Q2 (sequentially up from 2.2% in Q1)
- Volume mix: +1.4% overall (North America volume ~+2%)
- Gross margin: +140 basis points (cost/productivity gains)
- Operating margin: +120 basis points at constant currency
- EPS: +12% in H1
🎯 What Management Says
- Investing for growth: A&P spend around 20.9% of sales; stepped-up investment in digital (60% of media) and targeted activations in U.S., China (Douyin) and India.
- Productivity over cuts: Margin gains driven by supply‑chain efficiency and SKU/network simplification, enabling reinvestment rather than broad cost reductions.
- Emerging‑market push: Low‑price formats and route‑to‑market moves (e.g., INR20 packs in India, hospital channel for Voltaren in China) to reach more consumers.
🔭 Outlook & Guidance
- Guidance: FY organic growth guidance maintained at 3%–5%.
- H2 view: Management expects stronger second half (seasonal cold/flu pickup in Q4), a step‑up in growth investment, and further margin improvement albeit with some Middle East cost headwinds to absorb.
- Savings: Operating‑model savings target GBP175–200m, ~one‑third expected to be realized this year.
❓ Analyst Q&A
- Respiratory outlook: Weak Q2 cold & flu seen as cyclical; management expects sequential improvement in H2/Q4 but not a return to peak 2024 levels.
- North America execution: Shelf resets, new clinical toothpaste pillars and e‑commerce (double‑digit growth) driving volume; management confident but says more work remains.
- Margin sustainability: Margin uplift attributed to supply‑chain and digital/AI initiatives (forecast accuracy, plant scheduling), not lower A&P; some Middle East cost pass‑throughs will hit H2 but are expected to be absorbed.
⚡ Bottom Line
- Shareholder impact: Haleon delivered a margin‑led beat while maintaining growth investment and held FY guidance; upside depends on H2 recovery in respiratory, further emerging‑market execution and managing regional (Middle East/Europe) volatility.
Haleon — Q2 2026 Earnings Call
1. Management Discussion
Hello, and welcome to our half year results presentation.
We're continuing to make good progress against our Win as One strategy and our strategic priorities of delivering competitive growth in our categories, unlocking productivity gains and embedding an agile performance-focused culture. In the first half, organic revenue was up 2.6%, with sequential improvement in the second quarter, where organic revenue was up 3.1% in a challenging consumer and macro environment. Growth in the quarter was balanced, supported by volume/mix of 1.4%. That reflects the targeted actions we are taking across the business to drive improved performance. In North America, we're continuing to make meaningful progress. We're improving our execution and delivering stronger share gains. We are seeing early signs of underlying market improvement.
In our emerging markets, momentum improved through the quarter. We're delivering double-digit growth in Oral Health, Digestive Health and Skin Health. And China, India and Latin America all delivered strong growth. Europe continued to be impacted by a challenging market backdrop. We delivered modest growth in a declining market. You'll hear more from Dawn on Europe in a minute. Encouragingly, our competitive performance remains strong. 73% of the portfolio gained or maintained market share. That reflects the continued relevance of our brands to consumers around the world and demonstrates our ability to compete effectively in the categories we operate in.
We made strong progress on our productivity agenda. In the first half, our initiatives delivered 140 basis points of constant currency gross margin expansion and 8.2% adjusted operating profit growth. Cash generation remains strong with healthy investment in the business to drive future growth. At the same time, we continue to return surplus cash to shareholders through dividends and buybacks. Looking ahead to the second half, we remain focused on driving competitive growth and delivering against our commitments. This will be achieved through the improvements we're seeing in North America, the encouraging performance in our emerging markets and the opportunity to unlock growth and agility through our new operating model. As a result, we're reaffirming our full year guidance of 3% to 5% organic revenue growth and high single-digit operating profit growth.
Taking a step back, it's been a year since we launched our Win as One strategy at Capital Markets Day, where we set out our medium-term ambitions and defined our strategic priorities of growth, productivity and culture. I'll now take each strategic priority in turn and update you on the progress we're making.
First, growth. While our current growth is competitive and we're gaining share, it's below our medium-term 4% to 6% expectation. Q2 marks an improvement on Q1, but there is clearly more to do, and we are taking decisive steps to strengthen performance and drive stronger volumes across the business. Let's take North America, where we are focused on driving growth at the bottom end of our medium-term guidance. The targeted action plan we set out at full year is showing real progress. Growth is accelerating, execution is improving, and we're delivering an increase in share gains. We have achieved this through stronger retail execution and enhanced in-store activation during the World Cup as well as continued progress on e-commerce.
Innovation is delivering. Sensodyne Clinical Repair, Centrum Age Defy and Excedrin Rapid Relief are all driving category growth. In fact, Sensodyne Clinical Repair, which we launched in January, is the third pillar of our clinical platform in the U.S. and is driving significant share growth. In e-commerce, we're growing double digit, twice the rate of the market. As I mentioned in February, we are building dedicated GLP-1 cross-category shelves across Oral Health, Digestive Health and VMS. That positions us to capture a disproportionate share of the opportunity. It is still very early days, but we are optimistic about the potential here.
Turning now to emerging markets, a growth engine, which we expect to deliver high single-digit growth over the medium term. We saw a stronger second quarter across our emerging markets with growth up 6.3%. That was underpinned by good momentum in China, India and Latin America, partially offset by the expected impact of the conflict in the Middle East, which typically grows high single digit, but was broadly flat in the second quarter. In China, we see significant opportunity for growth, supported by strong consumer health trends, accelerating digital engagement and continued innovation across our portfolio.
Let's take e-commerce, which represents around 40% of our revenues in China. We are investing a healthy rate in the high-growth digital channels, including Douyin, which is now over 10% of our e-commerce business and growing at over 100%. Douyin is helping us drive trial, repeat purchase and brand engagement through social content and influencer activation. We plan to increase investment in Douyin in the second half, and we have a strong pipeline of innovations designed to meet the evolving consumer needs for this channel.
Now turning to India, one of our most important growth engines. India continues to deliver sustainable double-digit growth, up in the mid-teens for the quarter. Oral Health is a significant driver of growth in our India business, the second largest market for Sensodyne globally, growing at over 20% in the first half. We are successfully driving penetration with lower-income consumers. We started this 2 years ago through our INR 20 access packs, which are now gaining real momentum and making up 40% of the tubes sold in the first half. Our strong delivery goes beyond access. We launched Pronamel and Pronamel Kids at the start of 2026, broadening our reach from consumers over 35 to the full age range with science-backed products that help consumers build strong enamel. Toothbrushes are also an important part of our business. 70% of consumers who enter through the brush franchise are new to Sensodyne. That is driving nearly 230 basis points of share gains in the toothbrush market, taking our share to 13%, supported by media activation and expert endorsement.
To support the Oral Health growth in India, we are investing GBP 175 million in a new manufacturing site to meet growing consumer demand and drive stronger productivity. We are also seeing good momentum in Centrum. Centrum Recharge, priced at INR 10, continues to recruit new consumers. Here, we have leveraged our rural distribution and regional activations to drive strong in-store visibility. This has driven strong consumer uptake since we launched last year. In Latin America, while there's still more to do, we are encouraged by the good progress we're making from the targeted actions we've taken to drive growth. In Oral Health, we have optimized pricing in Brazil, which has accelerated Sensodyne volume growth and consumption. We're also developing more accessible Sensodyne offerings for lower-income consumers. These new offerings are gaining traction, and we are delivering 50 basis points of share growth in Mexico.
We are scaling that into Brazil, where Sensodyne pilot in Sao Paulo is performing well. Our World Cup in-store activation delivered good results. ENO saw a significant uplift in consumption versus typical daily levels over the tournament. And finally, new launches are performing well. For example, Advil Gripa Max in Colombia is resonating well with consumers. It's helping expand the category and delivered double-digit consumption growth and over 140 basis points of market share gains.
Now turning to productivity, where we have continued to make excellent progress against our GBP 800 million gross cost savings program. These savings are generating capacity to invest behind growth, innovation and capabilities while supporting the delivery of high single-digit operating profit growth. A key driver of this is our simplification program. To date, we have reduced SKUs by 27% and formulations by 26% and continued packaging optimization. These actions are making the business simpler to run, and they're helping teams focus more sharply on the biggest growth opportunities. At the same time, we're investing in new capabilities, including AI and digital twins to improve speed, resilience and decision-making across our supply chain and our broader operations. And our investment in new manufacturing facilities in India and China will further enhance productivity, strengthen resilience and support our long-term growth ambitions.
And finally, culture. Our new operating model is now largely embedded across the organization. It's bringing us even closer to our consumers, shaping a culture that will help us deliver on our strategy and our financial commitments. We are already seeing early benefits in North America, where implementation took place at the start of the year. Accountability is clearer, execution is sharper, and teams are now moving at greater pace.
I'll now hand over to Dawn to run you through the first half results in more detail.
Thank you, Brian. We made good progress in the first half of 2026. We delivered strong adjusted operating profit growth of 8.2% at constant currency and free cash flow of GBP 769 million, in line with our value creation framework. Gross margin improved 140 basis points at constant currency, underpinned by our productivity program. A&P grew broadly in line with revenue, resulting in strong drop-through to operating margin. This increased 120 basis points at constant currency or 160 basis points at actual rates. Cash generation was also strong, and we continued our track record of disciplined capital allocation, returning GBP 893 million to shareholders.
We also announced 2 capital investments in the half for manufacturing sites in India and China, reflecting the long-term growth opportunities of these markets. There is more to do to drive organic revenue growth, which was 2.6% for the half. While this is below our medium-term guidance, we continue to deliver against our value creation framework, driving operating leverage, strong free cash flow and disciplined capital allocation. In particular, the quality of our EPS has significantly improved with most of the delivery coming from operating profit.
Looking at the performance in more detail, starting with revenue. Organic revenue growth for the half was 2.6%, split 2.1% price and 0.5% from volume/mix. In Q2, we delivered 3.1% growth and a more balanced price and volume/mix with 1.7% price and 1.4% volume/mix. We continue to deliver strong volume/mix growth in Oral Health and Asia Pacific with stronger execution in North America and an improvement in VMS, which overall was partially offset by weaker volumes in Europe and the Middle East.
Turning to profit. Operating profit grew 9.7% at actual rates, representing a margin of 24.3%, up 160 basis points. This included a translational FX benefit of 40 basis points, driven by the strength of sterling, euro and several emerging market currencies. The key driver was continued excellent progress on supply chain productivity with further reductions of SKUs and formulations, increased equipment effectiveness and network optimization. AI continues to be a driver of efficiencies with analytics enhancing quality and reducing line stoppages as well as helping to reduce complexity and cost in harmonizing packaging and formulations. The strength in gross margin enabled us to continue to invest in our core portfolio, innovation and key growth markets. We increased A&P spend by 3.2% at constant currency to 20.9% of sales. We are focused on maximizing the efficiency and effectiveness of our spend through media quality, precision targeting and social first.
In terms of our categories, Oral Health remained a standout performer, delivering 6.2% growth in the second quarter and 7.3% in the half, more than twice the market growth, driven by double-digit growth in Sensodyne and parodontax. Denture Care also performed well, driven by the successful launch of Ultimate All-in-1 in Japan. VMS improved in the second quarter to 2.2% with 1.9% growth in the half, driven predominantly by the U.S. and China. In the U.S., Centrum delivered mid-single-digit growth, driven by shelf resets and the launch of Age Defy. In China, Centrum Daily Kits and Caltrate Kids Liquid contributed to high single-digit growth.
Within OTC, Pain Relief grew strongly at 4.6% in Q2, taking the first half to 2.1%. Performance was driven by major consumer activations, including the London Marathon and UEFA Champions League, alongside innovations such as Excedrin Rapid Relief. Voltaren 2% Gel delivered exceptional growth in China, driving the brand's highest ever market share in the country. Panadol outperformed the market, driven by geographic expansion of dual action and the activation of Optizorb technology.
Respiratory Health declined 6.5% in the second quarter and 4.7% in the half. This reflects a weaker cold and flu season. Across other parts of Respiratory, Otrivin grew, with Otrivin Nasal Mist now in 18 markets. Allergy was broadly flat with a strong early start, which tailed off in the second quarter. The U.S. Smokers' Health business showed improvement in the second quarter, but remains a drag. Digestive Health grew 5.5% in Q2 and 2.4% for the half with strong innovation helping Tums outperform the market by almost 2.5x and Benefiber saw strong growth due to media activations, both of which were partially offset by declines in Nexium.
Now looking at the regions. In North America, whilst we have seen some market improvement, U.S. consumers remain cautious. In the quarter, organic revenue accelerated to 3.1%, split 1.1% price and 2% volume/mix, taking the half to 2%, split 2.5% price and 0.5% decline in volume/mix. Volume growth was broad-based in the quarter across all categories, except Respiratory. As mentioned in the category summary, Oral Health, Centrum and Digestive Health all saw good growth. For the half, adjusted operating margin increased to 23%, up 270 basis points at constant currency, driven by strong gross margin expansion.
In EMEA and Latin America, organic revenue in Q2 grew 1.7%, split 3.5% price, offset by a 1.8% decline in volume/mix. And for the half, organic growth was 1.9%, split 3% price and a 1.1% decline in volume/mix. In Europe, the overall market saw low single-digit volume declines. In this context, we continued to outperform the market, driven by strength across our Oral Health and Pain Relief.
In Middle East and Africa, geopolitical uncertainty weighed on our second quarter performance, which was broadly flat. We saw strength in Sensodyne as well as innovation launches across Voltaren and Panadol, which was offset by double-digit revenue declines in the United Arab Emirates and Pakistan. This region continues to remain challenging.
Latin America in the second quarter was more encouraging and was up high single digit, benefiting from stronger execution with Sensodyne and ENO performing well.
In the half, adjusted operating margin was 28%, increasing 160 basis points at constant currency, driven by supply chain productivity.
Finally, in Asia Pacific, we are seeing consumers adopt a digital-first approach, which is more discovery-led, supported by digital platforms, content and increasingly AI-enabled tools. These are areas where we continue to increase investment, particularly in China. In Q2, organic growth was 5.4%, split 6.1% volume/mix and a 0.7% decline in price. Pricing was slightly impacted by higher hospital channel growth, driven by participation in China's volume-based procurement program. For the half, organic revenue grew 4.7%, with 4.9% growth in volume/mix, partly offset by a 0.2% decline in price. Overall, China growth accelerated in the second quarter to high single digit, supported by Oral Health, Pain Relief and VMS, partially offset by weaker Respiratory Health demand for cold and flu products. India also accelerated in Q2, delivering mid-teens growth driven by expanded distribution and strong in-market execution. For the half, adjusted operating margin was 24.6%, up 160 basis points at constant currency, reflecting strong operational execution and productivity benefits.
Let's now look at the remaining drivers of earnings. Adjusted diluted EPS grew 12%. In addition to the operating profit drivers I have shared, EPS growth was also driven by a lower net interest charge from a reduction in net debt, an increase of 140 basis points in our effective tax rate to 25.9%, driven by discrete items, which are expected to reverse in the second half and a 1.6% reduction in average share count, benefiting from the share buybacks in 2025 and 2026. Adjusting items were GBP 192 million, up GBP 152 million year-on-year, driven primarily by restructuring costs associated with the operating model transformation. We continue to expect the program to deliver GBP 175 million to GBP 200 million of annualized gross savings over the next 2 years. One-off implementation costs are expected to be broadly equivalent to the annual savings, with the majority recognized in the first half.
Moving to cash. Haleon is a highly cash-generative business. We delivered GBP 769 million of free cash flow, an increase of GBP 35 million versus the prior year. This was due to strong operating profit and further reductions in working capital of 5 days compared to the first half of last year. This was due to payables optimization. Net capital expenditure increased to GBP 140 million, reflecting investments in systems, processes and automation to support sustainable long-term growth alongside initiatives to drive productivity. Our capital allocation policy remains unchanged. In line with that, our dividend policy is to pay 1/3 of the prior year total dividend as an interim. And the Board has declared an interim dividend of 2.4p per share, a 9% increase on the prior year.
Before moving to the outlook, let me briefly walk through our new reporting structure. Full details, including historic pro formas, are provided in the appendix to the presentation. North America is largely unchanged, apart from a modest impact on operating margin due to the reallocation of R&D investment under the new structure. We have introduced a new International segment, which is made up of our 3 smaller operating units, LatAm, India subcontinent and the Middle East and Africa. This means Europe is now reported separately and Asia Pacific no longer includes India subcontinent. This new reporting structure better aligns with the way that we manage the business and highlights the growth opportunities across our key markets. We will report on this basis moving forward.
Now let me turn to our outlook for 2026. As Brian mentioned, we expect to deliver organic revenue growth within the 3% to 5% range and high single-digit adjusted operating profit growth at constant currency, driven by continuing benefits from our supply chain productivity program and higher SG&A savings from operating model changes. These will be partially offset by higher input costs from the conflict in the Middle East. This enables flexibility and agility in our P&L to continue to invest behind our brands and in future capabilities.
And with that, I'll now hand back to Brian.
Thank you, Dawn. So to sum up, we delivered a sequential improvement in growth in the second quarter against a challenging consumer and macro environment. Our financial performance was strong. We benefited from the excellent progress we've made on productivity, which has driven strong profit growth. We continue to make progress against our Win as One strategy and our strategic priorities of growth, productivity and culture. I remain confident in the opportunities ahead to deliver our medium-term guidance of 4% to 6% annual organic revenue growth with high single-digit adjusted operating profit growth at constant currency.
Thank you for your continued support and interest in Haleon.
Haleon — Q2 2026 Earnings Call
Modest H1 organic growth with strong margin and cash improvements; management reaffirms FY guidance while investing in productivity and emerging-market capacity.
📊 Quarter at a Glance
- Organic revenue: +2.6% H1, +3.1% in Q2 (H1 split: 2.1% price, 0.5% volume/mix; Q2 more balanced)
- Operating profit: Adjusted op profit +8.2% at constant currency; operating profit +9.7% at actual rates
- Margins: Gross margin +140 basis points (constant currency); operating margin up ~120–160 bps
- Cash & returns: Free cash flow £769m; £893m returned to shareholders (dividends + buybacks)
- EPS & costs: Adjusted diluted EPS +12%; adjusting items £192m (restructuring)
🎯 What Management Says
- Strategic focus: “Win as One” priorities—growth, productivity and culture—remain central; new operating model largely embedded to speed execution
- Growth actions: Targeted recovery in North America (retail execution, e‑commerce), double‑digit momentum in India and China, and GLP‑1 cross‑category shelving to capture new demand
- Productivity program: GBP 800m gross savings target; SKU cuts (~27%) and AI/digital twins to boost supply‑chain efficiency and free spend for growth
🔭 Outlook & Guidance
- FY guidance: Reaffirmed organic revenue growth 3–5% and high single‑digit adjusted operating profit growth (constant currency)
- Risks: Higher input costs from Middle East conflict and weaker Europe volumes could pressure near‑term top‑line momentum
- Timing & costs: Restructuring/implementation costs raised adjusting items this half; expected annualized gross savings of £175–200m over next two years
⚡ Bottom Line
- Conclusion: Haleon shows clear profit and cash delivery from productivity and disciplined capital allocation, but organic growth remains below medium‑term target; execution in North America and emerging markets is the key lever for shareholders to close that gap.
Haleon — Special Call - Haleon plc
1. Question Answer
I'm delighted to welcome Jayant Singh. Thank you for coming to our Consumer Health Event. So this one is going to be a bit different from the last one. So you're going to do a few slides, and then I'm going to ask you a few questions. So over to you.
Okay. Thank you very much. I know I'm holding your lunch, so I'll try and make it interesting a little bit. Cool. My name is Jayant, and I'm the Head of Oral Health business for Haleon. This is a little bit of my background, and I've been doing this role for the last 6 years with Haleon. I thought about what did I want to tell you in the next 20 minutes.
So there are a couple of things probably which are important here. One is to just give you a sneak insight into our portfolio, where do we focus, what do we do, to talk to you about a few of the growth drivers that have been driving our growth and our performance in the market. And to show you a few examples of how we execute to build your confidence around the future growth trajectory that we want to continue to outperform and win in this amazing marketplace.
But before I go into those things, let me pull you back into the core reason why we win is because we solve real issues for our consumers. These are issues that impact the quality of life of our consumers. And we call it therapeutic oral health. When you have a short sharp pain in this amazingly beautiful Dubai weather here these days, and you can't have a sip of cold water or icy drink, that impacts your quality of life. When you have gum issues, bleeding gums, periodontitis, gingivitis and your roots hurt, that -- swollen gums, that impacts your quality of life. And those are the spaces we play in to really continue to outperform the market. So best to listen from some of our consumers as to how their life gets impacted by these issues.
[Presentation]
So we have got a sharply positioned portfolio. We have a clear sharp focus on dentin hypersensitivity which is the sensitivity, short sharp pain, nearly 45% of adult population feels this twinge on a weekly basis and Sensodyne is our brand positioned against this. Enamel erosion, I bet each one of you in this room have some or other form of enamel erosion because some studies are showing 90% of people have enamel erosion.
And these are coming from the potentially healthy things we do. When you bite into an apple, when you have a sip of orange juice, the acidic nature of these foods is causing your enamel to erode. Pronamel is our brand positioned against enamel erosion. We talked about fixatives, which is Polident Corega going after tooth loss. Parodontax -- Corsodyl in the U.K. is the brand positioned against gum health. And then as evidence is increasing more and more on connections between oral health and systemic health.
We are beginning to learn more about it and see what we can do with it. For example, just a couple of months back, in partnership with Tesco, we executed a program around diabetes and gum health education for our consumers in Tesco stores in the U.K. We are doing a 10,000-patient study over 2 years in partnership with the University of Birmingham to really understand what are the markers of diabetes that can be found in a dentist chair because we are finding strong linkages between gum health, gum issues and diabetes.
So these are the things that we are sharply focused on. And what's quite unique about these is that as awareness about oral health increases, we are finding higher prevalence of some of these conditions. People are living longer. So more oral health issues as they age. GLP-1, you are hearing more and more feedback from users of GLP-1 around issues like dry mouth, around issues like acid reflux, which is leading to enamel erosion. Some of the dietary shifts that are happening, they are leading to some of these phenomena. So we're finding increasing prevalence of some of these issues that we are sharply focused on resolving for our consumers.
Now let's take a look at our portfolio, okay? We play in this large oral care market, but we are uniquely positioned in therapeutic -- what we call, therapeutic oral health. So 90% of our oral health portfolio is in therapeutic oral health, which is solving real issues which affect the quality of life of our consumer. And what's unique about us is not only are we sharply focused but we are also a scaled player. And somehow these 2 things don't always go together that you want to be sharply focused and you also want to be scaled.
Although we are #3 in total oral care, we are #1 by far in what we call therapeutic oral health. And this is the faster-growing segment, not just this year, not just last year, but over longer term, 5 to 7 years or even longer. Therapeutic part of the segment is growing 1.5 to 2x faster than the total oral care category. So we're playing in the faster-growing, sharply focused end of the -- on the segment, which is scaled as well. And then we have a clear track record of outperformance. We represent 32% of the group revenue, a much higher percentage, which I'm proud to say of the group growth. And over the last 12, 13 years or so, we've been growing at about 7% CAGR, which is almost twice the long-term growth rate of the market.
So outperforming this market consistently over a large period of time. But the beauty of this is that we continue to have huge headroom for growth. For those of you who were during our Capital Markets Day last year, we talked about this closing the incidence to treatment gap, right? Nearly 45% of adults experience frequent sensitivity twinges, but over 60% don't use specialist propositions. Same is true for gum, same is true for our denture fixative business and cleanser business.
So we are outperforming. We are growing -- we've been growing at twice the rate of long-term market average. We are sharply focused. And we see a huge opportunity to continue to grow with the incidence to treatment gap by gaining more and more new users and by driving penetration.
So let's talk about how we do that, right? And the first and the foremost thing that I want to talk about is that our entire focus is on driving category growth. When we talk with our retail partners like Walmart, like Amazon, like Tesco, okay? They care less about which brand grows or not. They care more about are you bringing more users into my store? Are you growing the overall category or not? And that's what we're uniquely focused at. By growing almost 2x the long-term average growth of the oral care category, we are helping drive category growth. And this is coming at more premium end of the segment, which means better margins, better cash flow. So that's how the model is. It's a nice model of -- which generates good profitability for ourselves and for our retailers as well.
And there are 3 key growth levers that we focus on as we do that. And I'll take you through a few examples of each one of them as we go forward. The first one is condition education and conversion. We spent quite a lot of time educating consumers and experts indeed about the conditions that are treatable like sensitivity, like gum issues, like comfort with dentures that they can help their consumers improve their quality of life. The second one is around superior premium innovation, which is science-backed, clinically proven, dentist recommended.
And the third one is unlocking access to new consumers, new cohorts, and I'll talk about each one of them in a short while. Some examples of how we are driving category condition, education and conversion. Our dentists reach our extensive reach of dental fraternity, whether it is in their offices, whether it is through forums like FDI or IADR, EuroPerio, which are the big events in the dental community. We are present. We are talking our science. We have a real science-based relationship with these dentists. We are bringing new material to them.
We have a platform called Haleon Health Partner, which has 1 million registrations of dental professionals where this material they can look at and they can get points for their continuous medical education. They can also order samples through Haleon Health Partner to give it to their patients. So that's a big element of what -- how we drive trial and condition education.
But there are other elements which are on this page as well. For example, we do mass consumer contact programs like chill test. Chill test is a very simple test. Take a sip of icy cold water, swirl it around in your mouth for 20 seconds and see whether you feel pain in any part of your teeth or not, right? And if you have sensitivity, you will, right? We do that with a number of consumers, and we are ready to hand them a sample if they feel this pain in their teeth.
We're doing plaque test on parodontax. These are all programs which can diagnose people for the condition they have and offer the solution. And similarly, denture confidence test for our denture consumers. And we are doing this now in an increasingly social environment. We are building content factories. We are driving social virality with some of this. There's plenty of fake advice, health advice as it is right now in dental world as well as it exists in outside world, so in outside of oral health.
So we have this program in Germany, which we did a couple of years back around Trust Real Dentist, which is a real dentist telling you, bursting some of the myths of you should be having vinegar in the morning to have fresh breath and those sorts of things, right? And actually, these advices are there and sometimes they are harmful. And this is what we are beginning to do more and more in the social world or, for example, building content whilst being present in these dental conferences, which are then relayed through webinars and seminars to other folks.
Very recently, in our Weybridge, where we are based, we have a studio. We invited a celebrity from China who came in with entourage, met our scientists and that led to a huge amount of content creation, which was then live streamed back in China, which drove significant sales for our brand, Parodontax, which we have recently launched in China. So increasingly getting social to drive condition education and conversion.
The second one is around the superior premium innovation. It all starts with our consumer insight. That's at the core. Solving a real consumer issue is -- must be at the core of every innovation. We saw the trend in whitening. A lot of people want whiter teeth. But sometimes whitening treatments can cause sensitivity, right? So we are not promising 15x whiter or 10 years of stain removal. We are very simply promising 2 shades whiter teeth, but they are sensitivity protected. You won't have enamel erosion. You don't have sensitivity issues.
And we first launched it in the U.S. in 2024. This was the #1 innovation in toothpaste in the entire U.S. market. Since then, we've built this phenomenal range of clinically proven dentist-recommended superior efficacy products under the clinical umbrella. In the U.S., we now have Clinical White, Clinical Enamel Strength and Clinical Repair. This year, we've launched. And this year, again, Clinical Repair is the #1 toothpaste in dollar terms in innovation -- in new product introduction in the U.S. again, right?
And we are building this beautiful range at the premium end, which is also helping our mix as we work through this. and investing significantly in clinicals. We have more than 10 clinicals on this clinical range alone, which is helping us drive significant dentist recommendation behind this new proposition. Not just on Sensodyne, this is something that we do across our brands. On parodontax, for example, again, this is how we are -- we have a Sensodyne Repair and Protect range. And we know that the concept of repair works very well with our consumers. So we take that and we put a parodontax Active Gum Repair, which talks about active repair of gums within a week's time.
We are building clinical studies. We have superior science visualization that we take to the dentist and the consumers to show them the difference that Parodontax can create before and after in terms of repair of the gums. And we've been scaling this across a number of markets over the last few years, which is again a significant opportunity for us because parodontax is a reasonable size brand, global share of about 2.3, but meaningful revenue only in 20 markets. It's a good opportunity to scale up in the other markets that we are present through some of these programs.
Yes. And finally, on to this third pillar that I wanted to talk about today. Nearly half of the world's population suffers from some of these issues, whether it is sensitivity, whether it is gum health issues or whether it is tooth loss kind of stuff, which our brands can prevent, can help manage or can treat, right? So the opportunity for penetration for our brands continues to be immense.
And on this slide are an example of 3 ways, there are more ways in which we aim to do this. The first one is new need states. So how do we expand into new related need space? So enamel is a very closely related need space to sensitivity, right? We have an offering called Pronamel, which offers you the best enamel protection. It's scaled in the U.S., but not scaled outside. So we have an opportunity to scale that. We've got into whitening, which is the sensitivity safe whitening I was talking about.
New consumer cohorts. Kids is a very important target. So how do you get into -- we play with AquaFresh Kids. We are now beginning to play with Pronamel Kids in this segment. Younger cohorts with propositions like whitening and enamel that I talked about. And then finally, in many of our emerging markets, how do we go to the next level layer of consumers in terms of allowing more access through price points like the INR 20 price point in India, which has been a great example of how do you take -- how do you still remain a premium product, but start moving into new lower-income consumers through offering the right propositions at the price points.
I'm going to play a small video, which will show you around how this is not just a distribution game, how the model of condition education and conversion, diagnosis and therefore, sampling the consumer continues to play an important part, even if you start looking into some of these low-income access consumers. Hopefully, this video plays.
[Presentation]
Yes. So hopefully, you saw the demand generation mechanism. It's giving good employment to the rural audience as well as for many of these audience, dental access is limited. They don't have any dentist they can go to. So this person is serving as a health ambassador, helping them identify some of these issues as well as sampling the products and helping them resolve these issues. That's an example of how we are driving the last-mile condition education in some of these underserved communities where there is little dental access.
Finally, I think my presentation will be incomplete without talking about e-commerce. This is a very, very fast-growing segment in oral care. We are also playing there. We have our online shares in many of our important markets are higher than our offline shares, which puts us in a good place in order to exploit this increasing trend of consumer shopping more on online channels. Social commerce is a massive big play in China. In fact, TikTok is almost 30% of the total China toothpaste market, and we have strong programs to build scale and continue this growth trajectory on the e-commerce channel as well.
So I took you through a few examples of how -- what our growth drivers are, what our opportunity is and how we are executing some of this. Hopefully, you share with me the huge positive growth trajectory that I see for this business, given the opportunity we have, given the track record of successful execution that we've built over a number of years to continue our outperformance and with our amazing set of brands that we have in our portfolio.
That's all I wanted to share as part of this presentation. Thank you very much. And now we'll have a fireside chat. Thank you.
So super interesting. What I want to try and do is to bring the medium term also back to some of the shorter-term stuff as well because we try and balance both.
So one of the questions that have been coming in from investors has been a little bit around pricing. Clearly, affordability, a big issue for consumers around the world. Can you talk a little bit about whether you're seeing any kind of stepped-up promotional activity you -- vis-a-vis your biggest, more mainly U.S. listed peers. How does promotional activity look like at the moment? And perhaps if you've got any examples by country? I know in the U.K., you [ presume ] Boots, it changes the dynamic. I'd love to know what's happening in the U.S. versus Europe?
I mean there's always a search for value, right? And I think it's important for -- as a premium player to get focused on driving superior value than just pricing. And we take no issues in building a premium aspirational brand, and that's what our focus is here. I think the difference between U.S. and Europe, if you ask me, is Europe -- U.S. is much more into multipacks, and we see a much higher percentage of -- now you are even seeing 4 packs and 5 packs solutions in U.S. sales. In Europe, probably outside of Netherlands, where you are seeing 12 packs and 24 packs, [ 11 ] free for the price of 1 and all that. We generally see less of multipacks in Europe and more single pack price promotions.
Now I'm not going to predict the future with the cost of living and all that, that's going to happen. But so far, we haven't seen any irrational level of promotion coming through in the category, neither with us nor with any of our competitors that we are seeing. But it remains to be seen in terms of what -- where the inflation nets are and what -- is the cost of living. The consumer confidence overall is down. So we'll see where that goes.
Because the other thing is pricing in emerging markets because you've got the new lower rupee price in India, but also I've noticed in Latin America, your price premium against Colgate has come down. So you've taken the pricing down, but actually, the volume has really ramped massively. Is that kind of a conscious decision to figure out what the right price point is in some of these EMs to drive the maximum volume elasticity. And maybe had you got it wrong before and maybe you're making some adjustments in Latin America to put it right? And why is that now happening?
So it is absolutely a conscious decision, but it's a sequential decision, I would say. I think first, you need to build a strong premium brand, which many more people wanted than those who can afford, right? And I don't tire of telling this lovely story of as I go through many consumer homes, and this has not just happened once, but a number of times, I would sit with the consumer in the drawing room, we would be talking -- they wouldn't know where I'm from, but we would be talking toothpaste, and I would ask them what toothpaste they use.
And they would say, I use Sensodyne, okay? And then you either say, can you bring a few tubes, can we see it? Or you say, can I look at your bathroom to see where you brush, how you brush? And there is no Sensodyne, right? And then the consumer will tell you a story about, oh, it's just got finished, it's in the bin or I've just ordered and things like that. And that is a beautiful thing for me to note because it means that consumer wants Sensodyne, right?
So we built that brand position, which is premium aspirational. They can't afford you right now, right? So then that's a better problem to solve than to solve than to solve the issue of the consumer doesn't want your brand in the first place, right? So I think it's a sequence.
And in the case of India, for example, I launched Sensodyne in India in 2011. It seems a long time back, right? We have spent 14 years building a premium aspirational brand in India, right? We always knew that a huge chunk of Indian volume in toothpaste goes at INR 20 price point. But the time was not right. We wanted to build a premium aspirational imagery. Now the time is right because we built that, more people want this.
So we offer that INR 20 price point so that more people can use us. But do remember that INR 20 price point on a price per gram basis is still significant premium to what others are selling. So we'll maintain our premium aspirational energy, but it's not that with every market, we will go and enter with a low price point. It's only in those markets where we built a premium aspirational brand that we get the next level of consumer and the next level of consumer at a reasonable price.
You're also investing a lot of money in India. I think...
Yes, a manufacturing plant...
GBP 175 million if I remember the number correctly. Could you talk a little bit about where -- why that money is going into India? Is it for localized production? And then what the returns you expect from that spend will be over time?
So we've made 2 announcements in recent past. One is a plant in China, which we are investing GBP 65 million. It will become operational towards the second half of '27. And over a period of '26 to '29, we are investing GBP 175 million in India. The China plant is a China for China. China requires local innovation, local flavors, local forming, local adaptation.
And this plant over there allows us to do 2 things. One is protect our technology because we do have some very robust patented technology that we want to protect, especially in the non-aqueous side of our toothpaste. It gives us that IP protection. And it also allows us at fast pace to do this local experimentation. In fact, when we launched Parodontax in China, it's the global sachet of sodium bicarbonate, but the flavor is local. The foaminess is local to make sure that we appeal to that. It will also allow us to generate a lot more of local innovation in China.
There are similar things in India, although to a lesser scale. So our India plant will serve India, but it also serves the nearby geographies in Asia. And we see significant volume potential, growth trajectory coming out of India. We are growing in high double digits, and we can -- we see that continuing. And therefore, it makes sense to invest in our own plant.
Yes, absolutely fine. And I want to touch on parodontax as well because that's a brand, I think, in fewer countries than Sensodyne, certainly the white space growth is probably more sizable. Clearly, China is a huge opportunity with leading -- I can't remember the stats about 60% of Chinese consumers have bleeding gums. But how do you think about actually that brand in terms of trying to get more revenue out of China compared to then rolling out into more other countries and getting that balance right. And I think ultimately, trying to figure out how big an opportunity is Parodontax if you had to put a dollar number on it.
Yes. Look, I won't put a speculative dollar number, but it is the fastest-growing toothpaste brand of a certain reasonable size. And when I mean reasonable size, I'm talking about brands which are hitting GBP 150 million, GBP 200 million business globally. So amongst that range, it is the fastest-growing global brand and double-digit growth over a number of years. It's got reasonable revenue in 20 countries only, so huge, but it's present in more countries. So I see this as more -- both a growing in scale opportunity as well as white space opportunity.
So let me talk a few numbers. What do I mean by that, right? I think Japan is one of the world's most developed gum markets. 30% of toothpaste is in gum in Japan. In China, where we have a big player called Yunnan Baiyao, which is about GBP 850 million in revenue, 17% or 18% of the toothpaste market is in gum. You compare that to a U.K. where 4% of the toothpaste market is in gum. Compare that to France at 7%.
So there are significant opportunities to scale up this brand even in the European markets as well as going after some of these opportunities like China, like India, like South Africa, where, again, prevalence of gum diseases is high. Of course, having the opportunity and profitably mining the opportunity can be 2 different things, and we want to be really cautious about creating shareholder value as we go after these new opportunities. But we do indeed see a very significant scale-up opportunity with parodontax.
The other part of your portfolio, I mean, it doesn't get much attention because everybody is focused on Sensodyne and Parodontax, but you have Polident and you have Aquafresh, kids toothpaste. Can you talk a little bit about the other parts of the portfolio?
Again, Polident, Poligrip, Polident cleansers, Poligrip fixatives, Corega in some parts of the world is again a significant part of our portfolio. And I quoted some number over there, which is 20% of people are wearing dentures. 80% of them are not using fixatives. And frankly, it is one of the most life-changing experiences of losing your teeth, wearing dentures, everything becomes that much more difficult. And we have almost an 80% repeat rate. If somebody uses our fixative with a denture, then they see a remarkable difference in the comfort of their gums, in the biting power, in their quality of life.
So again, this is an area where we are focused on in terms of how do we have more and more users go after fixatives. Now the issue there is that the dentists believe that the denture that they give you is a very good fitting denture. So if they recommend fixative, it's a reflection of poor quality work on them, right? So we're not finding -- but that's what we are looking to solve in terms of -- it's not about bad quality dentures. Clinical proof of even in good quality dentures, because mouth is a living organism. It moves and you've got a piece of plastic in there, right, which is not moving, not as flexible. So it does create a problem.
So we see good opportunities behind that. We've been growing well. We have more than 50% share globally of that. We lead the category. And we are going more after -- while the number of full denture wearers is coming down, the number of partial denture wearers is going up and their needs are different. So we're looking to grow it there. Aquafresh, it's not a global priority. It's big in some markets, Germany, South Africa, U.K. play with Aquafresh kids.
So we are very much focused to really drive it in these markets in, again, a reasonable way. We don't have as high gross margins that we have with our therapeutic portfolio on Aquafresh. So obviously, it gets lesser level of investments to make sure that we are again generating the right portfolio results in this. But it's a focus in some markets not a global focus.
And the other big story is the U.S. oral care market is flat as a pancake, but you're growing double digit or certainly high single digit from the data that we can see on the scanner data. So that's interesting because you said it's growing 1.53% above. It looks like it's growing even higher at the moment. So I guess the question is, is that just innovation-led share gains around all the -- and then if it is, are you -- how confident are you that, that kind of quantum of innovation can be at least replicated or even improved upon over the next 12 months without giving away the game in terms of new innovation, can you reassure us that actually what we've seen around clinical and enamel can be replicated with other big breakthroughs?
Look, the 3 growth drivers that I talked about, they are equally important, right? I don't think it is -- it can't just be an innovation-led game. I think we are innovating strongly. We have a very strong innovation pipeline. I gave you the example of 2 of our recent innovations, our #1 in toothpaste in the U.S. And even on the clinical platform, we have more to come, right?
So I feel good about our innovation pipeline and the innovation strength that we have moving forward. But it's not just an innovation story. It's a story which is based on the work that we put in condition education, condition diagnosis. We are reaching more dental offices because what we are seeing in the U.S. is that the independent dentists are getting together into chains and that's a unique thing happening in the U.S. So we're reaching more dental offices. We are doing more webinars. We have -- we are doing more remote ways of reaching more and more dentists and stuff to do the condition diagnosis and condition education.
We continue to invest in helping people understand what sensitivity is and what gum health is. And I think even in U.S., there are parts of the population which are not as -- we haven't reached as much as some of the other parts, the Hispanic communities, there's a kids audience. Even in U.S., there is a Dollar General, dollar store audience that we want to play more into. So all the 3 levers are important even in U.S., and they are the ones driving the weight of one lever over a period of time may be different than the others. But we really believe that we need to play in all these 3 to drive sustainability.
The other thing that's changing is that you seemingly are winning distribution in some of the bigger U.S. retailers like Walmart, Target, Costco. So my question is kind of where are you in terms of TDPs, trade distribution points, across the U.S.? How big an uplift could that be? And what's driving that? Is it the work that Natalie and her team are bringing in terms of how you're executing with Amazon? And -- or how do you think about it? How much -- how big a deal is it?
Yes. Well, I talked about what retailers care about. It is footfalls and growing the category, right? If you're growing the category, then you earn your right to a better shelf presence, more TDPs and things like that. And I think Walmart, we won the Supplier of the Year in Personal Care in 2025. And they're seeing that we are bringing innovation that sticks. One clear measure of sustainable innovation that I look at is that does your product stay on the shelf after 3 years or not? If it's not, then you're creating churn, right? There's a lot of cannibalization, which is happening.
So when the retailer sees that we are bringing meaningful innovation, which stays on the shelf for a longer period of time and just doesn't churn the shelf, they're willing to give us new distribution points. If they see that we are improving their mix with things like clinical, it is our foray into $10 toothpaste into. So they're seeing us improving the mix kind of stuff. And with the margins that we have, they're seeing the absolute dollar that they're taking home if we are pricing higher is much better for them. They see the dentist recommendation. They see the scientific efficacy of our product. So we are seeing good traction there.
And I think the -- our partnership is becoming stronger and stronger, so much so that I think Walmart is coming over to our place in the U.K. this -- later this year to look at our program and to work together with us to really do more. We did a program called Remote Area Medical with Walmart in the U.S., which is outside of Walmart stores. We are doing oral health checkups and things like that. I talked about the Tesco program that we did with diabetes. And so retailers are seeing us as somebody who's rooted in science, is solving meaningful issues for our consumers and is innovating in a manner that serves both the category needs as well as their needs. And that's why they're willing to partner with us.
I do -- I have to touch on AI just quickly. I mean -- and do you think Agentic AI where consumers actually getting recommendations from the pharmacists and doctors, you're also getting recommendations from large language models as well. And those large language models are often pointing to scientific credibility. And so does that actually play -- it must -- does it play to your advantage? Are you seeing actually any uplift in growth as the percentage of people that are using Agentic increases already? Or is that something that you think could happen in the future? Is it now? Or is it down the line?
Yes. I don't have clear evidence to tell you I'm seeing an uptick in the growth. But I do think there is -- this is an inflection point in terms of LLMs and discoverability of the things we do. I think what we are realizing is the more scientific publications you have, the better discoverable you are with some of these LLM models. There are forums like Reddit, which we would never have thought about, right, which if you're not there and you're not being talked about, then you are less discoverable.
So look, I mean, we are ourselves learning things here in terms of how we -- we've been generally quite, let's say, reticent in terms of our bar for publication of scientific material has been quite high. And we are looking to -- whilst not lowering our standards, what's the right way so that we aid in discoverability as well as holding that scientific standards high. And it's a nice -- I think the -- I feel the freedom within constraints is always a beautiful thing because it limits your choice.
We -- and we are always very careful about before we do anything, I have my dental rep going into the dentist office, talking to them about how scientifically proud as a company we are and the pharmaceutical heritage that helps us there, does it damage that? Will the dentist believe in my rep less as a result of something I said or not? And having that filter really allows us to do the right things in that manner.
So yes, I mean, is AI changing consumer behavior? Absolutely, yes, okay? Is AI leading to some things which may not necessarily always be great, like a lot of influencers, a lot of stuff which is becoming mainstream, which otherwise should not, fake advice becoming mainstream. Do we want to play in these areas? No. But do we need to leverage AI in the right areas of discoverability, scientific publications being where we need to be? Absolutely, yes. And it's a journey. We're not there.
We've got about 10 minutes left. So I'm going to open it to the floor. So please don't be shy. There are microphones on your desk. So if there's any questions, just raise your hand and ask them. Otherwise, I want to keep going.
Wonderful that you're going out to rural India and bringing products for sampling to who need it. Can you just tell me about the execution of how you follow that through so that consumers can actually get the product when they want it and they're sort of -- they're on Sensodyne. So how do you roll out that coverage and get distribution?
Absolutely. So the first thing is distribution. We're only going to those places where we found the distribution route because if you're not distributed, then it's a problem in terms of -- and the other thing -- and the reason why demand pull is really important because you can always place a product for one time, right? But the last mile in this happens more through cash and carry and wholesale channels because your limit -- I mean, India has got, whatever, 7 million, 8 million, 10 million outlets or more. I've been out of India for quite some time. So the number keeps increasing.
And one of the things which you said about is why India is not great at football is because whenever they find a corner, they open a shop. So I don't know what the latest number is, but it's a question of distributing and visible distribution is very important. That's why you see that hang there, right, which is if you are just there in the store, I mean, you're not visible if you're a new brand, people will not -- you saw the wall painting where is that image of the girl with this and doing -- and so demand generation needs to go together with distribution so that you have people asking for it, okay?
We also go to the nearest primary health care center, and we talk to the people there, we educate them about. So it's a circle of your product is there, the right SKUs, you're doing the sampling, you are talking to the primary health center, you're doing wall paintings, which people see in these important locations, and you've got this hanging display to really continue to drive the demand, which then continues to fuel the distribution of this.
Cool. Any others? If not, it's lunch. So thank you very much. Super interesting. And if you join us for lunch. Thank you, everybody.
Thank you, everybody.
Haleon — Special Call - Haleon plc
Haleon’s oral‑health presentation emphasized therapeutic market leadership, premium clinical innovation, and growth via education, e‑commerce and EM expansion.
📊 Key Message
- Summary: Management positioned oral health as a faster‑growing, therapeutic segment where Haleon leads by share; strategy is to convert unmet need into users through dentist engagement and consumer diagnosis, back premium clinical products with evidence, and expand access via tailored price points and e‑commerce to sustain higher margins and growth.
🎯 Strategic Highlights
- Condition education: Large dentist outreach (Haleon Health Partner ~1M registrations), in‑store diagnosis tests (chill/plaque/denture), sampling and social content to drive trial and category growth.
- Premium innovation: Clinical product platform (Clinical White/Repair/Enamel Strength), >10 clinical studies, US #1 new toothpaste innovation and dentist recommendations improving mix.
- Access & scale: Sequenced market entries (INR20 price point in India after building premium demand), Parodontax white‑space expansion, strong e‑commerce/TikTok programs in China, plus manufacturing investments (GBP175m India, GBP65m China).
🔭 New Information
- Updates: Concrete reveals: GBP175m India investment (’26–’29) and GBP65m China plant (operational H2 2027), a 10,000‑patient gum/diabetes study with University of Birmingham, and specifics on Clinical range traction in the US and Parodontax scale opportunity.
❓ Analyst Q&A
- Pricing/promo: No current irrational promo war observed; US favors multipacks while Europe sees single‑pack discounts; management watching consumer confidence and inflation risks.
- EM strategy: India entry via lower price points is deliberate and sequential—first build premium aspiration, then broaden penetration; Latin America pricing adjusted to drive volume elasticity.
- Distribution & tech: Gaining retail distribution (Walmart, Target, Costco) by growing category and improving mix; exploring AI/LLM discoverability while guarding scientific credibility.
⚡ Bottom Line
- Conclusion: Presentation shows a disciplined, evidence‑led plan to monetize large unmet oral‑health needs via premium clinical innovation, dentist advocacy and targeted access moves; key execution risks are promotional pressure, EM roll‑out execution and protecting scientific trust, but the roadmap supports durable, higher‑margin growth for shareholders.
Haleon — 23rd annual dbAccess Global Consumer Conference
1. Question Answer
Okay. Good afternoon, everybody, and thank you very much for joining this session, and thank you very much indeed, Brian, for joining us here in Paris. Good to see you here.
So Brian, perhaps before we dive into the business, you've been the CEO of Haleon now for 4 years. How have your priorities changed over that time period? And what are your key strategic priorities now?
Yes. Listen, I think if you take a step back, we listed in July of '22, so coming up on 4 years. I think of Stage 1 was separate from GSK, focus on delivering continuity of the business, delivering the growth, delivering on the commitments, building the corporate functions, tax, treasury, new Board, all those kind of things.
I think we successfully did that. We also had 2 big things we needed to address, 4x leverage and 45% overhang of our previous owners, Pfizer and GSK. So 2 years in, we've kind of dealt with all of that, built the company, stood it up, got rid of the overhang, leverage down to around 2.5x.
Then I think the next phase for me was then building out the leadership team. Team that took us the separation was fantastic, but we probably needed a different group of people to realize the full potential and do that. We started that journey a couple of years ago. First hire was Namrata Patel, my supply chain head, 15 members of my team, 13 of them are new since the separation.
Then about a year ago, we did a Capital Markets Day, and that's when we laid out kind of the priorities going forward. So simply put, I'd say #1 priority is growth. And listen, we guided to 4% to 6% growth in the medium term. Last year, we delivered 3%. This year, we guided to 3% to 5%. So I realize we're below that algorithm, but we're very focused on getting that growth back. A lot of the drag in that growth was seasonality and things like that. So we're working through that. And the other big focus for us within that is -- while growth this year, we've guided 3% to 5% competitiveness, market share is a big, big focus.
We ended last year at 60% of the business, maintaining and growing share. That's improved, and we shared that number at half year results, but we're seeing real improvements in our competitiveness across the area geographically.
The ability to do that links to priority #2, which is the productivity. A year ago, we laid out the GBP 800 million of really supply chain savings, productivity savings, which lead to 50 to 80 basis points of gross margin improvement over the next number of years. What that's allowed us to do.
And last year, we delivered 220 basis points of gross margin improvement, taking us to 65%. So what that's allowed us to do is it gives us tremendous flexibility. One, to continue to invest in the business, even though top line has been a bit more challenged, so making ourselves more competitive, but also being quite confident in high single-digit operating profit growth, which will translate into very strong EPS growth on the business in a year where we're guiding 3% to 5% and not 4% to 6%. Really confident in our ability to deliver that, and it's going extremely well.
And again, at half year, we would review where we're at on that journey. I think the third is culture, and it has to do with the new team we put in place, but also the announcements we made in January about a new operating model. And basically, we've now structured in 6 operating units, 3 global categories, we've taken an entire layout out of the organization, 2 layers in some cases and really streamlining and simplifying how we're doing work.
In the U.S., we were able to do that on January 8, top to bottom. Right now, we're in consultation across European markets. We expect the new operating model to be fully in place in mid-July. And for me, that was the last step in this transition of division of a big pharma company to a stand-alone CPG company. So it's really -- it's about growth, #1 priority, productivity culture.
Okay. Fantastic. Thank you. So perhaps before -- well, if we could talk about the business through a geographic lens. First, you're building out your capabilities in emerging markets. How much larger is that investment now across EMs. To what extent do you feel you need or want to build out the capabilities in distribution or A&P? And what are some of the successes for you in the bigger markets?
Yes. Why don't I take that through the lens of our 2 most important and bigger emerging markets of China and India. So if you step back and look at China, we invested about GBP 600 million. We closed that a year ago in buying out our joint venture partner. So we own 100% of that business. We had a joint venture on the OTC part of the portfolio. So now we fully own that business, financially made a lot of sense, EPS accretive, but it also gives us now full control of our business in China. We felt like that was important.
I was in Shanghai 6 weeks ago or so. We announced we're building a new plant in Shanghai, and this to support our oral health business because we have a fantastic oral health business in China. We launched parodontax as a second brand of Sensodyne in China about a year ago, and we see significant opportunities there.
Now if you look at from a distribution perspective, 40% of our business in China is online, breaks down into 3 areas. First is traditional e-com. Good business for us, growing really well. Margin-wise, kind of maybe in line with our business. Then there's online to offline, which is quick commerce through the pharmacy, extremely profitable business for us, and we're very, very strong there. And it plays to our OTC portfolio.
Third is Douyin, TikTok and social commerce. On social commerce, OTC cannot -- you can't market OTC on the Douyin platform. And 2/3 of our portfolio is in OTC in China. Even some of our VMS are classified as OTC. That's an area where we're doubling down and we're investing both in capability, but also in portfolio.
So we have a number of innovations that we're going to bring in, some of the cross-border e-commerce, some of the local to really get our portfolio more fit for purpose for Douyin. Harder channel to make money on, if I'm honest, it's less profitable, but that's where consumers are. And again, with our gross margin and the gross margin improvement, we have the flexibility to make those kind of investments and ensure that we're growing in a very fast-growing channel.
Separate from that, Tier 2, Tier 3 cities is still an opportunity. Our market share of Sensodyne in Tier 1 cities versus Tier 2, Tier 3 is still low. So we're expanding our distribution and our footprint there.
Looking at India. India is a market that grew for us double digits the last number of years, double digits in Q1, super confident going forward in India. About 2 years ago now, we built our own -- began building our own sales force initially when GSK Consumer Health sold Horlicks to Hindustan Unilever. Hindustan Unilever was the distribution arm for that business. We decided strategically, it was time for us to take control of that.
At the same time, we've launched low-income products to reach a different consumer cohort, specifically Sensodyne INR 20 pack. We already have a INR 10 pack on ENO. So we see huge opportunity there. We are investing heavily already. So we're investing in A&P. We're investing in the infrastructure, in the people but we are seeing the returns come because the growth is really, really strong. And our gross margins even on the INR 10 pack of ENO are quite strong.
So I would say that, listen, we are investing in things. It's part of our algorithm going forward. We expect emerging markets to be in that high single-digit kind of range on a continuous basis. Last year, the numbers are a bit hard to dissect because there was just a -- there was a cold and flu impact across both developed and emerging markets. But we feel like we have a really strong business, really strong share growth in emerging markets and quite optimistic about where we can take it.
Okay. Great. So maybe if we look at the EMEA and LatAm business now, this obviously had a tough start to the year because of cold and flu. But what was the performance outside of the seasonal product like? And do you see any impacts of the Gulf conflict either, I guess, here or anywhere else?
Yes. And it's worth Europe, Middle East, Africa, LatAm. By the way, when I changed the operating model of the business, we created Europe as a stand-alone operating unit in Latin America and Middle East, Africa and India. So when we report half year results, you have visibility on Europe as an entity as opposed to EMEA and LatAm.
So let me take it in 3 chunks. So I'd say in Europe, I'd say the business has been stable in the sense that it hasn't been declining, hasn't been growing aggressively. We've been growing market share, impacted by cold and flu. So that's a lot of noise in a lot of the numbers. But we feel like it's a good market and we would expect that market to grow in the 2 kind of percent and we'd expect to be able to grow ahead of that. It's been more flat to slightly down, cold and flu in there and some things.
We don't think there's a big impact yet of the Middle East crisis on Europe at this point. It's certainly a tougher economic environment because we're going through pharmacies for a majority of our business and pharmacist recommendation to play such a big role. We feel like we're positioned okay in Europe to kind of withstand that situation. But we're not seeing it as a high-growth market and a big growth driver, but it's a very profitable market and it's quite challenging but stable for us.
If I look at Latin America, Latin America was tough for us in Q1. It is something we elevated to my leadership team. We brought a new leader in. We did that because we think there's significant opportunities in Latin America. We don't feel like we were capitalizing on them. I think we learned some things as the new leader came in, who's got tremendous Latin American and CPG experience. We've already made some changes. Q1 was quite challenging. Q2 is going to be much better, and we're quite optimistic going forward.
Middle East, Africa was one that was growing quite well for us, grew quite well in Q1. We are seeing just a direct impact quite in places like UAE. For perspective, Middle East is about 5% of our business. UAE is 25% of that chunk of business. So we are seeing some impact on it, but not particularly significant, but we're seeing a downturn in some of the consumption in markets like UAE.
Now from an overall impact of Middle East, Africa and the cost situation, we just feel like we're better positioned than most because we have high gross margins, quite low exposure to petroleum-based derivatives and raw materials and stuff like that. So we estimate it's about 3% of our cost base. But because the productivity is going so well, because gross margin is so strong, it gives us a lot of flexibility to continue to drive that high single-digit operating profit growth, deal with some of these cost headwinds that may come, but also make sure that we're investing in driving growth in R&D for the business and making sure we're showing share growth and we're strengthening our business even at a time where top line is a bit tougher than it has been in previous years.
Okay. Interesting. Thank you very much. So perhaps now we could spend a bit of time on North America. Firstly, how would you describe the consumer backdrop that you're seeing at the moment?
Yes. So again, what I would say is in Q1, we saw a negative market, cold and flu being a big impact. I know that continues to be a theme here, but it is the reality of what we saw. I'd say, again, that's a market we never expect to be super high growth, a couple of percent kind of thing, maybe a bit more flattish than a couple of percent kind of thing. So not massive in the categories that we're in kind of drag on growth at all. If I look at oral health, for instance, slightly less growth than we have expected, but our business actually performed as well, if not better, than we expected.
So our market share has actually been better than we thought. The launch of Clinical Repair in the U.S. and the accumulation of Clinical Enamel Strength is really just continuing to build momentum. So oral health grew -- Sensodyne grew double digits in Q1, quite strong. So we expect that strength to continue. Cold and flu is primarily a Q4, Q1 thing. It still is something that exists in Q2. So -- but it's less of a drag than it would be elsewhere.
So listen, I would say it's relatively stable. We're not seeing big declines. We're not seeing aggressive growth. So our focus is really on our commercial execution, growing market share. And with Nathalie and her team in the U.S., we have some wins in Q2. Changes happened kind of April into May and now in early June, it's probably all set, which is we saw some real wins in distribution in places like Walmart, with Sensodyne, with Oral Health, with Advil, Centrum moving up to a middle shelf from the bottom shelf, wins in Target and in Costco.
So we know that we have some good wins that will help us be even more competitive in that market. We grew 1% in Q1. We expect to see better growth in Q2 and expect to see a progression throughout the year.
Okay. Thank you. And perhaps we could spend a bit of time talking about the different channels and some of the channel shift as well. I mean, firstly, we have the destocking within the drug channel. Is that over? And are you annualizing that? And is that like less of a drag?
Yes. Listen, what I would say is 2 things. So the channel shift where the drug channel is not really growing and Walmart, Amazon, Costco tend to be the big winners. That shift is something that's been happening for a while. The difference was last year, I think as the drug channel customers were under real pressure to deliver their financial results, they took their inventory levels down from a week's perspective.
We believe that's behind us because actually, we're at a level now where it will result in out of stocks and it will impact top line sales, and we think that's done. The channel shift will continue to happen. But listen, as the drug channel becomes a smaller part of the business, Amazon, Walmart has, they will also need more inventory to support growth.
So we think that's just very manageable. And so as far as the step change in inventory that was being hold by the drug channel, we believe that's behind us. The channel shift will continue. And then we look at something like Amazon, 18 brands make up about 90% of our sales on Amazon. 16 of those 18 brands, we have higher shares on Amazon than we do in bricks and mortar.
So Sensodyne, for instance, has about 6 share points higher share online than offline. So from that sense, the channel shift is going to channels where we have higher shares and we're even more competitive.
Okay. So we're hearing a lot about Agentic AI at this conference. How much are you seeing it on the retailer side at the moment that in price negotiations with the larger buyers? And how important is it on the product discovery side?
Yes. I mean, listen, we're doing -- I'll start with the product discovery side. We're doing a lot of work because, obviously, large language models, Agentic AI pulls from different sources than like a regular search. The other thing is that the logic by which decisions are made by the large language models are different than the way it would be for consumers. So how you present data, how you put data in there and how that works is something that you need to be very conscious of.
So we're on that, and we're working that. We don't think that's something that's had a significant impact on the business yet, but we're prepared for the fact that, that will become a bigger, bigger part of Agentic shopping potentially in the future. We have tremendous amount of product data, clinical studies, claim studies, consumer research, even on our oral health portfolio, where we have a significant amount of clinical studies and things like that.
Internally in the company, that was all digitized. Now that all sits within a large language model that allows us to get answers on can we make X claim on this product in this market? What would take months of regulatory people shifting through things is now a couple of minutes coming back.
We believe that in this future world, having great data on your products is an advantage versus not being advantaged in a world of Agentic shopping, just the way the large language models work because we have data that show the efficacy of the products, data that show superiority and things like that. So it's a work in progress. I think everyone is figuring it out. We're on it. We believe it's something that could be much bigger. And we believe that given our portfolio and given all the data we have and all the clinicals, this should be something that shouldn't be a headwind for us. It's something that we should be able to navigate pretty well and maybe be an advantage.
On the customer side, listen, I don't price negotiations are always difficult with customers. We're not looking to take pricing at this point kind of thing. So we haven't really seen as much, I think, on that side, at least to date.
Okay. So if we put all this together, you previously stated that once you annualize some of the smokers health headwinds and the destocking on drug channel as well as having the shelf resets, et cetera, as you'd outlined, this would lead to accelerating growth in the U.S. How are you feeling about that and the level of growth that you can get to?
Yes. Listen, I think, 1% growth in Q1, Q2 will be better. I think you'll see progression throughout the year as some of these things get embedded, the new operating model gets embedded, the new team in the U.S. gets embedded. I see the U.S. as a business that should grow 3% to 4% plus on a consistent basis going forward. That's kind of where we would expect to be as we go into 2027 on the kind of growth. Can it be 4%? Can it be higher? I mean that's to be clear, our ambition is to really maximize that business. We feel like we have a great portfolio. I feel like we have a new team in place that's on it and is going to bring a whole different level of capability. So I feel good about the progression in the U.S., but it will be something that kind of work throughout the year.
Okay. So perhaps we can move on to the cost side of the business and the productivity that you mentioned before. So you've announced GBP 800 million in cost savings by 2030. These were grouped into immediate accelerators, operational excellence and build for tomorrow. Do the immediate accelerators contribute incrementally both to '26 and '27 in terms of cost savings? And what's the line of sight that you have on these for next year in particular?
Yes. So again, we announced GBP 800 million, and we said 50 basis points to 80 basis points of gross margin improvement over the next 5 years. What we saw in 2025 was 220 basis points of gross margin improvement. And honestly, as you model kind of gross margin improvement and you simplify the portfolio and things like that, I always believe there's so much more there, but it's hard to -- so as we simplify the portfolio, 26% less SKUs, 22% less packaging, 12% less formulations.
The operational efficiency of our plants went through the roof. And it just -- the net savings were tremendous, and that drove the gross margin improvement. That 220 basis points is not an accelerator, meaning that 50 basis points to 80 basis points won't be 50 basis points to 80 basis points going forward. We're quite confident in the 50 basis points to 80 basis points going forward because we'll still see benefits from those immediate accelerators, but we're already on the second tranche, which is automation in the plant, capital investment in our plants to automate more, to create more efficiencies. That's already in train.
And then the third, which is really about our supply footprint, which is more in-housing manufacturing. We're like 60-40 in-house and CMOs. We announced a plant in Shanghai in about a week or so, we're going to announce another investment in another plant in an emerging market. And those are things that in the 2- to 3-year time frame will start paying dividends for us.
So we feel really good about what we laid out, the GBP 800 million, saw more benefit in year 1 than we thought, seeing good momentum coming into year 2. And again, back to the answers to the first question you said, that gives us a tremendous amount of flexibility to invest in growth, to deal with potential cost headwinds that come from oil prices staying high, to make sure that we're doing everything to keep the business really healthy and drop high single-digit operating profit growth which will then cascade to EPS. We believe that's a great formula for us to drive real shareholder value at a time where everyone is facing a bit of growth headwinds.
Okay. Thank you. So you mentioned one of the interesting differences to your peers that you have a higher level of contract manufacturing, although you're looking to change that in the future. But I believe these prices are largely fixed for '26. So when we consider the COGS inflation, is that really for you more a '27 issue rather than '26? And is pricing something you're actually considering you mentioned it before that price is something you're considering?
Listen, I think I would say pricing is -- and certainly in the U.S. environment is the last quarter of call where we're going to go. By the way, we did take pricing in Q4 of 2025 on our oral health portfolio. And what I can say is the business is performing extremely well. We felt like the strength of that brand and the innovation that we have will enable us to do that. We're still driving great volume growth and great overall growth on that business. So we've done that already.
We're not looking for more pricing in the U.S. environment. We always take a couple -- 1% or 2% of price would be a typical thing you would do in Europe and other places. We're being very conscious about not getting to a place where we outprice our consumers. We don't feel like we have major pricing issues in places, maybe a bit of a brand combination here. If we need to invest in pricing, we will also because growth is the priority, and we want to make sure that we get to a place where we can be delivering that medium-term 4% to 6% growth on a regular basis.
So the CMO factor or just overall on the cost structure, all that plays into how we're looking at this year and how we're looking at next year. And again, we feel like that the situation is navigatable for us, and we're probably better positioned than most just because we have higher gross margins to start with. We have a productivity program that's kind of hitting on all cylinders, and we're a bit less exposed to commodity-related costs, certainly petroleum-based raw materials.
Okay. Very clear. So looking now at A&P, when you look at the returns that you're making on A&P, are you happy this is generating, in particular, the incremental growth that you expect from it? And how are you optimizing that spend? And where could you get to as a proportion of sales?
Listen, we're at about 28% A&P as a percent of sales. So we think we're well invested in the business. If you look at where over the last few years, a lot of that incremental A&P has gone because we've grown our percentage of A&P. It's been put like oral health. We've invested a lot more in oral health, and that has paid dividends. Emerging markets, places like India and now places like China, and we believe that we'll get really good returns there, launching things like Pronamel in India and parodontax in China, and these are places we're investing that incremental money.
I think we're very focused on growth. We think those places where we are investing the incremental A&P is translating into more growth. On the balance of the portfolio, we want to see more growth, and we're focused on it, and we think we'll get there.
The other measure for A&P, though, when you have a market which is the market growth isn't quite that way as it's due to cold and flu or other situations is share growth. And that's where I do feel good. And for me, that's an indication that our investment is working because the competitiveness of the business is strengthening. And for me, that's a long-term thing that higher market shares, growing market shares in our business getting momentum. Cold and flu is going to grow off of a 2-year lower base. The stronger we are going into when the markets get a little more buoyant, the better off we are.
Okay. So if you look at the cadence of innovation that you've had as a company, we've seen consistent value-creating innovation coming out of oral health as you've spoken about. Are you happy that the innovation is coming through in the rest of the business at the pace that you'd like? And what are the innovation areas you're most excited about?
Yes. So listen, I think -- not to talk the oral health story, you captured it. Yes, we're very happy as well. It's also a very different category than OTC and what the drivers of those categories are. So when I talk OTC, think pain relief, respiratory health, skin health, a bit of digestive health.
The innovation cycle is different because the approval cycle is very different because especially if you think about across Europe and many countries, it's almost like individual approvals need to happen. So just to give you a sense of the history of what happens. We launched Voltaren 2% for the first time in 2008 in Portugal. Last market was Saudi Arabia 2018, not because we're not good and we don't know how to do it. It's the nature of the business.
So the OTC portfolio has less of a fast innovation cycle and commercial execution and pharmacist recommendation plays a bigger role than it would, let's say, in other categories. That said, we think we can do better on innovation in OTC. We're very focused on it. A number of things that are being rolled out as we speak. We've talked about our Ultra Nasal Mist, which we're rolling out and has done extremely well. We launched Advil Dual Action in the U.S., which is a combination ibuprofen, acetaminophen kind of pain reliever that is more effective with less dose.
We're launching that around the world under the Panadol brand because we don't have Advil everywhere else around the world. On Voltaren, we have 24-hour patches that we're launching. The patch market is very robust. The challenge with the innovation is it tends to be a bit over time and not quite the big bang where you launch clinical white and boom, you see the clinical white and how it impacts it.
That said, that OTC business is tremendous because with that innovation cycle comes major barriers to entry and a regulatory moat around it, commercial excellence, pharmacist recommendation plays a big role. We're the #1 pharmacy sales force in the world. So it's a fantastic business, less A&P intensive than some other businesses.
So I think it plays a really important role. New Head of R&D joined us in August. We are very focused on how do we -- despite all of those challenges, how do we create a different pace of innovation in OTC. We don't see anyone else doing that. We think we're positioned to really accelerate that. So it's a big focus for us.
And then VMS is a faster pace of innovation. We're launching Age Defy in the U.S. under Centrum. We've launched a GLP-1 variant under Centrum in the U.S. We've launched -- done extremely well in China, personalized daily kits, which are based on interviews or questionnaire with consumers, super premium product that gives you a packet of customized vitamins you take in a given day. That's more premium. So we think we -- but we also feel like we can do better in VMS innovation and that's another big focus.
Okay. So perhaps linked to this is your capital allocation. You've been focused on executing growth, particularly in the power brands. But we've seen high growth in areas like hydration and other VMS categories with significant growth in either adjacent categories, I suppose, or in disruptors. Do you believe that M&A plays an important part in value creation? And what's your view on acquiring smaller growth brands versus much larger cost synergistic M&A?
I think, first of all, capital allocation priorities, invest in growth, bolt-on M&A, return excess cash to shareholders. Bolt-on M&A is a big focus. And Tom, we do feel like there's some higher growth areas, specifically in what I'd call wellness, which as we think about wellness is it's like the overlap of digestive health and VMS, right? The wellness, the more proactively managing health. We think there are faster growth areas we want to shift the portfolio into. We think it plays a big role in value creation up until in our first couple of years, we didn't really have the flexibility to that because we had high leverage.
We needed to do some divestments. We needed to get to a place where we have the strategic flexibility to do that. We have that now. It's a big focus for me. And again, it's not about, hey, we need to do a bunch of stuff to get us to our medium-term guidance. But I think we have an opportunity to get us to a place where we can be even more confident in the mid- to higher end of that range that we can shift the portfolio. Some is also about divesting a few things which are lower growth areas that we think we can move on from.
But we also want to do that as we bring in some higher growth things because we do want to manage the dilution. We did 3 divestments in the first couple of years of the business, strategically made sense. It got rid of lower growth areas, simplified the portfolio, helped us pay down debt, which was really important, but they were also a drag to our operating margin, and it was dilutive in some areas. And we want to manage that better as we go forward. But big focus on bolt-on M&A and taking the opportunity to get into higher growth areas.
I guess to sort of flesh that out a little bit, do you want to move into more adjacent categories where there's, if you like, more of a daily use aspect, more sort of CPG aspect to growth versus, say, less frequent but important consumer health aspect?
Yes. I think, listen, what I would say is we want to be in consumer health. I think there are subcategories in that kind of wellness subset I talked about that are more daily use products. If you think about performance products or gut health and things like that. So we definitely want to get more into that, shift the portfolio even more into proactive management of health. Obviously, our oral health business is a daily use category, and we've kind of proven we know how to run that category, and we're very good at it.
So I see the shift, but I still see us being in consumer health. So I don't know what you meant by adjacencies, but I don't see getting into completely other categories that are outside of the health space. We think there's plenty of opportunity on where we play. And by the way, that both we talked about wellness and that. It also goes into opportunities in higher-growth markets. So there's a portfolio piece and there's a market piece. India would be a priority for us also in bolt-on M&A because we have a great business there. It's growing well. We've got great capabilities. We think we can leverage that and continue to strengthen the portfolio.
Okay. Well, thank you, Brian. We've come towards the end of the session. But before we finish, would you like to sum up the current outlook for us and for the company as we look into the second half of this year?
Yes. Listen, we guided to 3% to 5% this year. That is below our medium-term guidance. We did that because we knew we had headwinds in cold and flu, and we knew we were heading into a tougher market. We continue to be confident in that 3% to 5% growth on the year. We believe the back half will continue to strengthen as we go. We are very confident within that to deliver that high single-digit operating profit growth linked to all the productivity things that we said. I feel like the changes in the operating model that we're doing, the new structure of the company, the teams will give us more capacity even going forward to invest in capabilities in AI and Agentic AI and in technology and help set us up for 2027 beyond to get back to that medium-term guidance and growth algorithm.
And this year, my objective is let's drive growth, let's become more competitive, let's drive share growth and let's enter next year with momentum so we can deliver that.
Well, Brian, thank you very much indeed for your answers today. Thank you for your perspective, and thank you very much indeed, everybody, for joining us. Brian, thank you very, very much.
Appreciate it.
Thank you.
Haleon — 23rd annual dbAccess Global Consumer Conference
CEO stresses restoring organic growth while using GBP800m productivity gains and emerging‑market investment to drive EPS growth.
📣 Key Message
- Core: Management’s priority is to recover mid‑term organic growth (target 4%–6%) while delivering high single‑digit operating profit growth via GBP800m productivity, restructured operating model and selective investment in emerging markets and premium innovation.
🎯 Strategic Highlights
- Emerging: Greater control in China (100% ownership after JV buyout) and a new Shanghai plant planned; India expansion via local salesforce and low‑price packs to capture mass market.
- Productivity: GBP800m program, 220 basis‑points gross‑margin pickup in 2025, further automation and in‑housing of manufacturing to sustain margin gains.
- Portfolio: Continued focus on oral health and faster VMS (vitamins, minerals and supplements) innovation; bolt‑on M&A to shift into wellness/daily‑use adjacencies.
🔭 New Information
- Updates: Operating model roll‑out due mid‑July; management says immediate productivity delivered more than expected and another emerging‑market plant announcement is imminent; FY guidance (3%–5% organic) reaffirmed.
❓ Analyst Q&A
- U.S. outlook: Q1 weakness from cold/flu and channel destocking seen as largely transient; expects U.S. to reach ~3%–4% growth consistently toward 2027, with Q2 momentum from shelf/distribution wins.
- Channels: Drug‑channel destocking judged behind them; online and big‑box channels (Amazon/Walmart/Costco) are growing and where Haleon holds higher shares.
- Pricing & costs: Management prefers productivity over broad price rises; commodity/CMO (contract manufacturing organization) exposure manageable with cost pressure more likely in 2027 than 2026.
⚡ Bottom Line
- Takeaway: Haleon pitches a margin‑led route to shareholder value—productivity gains and emerging‑market investments underpin EPS upside while organic growth recovery depends on normalizing seasonality, U.S. execution and selective M&A; key risks remain cold/flu volatility and channel shifts.
Haleon — Q1 2026 Earnings Call
1. Management Discussion
Good morning. Welcome to today's Haleon's first quarter trading update. My name is Sarah, and I'll be your moderator today. [Operator Instructions]. I would like to pass the conference over to our host, Joe Russell, Head of Investor Relations. Please go ahead.
Good morning, everyone. Welcome to Haleon's conference call for our first quarter trading statement. I am Joe Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.
Just to remind listeners on the call that in the discussion today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. Today, we'll focus on organic revenue performance. There is a full reconciliation of organic revenue in the appendix of the company's slide presentation.
Following Brian and Dawn's remarks, we will take your questions. And for those listening to our webcast, who would like to ask a question, you can find the details on Page 3 of today's press release.
And with that, I'll hand over to Brian.
Thanks, Joe, and welcome to our Q1 2026 results call. We've navigated a challenging market in the first quarter where consumer confidence continued to weaken and delivered 2.2% organic revenue growth. The continued weakness in cold and flu that we highlighted at full year impacted group organic growth by 130 basis points. Once again, Oral Health performed strongly with innovation-led premiumization and geographic expansion driving continued success in Sensodyne and parodontax. And in VMS, Centrum saw an improved performance, underpinned by innovation. We continue to make progress against our strategic priorities.
Our productivity initiatives continue to drive strong gross margin improvement. Consistent with our strategy to build more competitive consumer-focused supply chains, in March, we announced GBP 65 million investment in a new oral health facility in Shanghai. That's due to open in early 2028.
And on culture, we are moving forward on the operating model changes we set out in January, which are designed to drive growth and agility. Coming back to growth. Dawn will take you through the numbers, but first, I'd like to look at North America, which is a good example of how our growth initiatives are progressing well.
Over the past quarters, we've been very deliberate in strengthening both our marketing effectiveness and our in-market execution. And while we have reorganized the team to follow our category-led approach, we have also created a cross-category platform team to capture opportunities that sit across the portfolio. A good example of this is GLP-1. We are taking a holistic view of consumer needs. This is not a single category opportunity. It spans VMS, digestive health, pain relief and oral health, and we are aligning our brands to play across that full consumer journey.
In parallel, we are accelerating innovation and sharpening how we segment our brands to address consumer needs. The recent launch of Centrum Age Defy is a good example, allowing us to reach a younger consumer with a more tailored proposition alongside innovations such as Excedrin Rapid Relief, bringing faster-acting solutions to the market in a category where speed of relief matters. Taken together, these actions are starting to translate into performance. In Q1, North America returned to growth, up 1% overall.
Next, let's look at our emerging markets, where we delivered organic revenue growth of 4.3%. That was largely due to weak cold and flu season in Central and Eastern Europe and Asia Pacific. Latin America and particularly Brazil also continued to be impacted by challenging consumer backdrop and performance challenges with higher promotional activity. We put in place a number of programs to support growth in Latin America, which we expect to positively impact performance from Q2 onwards. Examples include the launch of accessibility offerings across Sensodyne and Denture Care along with activations we are planning around the FIFA World Cup for ENO. Despite the near-term headwinds, we remain confident in our emerging markets. We have strong brands, our innovation pipeline, along with the actions we're taking to strengthen distribution will allow us to reach more consumers.
Turning now to the outlook. As we talked in February, outside of respiratory, we are not assuming a material improvement in global category growth. Despite the macroeconomic and consumer backdrop becoming more uncertain in recent weeks, we are maintaining our outlook for the year, but much will depend on the duration of the current conflict and any potential impact on the wider economies of our key markets.
So we expect organic revenue growth to be between 3% and 5% for the full year. We will deliver improving growth momentum through the improved performance in North America that I've talked about, increased investment in our e-comm channel in China, particularly Douyin, and an improvement in Latin America from some of the actions I outlined earlier.
On profitability, our plans are on track, and we remain confident in strong gross margin expansion. That improvement will be supported by ongoing productivity initiatives, delivering high single-digit operating growth while allowing for continued healthy investment in the business.
I'll now hand over to Dawn to take you through the numbers in more detail.
Thank you, Brian. Good morning, everyone. As expected, it has been a challenging start to the year. Category softness has continued where consumer confidence remains under pressure with our results also impacted by weak cold and flu season. From a consumer perspective, penetration levels across our categories continue to be resilient, but consumers are becoming more value-orientated and seeking more convenience. Against this backdrop, we delivered 2.2% organic revenue growth in the quarter, 2.4% from price and a decline of 0.2% in volume mix.
Looking at the results in more detail, starting with our global categories. Oral Health continued its strong momentum, delivering 8.3% growth, 2x ahead of the market. Key highlights were, in the U.S., growth was driven by the innovation rollout of Sensodyne Clinical Repair, along with parodontax Gum Strengthen & Protect. This resulted in double-digit consumption growth with Haleon growing 4x the market.
In India, our INR 20 Sensodyne pack performed well with 70% of units being purchased by new consumers to the brand. And overall, our growth was balanced across price and volume mix. For VMS, we saw an improving trend at 1.7% organic revenue growth. This was largely driven by Centrum. And in particular, North America grew mid-single digit. This was due to the launch of Centrum Nutrient Replenish targeting GLP-1 users, alongside continued strength in Centrum Silver, helped by the activation of biological aging claims.
And in Asia Pacific, the upgraded daily kits in China also performed well. On Caltrate, while consumption remained healthy, organic revenue growth was impacted by a tough comparative in the prior year.
In OTC, we saw a mixed performance with strength on brands such as Panadol, Benefiber and Tums, offset by a weak cold and flu season as well as declines across Smokers Health and Nexium.
Within the pain category, revenue was broadly flat. Key highlights were Panadol maintaining strong momentum, driven by our new campaign 'That's One for Panadol' and an improving trend in Voltaren, driven by the rollout of our 2% formulation in India and Saudi Arabia following the success in China and continued share gains in Advil in the U.S., driven by the 'No Pain. More Gain' activation against a weak category.
Within Respiratory, organic revenue declined 3.4%. Around 60% of our portfolio is positioned against the cold and flu category, which was down in Central Eastern Europe and showed double-digit decline in North America and Asia Pac. And in addition, Smokers Health continued to be a drag, declining double digit in the quarter. These factors more than offset strong performances from improved in-store execution and expert endorsement in Flonase as well as continued strong performance and expansion on Otrivin Nasal Mist.
For digestive health, strong innovation and activations on Benefiber and Tums was offset by weakness in Nexium and ENO to deliver 0.4% organic revenue decline.
And finally, Therapeutic Skin Health and Other grew 3% with continued strength in Bactroban, partly offset by a decline in Fenistil.
Turning now to the regions. As Brian mentioned, North America returned to growth of 1%, 3.7% from price and 2.7% decline in volume mix. In the quarter, we saw double-digit growth in Oral Health, alongside an improved performance on Centrum and continued strong performance across Tums, Benefiber and Flonase, offset by double-digit decline in cold and flu.
Moving forward, we are confident that growth in North America will accelerate as we move through the year. This will be underpinned by shelf resets, strong activations, including the partnership with U.S. Soccer for the 2026 FIFA World Cup as well as further innovation.
In EMEA and LatAm, we delivered 2.1% organic revenue growth with 2.6% from price and 0.5% decline in volume mix. We saw a very different picture across the 3 operating units. In Europe, we continue to see resilient performance with modest revenue growth underpinned by outperformance in pharmacy and mass market channels. This is against the backdrop of weaker consumption and lower consumer confidence. Strength in oral health, along with good growth in Panadol and an improving trend in Voltaren was partly offset by weak cold and flu season in Central and Eastern Europe.
In Middle East and Africa, we delivered high single-digit revenue growth with a good balance across price and volume mix, driven by innovation launches, including Panadol Dual Action and Voltaren 2%. Whilst performance in the quarter was not impacted by the Middle East conflict, we are monitoring the situation closely.
In Latin America, revenue was slightly up. The macro picture has been more challenging, and we have seen performance issues in Brazil.
In Asia Pacific, we delivered 4% growth with a higher-than-expected significant impact from the weak cold and flu season. In China, we continue to outperform and grew mid-single digit with double-digit growth in the e-commerce channel, which now makes up around 40% of our revenues. Our innovation agenda also continued to deliver with our upgraded Centrum daily kits with benefits for metabolism, liver and cardio performing well. We expect growth in China to accelerate as we build out further capabilities in Douyin through tripling the number of content pieces on the platform and doubling the number of key opinion leaders across VMS.
In India, we grew double digit with excellent in-market execution, particularly for Sensodyne Pronamel. As a result, Sensodyne grew at 5x the rate of the category with significant market share gains. In fact, Sensodyne has now reached double-digit market share in India.
Turning now to the remainder of the year. Our guidance remains unchanged at 3% to 5% organic revenue growth and high single-digit operating profit. We are watching carefully the potential impact from the conflict in the Middle East. And whilst we didn't see any significant impact in the quarter, we are mindful of potential changes in future consumer spending patterns and are monitoring costs in our supply chain closely.
So in summary, for quarter 1, Oral Health continued to outperform, North America returned to growth and we saw continued resilience of our portfolio against the backdrop of softer consumer markets. Our productivity agenda continues to make excellent progress. This provides us with the flexibility and agility to continue to invest and navigate the macro uncertainty.
With that, I'll hand back to the operator for the Q&A.
[Operator Instructions] Our first question is from Guillaume Delmas with UBS.
2. Question Answer
Two questions for me, please. First one, Brian, on your 2026 guidance because you had a relatively soft start to the year, I think, largely expected, maybe LatAm, China a little bit weaker than you anticipated. But more importantly, there is now far more macro uncertainty versus a couple of months ago. So my question here is you reiterated the 2026 outlook, but have some of the key moving parts changed? And do you see now clear additional sources of downside or maybe conversely upside, particularly when it comes to savings. So any color on how you look at the guidance now versus at the time of the full year results? What maybe you're baking in at this stage for the Middle East? And I guess what underpins your confidence in meeting your guidance?
And then my second question is on North America. I mean, it does seem category growth, even when we adjust for the weak cold and flu, not only is not improving, it seems category growth is getting worse, particularly in OTC in the region. So can you maybe talk about the reasons for this kind of unusually negative category growth? And do you see any structural reasons for that? Or is it just a bit cyclical and you would expect a pickup?
And very lastly, in the meantime, how do you ensure you keep outperforming category growth and that the gap between you and category growth keeps on widening?
Thanks, Guillaume. Let me start with full year guidance. So taking a step back, as you said, Q1 slightly lower than expected, but not material, honestly. So broadly in line, a little more downside in cold and flu in Asia Pac, specifically China. So from that perspective, nothing's changed since we guided.
As you mentioned, what has changed is the uncertain macro environment. Given the war, hard to predict what's going to happen, and we're monitoring it closely. But to be clear, there was no impact in Q1. Dawn mentioned that. Middle East, by the way, just for perspective, is about 5% of our overall business. So we do remain confident in the 3% to 5% guidance and in accelerating growth through the balance of the year. And that confidence comes from, first, North America. Benefiting from the shelf resets, which are happening at our largest customers, they're happening as we speak. So they're going into place now and into early May, our partnership with the U.S. Soccer and the activation that's going to happen across category initiatives on things like GLP-1 and frankly, just overall improved execution behind a very strong and new team in North America.
Secondly, we mentioned Latin America and Brazil. I mean, we did see a tough macroeconomic environment in Brazil. And our results were much softer there than they were in Q4. Now we've made a leadership change in Brazil. We've also made a structure change where that now sits on my executive team reporting directly to me. I was actually in Brazil 3 weeks ago with Andres, our new leader there. He has got fantastic, by the way, Latin American consumer experience.
I'm really confident in the plans we've already put in place, the actions we've taken to see improvement in Q2 and an acceleration in the back half. And then obviously, we're lapping softer comps in the back half in respiratory. And after 2 years of decline, we'd expect to see some growth off of that lower base.
And you mentioned it, Guillaume, I think on the profit side, productivity continues to progress ahead of our expectations, honestly. So the strength of the gross margin improvement gives us the flexibility we need to invest in growth, which underpins the confidence of being able to deliver the guidance on the top line despite a very difficult macro environment, but also the confidence in delivering the high single-digit operating profit growth with those uncertainties.
I mentioned a little bit, your second question was really on North America. Again, I was in North America a couple of weeks ago also. I'm really, really happy with the progress we've made there. The changes in distribution and shelving across Oral Health and Pain Relief and VMS are going to have a real impact on the business. So I'm confident we can continue to outperform and perform in the market. Cold and flu was down pretty significantly in Q1 in North America. And it has a little bit of a halo effect on some other categories, pain relief and immunity and VMS and things like that. But overall, again, I don't think that's a structural thing. I think it's a cyclical thing and that we would expect that, that to kind of bounce back. Where I am very confident is, obviously, in our ability to outperform and outperform more in the U.S. as we look at the balance of the year.
Our next question is from Warren Ackerman from Barclays.
Warren here at Barclays. Two for me as well. Can you maybe sort of drill in a little bit more on what you're seeing in Asia? I mean, you mentioned China, you expect acceleration with the Douyin rollout. I guess cough, cold, flu was quite weak in China. So maybe -- if you can maybe outline what the underlying picture is in China and then what you kind of see on the go forward? Similar thing on India. And in Southeast Asia, are you seeing any kind of weakness in some of the smaller Southeast Asian markets given the Middle East conflict. So yes, just any color on what you're seeing in those 3 big buckets of Asia?
And then secondly, just back on cough, cold and flu. I don't know whether Dawn, you're able to just break it out for us in terms of what the impact was specifically in the U.S., in EMEA, LatAm and in Asia Pac just so that we can sort of see what the underlying numbers are.
Great. Thanks, Warren. Let me take the first one, and then I'll pass it to Dawn on cold and flu and impact in the U.S. So first of all, in China, mid-single-digit growth in China. We have a brand in China called Contac, which is quite a big cold and flu brand, and we did not see a season at all. So that was a drag.
We have a good business on Douyin in China, but we see a bigger opportunity there. And that business for us, by the way, grew 100% in Q1. But remember, we have over GBP 1 billion business in China. And the other thing about Douyin is it isn't a channel where you can do OTC products based on regulatory. So it's really focused on our non-OTC portfolio. And we're quite confident in the acceleration that we're seeing and the capabilities we're building there. So we feel good about China.
India continues to be our star in seeing mid-double-digit growth. And frankly, Oral Health in China is doing incredibly well. The low-income consumer strategy we have there, the launch of Pronamel is driving very, very strong double-digit consumption growth.
And then on Southeast Asian markets, I mean, we're monitoring it closely. We haven't seen a big impact to date. It hasn't impacted Q1, but we're monitoring it closely because, obviously, we're seeing others -- in other categories seeing an impact in Southeast Asia. But overall, it seems to be fairly stable and continuing as is. Dawn, do you want to talk on cold and flu?
Yes. Thanks, Warren. So look, in terms of cough, cold and flu, so 130 basis points in the quarter. And the way I think about that, I mean, if you think about the majority of that is volume. And if I compare it to Q4, where we had 150 basis points impact, so kind of broadly similar overall, but actually, the split across the 3 regions is quite different. So a much bigger impact in terms of North America and Asia Pac, both of those down double digit.
And as I said, the way to think about that is from a volume perspective. So North America, if you think about volume down overall 2.7%, actually most of that cough, cold and flu. And I think the same in Asia Pac. So the reason why Asia Pac is at 4%, as I said, big drag from cough, cold and flu. I think in EMEA, LatAm, whilst we saw an impact in Central Europe, we didn't see really a large impact from cough, cold and flu in LatAm.
The other 2 things to talk about, if you look at overall respiratory, remember in respiratory, we have 3 parts. We have cough, cold and flu. We have allergy in terms of Otrivin and Flonase, which were both very strong in the quarter. And we also, obviously, in the U.S. have Smokers Health. So I think when you think about respiratory, you need to break it down into the 3 parts.
The last thing I would say, I mean, look, over the last 2 years, we've seen 2 weak seasons on cough, cold and flu, particularly overall in North America. And if I think -- cough, cold and flu volumes are down over that time, mid- to high single digit. It's not unheard of to have 2 weak seasons, but it is quite rare. So everything else being equal, if we look forward, we are expecting to see improvement in cough, cold and flu in terms of volume growth, particularly in the back half of the year.
Our next question is from Olivier Nicolai from Goldman Sachs.
Two questions, please. First of all, Q1, you saw a double-digit decline in Smokers Health, Nexium also continued to decline. What is the strategy to get these brands back to growth? And would you also consider some portfolio adjustments, which would probably help you to reach your 4% to 6% midterm targets more easily without those drugs?
And then secondly, just more of a follow-up on previous comments from you, Brian. But if you look at the Q1 growth, it was 3.5% once you adjust for the cold and flu impact of 130 bps. Do you expect an acceleration from that level? And could you remind us where this acceleration will come from in terms of regions and categories in the coming quarters?
Great. Let me take the first question, Olivier, and then I'll pass it to Dawn for the second question. Listen, no question, smoking category has been a challenge. As we said, it was down double digits in Q1. Overall, the category is down mid- to high single digits. So actually, there's a category issue there. But there also, as I said in the past, there's a share challenge with private label. And remember, these products are in the $30 to $40 range and with the U.S. consumer being under pressure. That said, we are very focused on stabilizing this business, and we're taking actions, increasing promotions to close price gaps to private label, incremental A&P investment. We're putting all those things in place.
There are some green shoots. To be clear, we're seeing very good growth in Walmart and Amazon on the gum variant. We're doubling down in those areas to make sure that we can drive more success where we're having success. So obviously, it's a priority for us to stabilize as we move forward, and we have plans in place to do that.
Your question on portfolio adjustment, of course, if there is an opportunity for us to strengthen the portfolio by bringing in higher growth assets and potentially divesting assets which aren't as core or strategic, we're absolutely open to that, and we're actively looking at opportunities there. Why don't I pass it over to Dawn.
Yes. Thanks for the question. I mean when I think about the building blocks for the year, I would expect sequential improvement in growth as we move through the year. And you will have seen we've held our guidance full year between 3% and 5% organic revenue growth. The way I see the moving parts, obviously, Brian has talked about North America. It's great that North America is back in growth, 1% growth. We feel really confident in terms of continued improvement in that growth rate, whether it's from shelf resets, strong activation and the rollout of innovation. And we have put more investment in North America as well.
If I look at Asia Pac, we also -- Brian also talked about China in particular. So India continued double-digit growth. I talked on the call about the strength in Oral Health and excellent execution. So we expect that to continue and mid-single-digit growth from China.
Again, we're also increasing investment, a very strong performance on e-commerce and further investment going in Douyin. And also, even if I look at markets like Australia, very strong activation in terms of Panadol campaign, That's One for Panadol. So I think Asia Pac, obviously, Q1 impacted by cough, cold and flu. But I think the underlying performance and the key drivers remain intact in terms of strong performance moving forward.
If I look at Europe, Middle East, Africa and Latin America, let me break it down into the 3 parts because Europe, actually, it's a challenging backdrop in terms of category and consumer. But within that, our performance remains resilient actually, particularly given our strength in pharmacy channel, and I would expect that to continue.
If I look at LatAm, a softer macro backdrop, stronger promotions in Q1. And so I would expect that to improve as we move through the year. Brian talked about Andres, new leadership in there. We feel good about that improvement. And in terms of Middle East and Africa, actually a big shout out to our commercial and supply teams that we did not see an impact in Q1. And actually, Q1 at high single-digit growth in Middle East, Africa is very strong.
I would say in Q2, we have started to see an impact, particularly in terms of consumption, and we are watching that closely. So Middle East probably is the area that remains uncertain. I think the other thing to talk about in that whilst we haven't seen an impact in Southeast Asia, obviously, it is an area that we are also monitoring closely, particularly given higher fuel prices, work from home, et cetera. So as I said, holding guidance, 3% to 5% growth, organic revenue growth for the year and sequential improvement in growth as we move through the year based on the different moving parts that I've talked about.
Our next question is from Sarah Simon with Morgan Stanley.
Most of my questions have been answered, but just one. Can you give us the weighting of cold and flu revenue through the quarters? That would be helpful.
Yes, I could take that very quickly. It's roughly 1/3 in Q1, about 15% in Q2 and then about split almost evenly Q3, Q4, about 30% each, rough numbers.
Our next question is from Celine Pannuti with JPMorgan.
My question on North America. So clearly, a pleasing start, 1% growth. Pricing was very strong. Is that kind of level to be sustained? Or was there maybe less promo because of the weak cold and flu? And what kind of pricing are we expecting for the year? I mean Q2 is your easiest comparative in North America. Are we expecting a strong bounce back given what you said on the shelf reset. And are you still comfortable with the 2% for North America for the year? Or you think maybe it could be higher. I don't know, pricing to me seems to be quite a tailwind. So if you could comment on that.
And then my second one is on Europe, which clearly seems to have a bit more challenges in terms of the different moving parts that you mentioned, including the Middle East. You flagged that for Q2. Does that -- obviously, we can't predict what could happen maybe on the second half, but like how comfortable are you that Europe is picking up in the second half of the year? And I presume maybe just to finalize on the point you mentioned on outlook, you said sequential acceleration. Are we expecting Q2 to be within the 3% to 5%?
Okay. Thank you, Celine. Listen, I'll take the second one on Europe. And I think you're probably talking Europe, Middle East, Africa, Latin America in that context it sounded like. And then I'll pass it to Dawn for the North America question and maybe the guidance -- phasing guidance question.
So listen, overall, in Middle East, listen, it's 5% of our business, not a massive piece of our business, it's 5%. We are seeing consumption softness in a few countries there. No question. We don't know how long the conflict is going to last or what the ultimate impact is going to be on that side of it. As we said earlier, as we're looking at all the input costs and the potential impact of a longer conflict there from an oil price perspective, obviously, we feel very good about the productivity programs we have in place. And again, they're exceeding our expectations and gross margin continues to show really strong progress. So we feel like we have a lot of flexibility to deal with that. And frankly, we're better positioned than most just because we have high gross margins and lower exposure to those input costs. So I think that's the Middle East piece.
On Europe, I think Dawn mentioned it earlier, too, which is, we're a pharmacy-driven market there. So we're seeing probably less of the impact that maybe others have seen in a more mass market driven. Now our toothpaste business is primarily in mass market, but I have to say it continues to perform extremely well, and we're up behind all the innovation and everything we've been driving there.
Dawn, do you want to address the North America one?
Yes. I think in North America, look, as we move through the year, we'd expect to see a more balanced price volume mix split. I think in Q1, I talked about the drag on volume from cough, cold and flu. And obviously, that will come out as we move through the year. I think from a pricing perspective, I mean, the price at 3.7%, that includes some carryover, particularly in Canada. And I wouldn't expect that level of pricing moving forward to the future quarters. So as I said, I think for North America, more balanced price volume mix. We've always talked in North America about the 2 main factors. One is our speed of improvement in terms of execution and the other one is in terms of the category.
And I think what -- I think from an execution point of view and what we're seeing in the first quarter, actually, we're seeing real positive momentum, and we're really pleased actually with the progress in North America. Obviously, what's also come up on the call is the category remains still challenging. But actually, our outperformance versus the category is improving in North America. When I look at the kind of phasing in terms of quarters, obviously, we're not going to guide to specific quarters. But as I said, we expect sequential improvement in growth as we move through the year.
Our next question is from Nicolas Ceron with Bank of America.
Just, Dawn, coming back on your comment on the cold and flu season. If we have a normal cold and flu season this year, what kind of growth rate you would expect in H2? Is that some sort of mid-single digit or double digit?
And the second question on LaTam, if I may. You expect an acceleration in Q2. Do you think you have some sell-in benefit in that? Or is that all consumer-driven?
Yes. I think, look, on cough, cold and flu, I mean, I've already talked about this. If you look over the last 2 years where we've had 2 weak seasons, cough, cold and flu volumes have been down mid- to high single digits. And we would expect -- therefore, we would expect to see volume growth in the back half of the year.
I think in terms of LatAm, it is a challenging macro environment, but we feel really good about the activations that we've got in place, both in terms of Oral Health and in terms of ENO. So we are expecting improvement in the LatAm performance as we move through the year.
So no sell-in benefit in LatAm, all consumer driven.
Yes, all consumer-driven.
Our next question is from David Hayes with Jefferies.
I'm going to be cheeky and do a follow-on then two questions, if I can. So just on the follow-up on the Middle East, you talked about some indications in the last few weeks of impact. But some companies have called out sort of 50% down in March. I'm just trying to get a sense of is it that kind of quantum that is the risk? Or is it much less pronounced than that in terms of what you've seen at the moment?
And then my two questions are just on the price-led growth versus the volume performance still coming through. Is there a need, you think, to review the price points across all markets, particularly maybe LatAm, to your point earlier on the competitiveness and to apply some more competitiveness in pricing into the second half, maybe take that down and reinvest even more of the ongoing cost saving that you're achieving.
And then the second one on input cost outlook for the second half. Some of your peers have sort of said if oil, et cetera, stay as they are, they kind of give a bit of indication on additional headwind. Is there anything you can give us on that in terms of the dynamics for the second half on cost effects?
Thanks, David. Let me address a couple of things and pass it to Dawn, and you can talk to input costs and the headwinds and stuff. First of all, Middle East, Africa, we are seeing consumption down like double digit, but like below teens. So to give you a range, we're not seeing 50% for sure, but we're seeing softness in the business, and that's why we wanted to call that out. Listen, on pricing and price gaps, we are focused on driving growth. So if the opportunities exist for us to tweak pricing, to tweak price gaps, we're going to do that, and we're going to make that happen. And just a bit of a case study, I was in Brazil a few weeks back, and we have adjusted some of our price gaps for some key competitors in markets where maybe they got a little out of whack, and we saw almost an instantaneous kind of volume growth. So we're on top of that.
I don't see major pricing reset or anything like that, but where there's opportunities to tweak and make sure we're doing it. And because the gross margin savings improvement is so strong, we have the flexibility to do what we need to do to get the business where we want it from a growth perspective. Dawn, do you want to talk?
Yes. I think, look, in terms of input costs, I mean, we are really well placed because we've got a strong supply chain productivity program that is progressing really well. In terms of our exposure, so if you think about our cost base, that's exposed to crude, it's about 3% of our revenue. If I look across total commodities, including gums, vitamins, that's around 10%.
We have fixed price contracts and hedging in most areas until the end of the year. What we have seen in the first quarter, we've started to see the impact. We started to see surcharges on freight, quite small, but I would expect that to increase in the second quarter and also in the second half of the year. But as I said, I think we're really well placed in terms of the strength of our productivity program, and that's why we've maintained our guidance, full year, of a high single-digit operating profit growth.
Thank you. There are no questions waiting at this time. So I'll turn the conference back over to Brian McNamara for any further remarks.
Thanks, everyone. I appreciate you all joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free, as you always do, to reach out to the IR team if you have any further questions. Thanks for the continued interest and support in Haleon. Have a good day.
Thank you. That concludes Haleon's first quarter trading update. Thank you for your participation. You may now disconnect your lines.
Haleon — Q1 2026 Earnings Call
Haleon sticks to growth plans amid macro headwinds, investing in capacity and innovation.
📌 Key Message
- Q1 momentum 2.2% organic revenue growth in a soft market; North America returns to growth; guidance unchanged at 3-5% organic revenue growth and high single-digit operating profit growth.
- Strategy focus productivity-led margin expansion paired with category-led execution and cross-category GLP-1 opportunities across the portfolio.
- Capital stance continued investments and selective portfolio actions to sustain growth and leverage core franchises.
🎯 Strategic Highlights
- Shanghai investment GBP 65 million to build a new oral health facility, due to open in early 2028.
- North America turnaround shelf resets, stronger in-market execution, and a cross-category platform team to capture GLP-1 opportunities across VMS, digestive health, pain relief and oral health.
- China/India momentum Douyin e-commerce growth and continued launches (Centrum-related products; Pronamel in India) supporting mid-single digit to double-digit growth.
🆕 New Information
- Brazil leadership new country head reporting directly to the CEO, aiming to improve Latin America performance.
- Cross-category platform formal initiative to coordinate efforts across multiple categories for GLP-1 related opportunities.
- Douyin expansion tripling content and doubling key opinion leaders in China to boost non-OTC growth.
❓ Analyst Q&A
- Guidance vs reality management maintains 3-5% organic growth despite macro uncertainty, citing productivity and North America/tailwind from shelf resets as supports.
- North America dynamics category growth remains uneven; expect sequential improvement as execution benefits materialize and pricing remains a lever without over-committing to lift.
- Asia/Markets cough, cold and flu drag is fading in H2; China acceleration via Douyin, India double-digit growth, with ongoing monitoring of Southeast Asia and Middle East impacts.
⚡ Bottom Line
Haleon reaffirms 3-5% organic revenue growth and high single-digit operating profit growth for the year, supported by margin expansion from productivity gains. The Q1 drag from cough/cold and Middle East uncertainty persists, but leadership changes, shelf resets, and strategic investments—plus stronger North America and China/India momentum—underpin a path to accelerated growth through the year. Portfolio flexibility remains, including potential divestments if needed.
Haleon — Q4 2025 Earnings Call
1. Management Discussion
Good morning. Thank you for attending today's Haleon's Fiscal Year 2025 Results question-and-answer. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I would like to pass the conference over to our host, Jo Russell. Please go ahead.
Good morning, everyone, and welcome to Haleon's Full Year 2025 Results Q&A Conference Call. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Dawn Allen, our Chief Financial Officer.
Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed or implied by such forward-looking statements.
We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had a chance to see that ahead of this call.
And with that, let's open the call for Q&A, and I'll hand back to the operator.
[Operator Instructions] Our first question is from Guillaume Delmas with UBS.
2. Question Answer
So one question. So my one question is on your organic sales growth guidance of 3% to 5% for 2026. I mean it does seem to signal some sequential acceleration relative to the 3% you posted last year. So wondering what will be the main drivers behind this sequential improvement? I mean, is it predicated on category growth accelerating and/or your level of outperformance gaining further momentum? And then related to this, Brian, you reiterated your medium-term ambition of 4% to 6%. I guess what underpins your confidence in the 4% to 6% when you may be delivering an organic sales growth below the bottom end of that range for now 2 consecutive years?
Thanks, Guillaume. I appreciate the question. So maybe let me take the 3% to 5% guidance, and I'll go to medium-term view. So if you take a step back and let's look at 2025, we grew 3%. That clearly was below what we were expecting when we were at Q3 based on the cold and flu season. But the U.S. was down about 0.5%. APAC and EMEA, LatAm grew mid-single digits. Now we did experience a market slowdown. A vast majority of that was obviously what we've talked about in the U.S. market and then the cold and flu category, which I mentioned.
Now remember, 70% of our cold and flu business is also outside the U.S. So in that context, we did deliver competitive performance. We outgrew the market overall and 60% of the business gained and maintained share. Looking at 2026, we're not planning on material improvement in the market. Consumers are likely to stay cautious. We're absolutely focused on driving category growth. I'm confident we will continue and improve on our competitiveness. And that's through investment in A&P, strong innovation plan, sharper commercial execution behind our new operating model.
And listen, the U.S. will return to growth in 2026. And that's based on the progress we've had to date. We ended the year where we expected to with inventories at the right place. And that's -- part of that is we did have softer cold and flu, but we had stronger Oral Health business, which helped offset that. And we also have plans in place that we know is going to help us improve through the year. So for instance, in Q2, we have a lot of key customers doing shelving resets. We're gaining distribution. We're gaining shelf placement.
On the profit side, the productivity program continues to deliver. You saw the 220 basis points of gross margin improvement. We feel great about that. That, combined with the efficiencies coming from the operating model, will allow us to deliver high single-digit operating growth at constant currency and still invest in growth, still invest in A&P, R&D and some key capabilities that we're continuing to build on.
So now if we step back and think the medium-term guidance. I mean you said it, the guidance doesn't necessarily mean we're going to be outside the range. But obviously, part of the guidance is outside our medium-term range. I think it's an acknowledgment of the uncertain market we're dealing with. Based on what we know today, we'd expect to be in the middle of that range, based on what we know today. You also asked about the phasing. What we do know today is that Q1 cold and flu season is going to be below a year ago. We're now almost 2 months into the quarter. And the results, we saw a spike towards the end of the year, and then we saw it come down after that.
So we're going to be below a year ago, and that's not only in the U.S., it's outside the U.S. My confidence, listen, these are still attractive categories. I still believe there's huge potential. Everything we've talked about in the past, closing the instant treatment gap, success of our premiumization continuing, the low-income consumer opportunity, which we're still only at the beginning at. And as we progress through 2026, I expect to see stronger performance in North America, as I said and continued strength in emerging markets.
We feel good about China, and I expect an acceleration in India. Actually, India for us is performing extremely well. And then as we continue to drive that productivity agenda, again, we will be able to continue to invest in the business, which again underpins my confidence in getting back to that 4% to 6% growth.
Our next question is from Warren Ackerman from Barclays.
It's Warren Ackerman here at Barclays. Outside of the numbers, Brian, could you talk about the new reorganization? You've got a new Chief Growth Officer, Chief Transformation Officer, new reporting structure, new hires in the U.S. other than Natalie I've seen. Can you maybe sort of walk us through how that's going to be a growth unlock and how you'll drive more volume growth in the U.S., more innovation? Anything you can say on sort of shelf resets and how the things are shaping up in the U.S. in what is clearly a tougher operating environment?
Thanks, Warren. And I think you captured it. This is first and foremost about unlocking growth and agility. And I think about the journey we've been on as a company, we're now 3.5 years in as a company. The strategy we laid out is very clear. And there was still an opportunity for us to streamline and simplify the way we work and drive strategy to execution.
So as you said, we created this Chief Growth Officer role that combines our category structure, our marketing effectiveness and capabilities, our business insights and analytics strategy and a new commercial excellence function. And then 6 operating units replacing our 3 regions. As you're aware, Latin America, India and Middle East, Africa will now have a seat around the leadership team table. So I think a couple of things. It's one on the commercial execution function that we've created.
Centrally, we're driving AI-driven tools behind net revenue management, next best action. We're going to be able to drive this quicker and faster through the organization. This structure of CGO, the 6 operating units, is going to allow us to really, really much quicker drive our category strategies through to execution, better leverage scale, better be able to move resources around, react to, what I would say, as you said, a very uncertain environment. And then as a result of it, we're taking a layer out of the organization.
So we're talking about a flatter, leaner organization, and that leads to the $175 million to $200 million in gross savings we talked about, which gives us incredible flexibility, frankly, to invest in those growth opportunities and to invest in innovation and drive the capabilities.
Now your question on the U.S. -- specifically on the U.S., yes, well, first of all, overall in the team, we did, as part of those changes, bring new members of the team. We got a fantastic leader in India, a fantastic leader in Latin America that came from outside the company who know these markets extremely well. Our Middle East, Africa leader is now sitting on the leadership team, and she's an incredible talent. In the U.S., as part of all this, Natalie made a number of changes in our category heads or category general managers. So we have one of our top talents now on the OTC business. We brought external talent in Oral Health and in the Wellness category, which is a combination of VMS and Digestive Health.
I mentioned it a bit earlier, Warren, but we know that in Q2, we will see across a number of key customers, some wins on distribution and shelving across Oral Health, VMS and Pain Relief, and that's locked. That's going to happen in Q2, and we feel good about that commercial execution. We also feel good about the innovation. The one thing I will say, it's broadly across the business, specifically in the U.S., Oral Health is doing incredibly well. And it really did better in Q4 than we expected, which again helped us offset, land the U.S. where we wanted to despite the tough cold and flu season.
Our next question is from David Hayes with Jefferies.
So just on emerging markets, there was a sequential slowdown in the fourth quarter. So just trying to dig a little bit deeper into whether the emerging is performing as you would expect it to be, like it to be at the moment. And then which areas specifically maybe are not doing as well? And I guess in that context, Oral Care continues to be amazing and impressive, obviously, still in this difficult consumer environment.
So is there something different about Oral Care and the dynamics there versus some of the other categories ex Respiratory because of the cold and flu? But it feels like Oral Care could ride the consumer dynamic whereas the other brands can't. Is there something you point to that says that this is what's going to change as the consumer maybe picks up in the other areas?
Yes. Thanks, David. So listen, I will take the Oral Care question linking to other categories, and I'll pass it to Dawn to talk about what we're seeing more broadly in emerging markets. So first of all, we do feel really good, as you pointed about around Oral Care. And as we've been talking about now for a while, the clinical range in Sensodyne has really resonated well with consumers. And it's beyond clinical white, it's clinical repair, it's clinical enamel strength.
Beyond that, we're seeing great progress in places like India with low-income consumer on Oral Health. And Parodontax is an amazing brand in gum health. We don't talk about it as much as Sensodyne. It's obviously not as big, but it's growing in the strong double digit in the mid-teens. We launched in China this past year. It's still quite early in our ramp-up for distribution, but we couldn't be happier with the progress that we're seeing there. So we feel great about Oral Health. And the Oral Health model is very, very clear. It's linked to the dental recommendation. It's linked to the innovation. And obviously, we compete on the therapeutic side of the business.
Listen, in the other categories, quite -- listen, when we talk about the impact of cold and flu, to be clear, we talk about our cold and flu portfolio specifically, which are brands like Theraflu and Robitussin and Otrivin, which sit in that category. There is also impacts across other areas like Pain Relief and some VMS and things like that tend not to be as much but there does tend to be a little bit of that impact that happens, too.
Fundamentally, I believe these are real strong categories that as we move forward, we can move ahead. I think we're just radically differentiated versus the competition in Oral Health in a way that's very, very unique. We're talking about now over 10 years of kind of high single-digit to double-digit growth in Sensodyne, and we continue to see that continuing to hum. And we're seeing good competitiveness in the other categories, but we're continuing to focus on innovation, things like our 12-hour patch launch on Voltaren in a number of European countries. Otrivin Nasal Mist continues to do well. We're growing aggressive share there. Our OptiSorb technology on Panadol, we're rolling out to another [indiscernible] market. So we feel like we have a good innovation plan that should underpin our -- certainly our medium-term guidance. Dawn?
Yes. Good morning, David. Hi, everyone. So let me talk a bit about emerging markets because we feel really excited about our emerging markets business. If I look at Asia Pac, first of all, I mean, we continue to deliver strong performance in Asia Pac. We expected an acceleration in half 2 versus half 1, and that has come through. And when I look at the growth drivers in Asia Pac, 80% of our growth is coming from volume mix. And that is a factor of us driving penetration and expanding reach across lower-income consumer groups.
If I look within Asia Pac, let me talk about India. I mean, an incredible performance in India, double-digit growth in the year, an acceleration in quarter 4 on the back of the macro changes around GST, but also on the fact of our activations. If I look at our INR 20 pack and Sensodyne is performing incredibly well. We continue to expand our reach across rural areas, across villages based on our investment in terms of bringing our sales force in-house. And actually, I was out in India the first week of this year, and it was great to be on the ground with the team, visiting stores and really seeing our brands come to life. So that was India.
If I look at China, we're also really excited about China, mid-single-digit growth in the year. And just some pockets to talk about. If I look at our e-com business, it's around 40% of our business in China. And Douyin, we're growing more than 100%. And our online to offline business is also growing double digits. So actually, we feel really good about China.
If I move on then to EMEA, LatAm. EMEA, LatAm, actually, we've seen a good performance, particularly across LatAm and EMEA, Middle East and Africa as well as Central Europe. But it is fair to say that whilst we've seen a good performance, particularly in LatAm and specifically Brazil, we are seeing a much more challenging macro backdrop, both in terms of the consumer behavior, but also in terms of retailer behavior as well. So we did see a slowdown in LatAm, particularly in quarter 4.
And if I talk about kind of Middle East, Africa continues to perform well. Central Europe also has seen a good performance. But again, based on the soft cough, cold and flu season in quarter 4, we saw a slowdown in Central Europe because of that. But overall, as I said, we're really excited about emerging markets. It's a huge growth opportunity for us. When I look at our A&P investment, half of our increase in A&P investment in the year actually went to emerging markets, and you can see that coming through in the performance.
Our next question is from Celine Pannuti with JPMorgan.
My question comes back on the overall guidance and how you manage top line performance versus margin improvement. Clearly, strong delivery in margin and your cost savings initiative augurs well for the years to come. At the same time, your top line has disappointed. And if I look at the past 3 years, volume has been 1%, which is quite low compared to the overall European staples, best-in-class are trying to achieve at least 2% and above. So in order to grow 4% to 6%, what kind of volume level do you think you need to have? And how do you -- like the discrepancy between margin progression and volume performance, does it mean that you may need to reinvest more or maybe look at your price positioning in order to grow volume faster?
No, thanks for the question, Celine. So let me kick that off, and then I'll pass it to Dawn to give a bit more perspective. I think if you take a step back, I do think we're investing in the right places on the business. If you look at our A&P investment in the last year, we were over 7% ahead of a year ago, and R&D was over 7% ahead of a year ago. That is the absolute benefit of the gross margin improvement and the improvements we've seen in our supply chain and structure, giving us 220 basis points of operating -- of gross margin improvement, which is allowing us to invest in the business. We continue to focus on where is the best of that investment.
By the way, a lot of that incremental investment this year went against Oral Health, and you see the results that have come out. And we understand that in a lower cold and flu season, also while we can gain share, we're going to have a very difficult time driving volume overall. But maybe, Dawn, you can talk a little bit about how we see the algorithm going forward and where we see the role of volume growth, which we're very focused on volume growth. So Dawn?
Yes. Thanks for the question, Celine. And you're right, and Brian mentioned it, we are very focused on driving volume growth in 2026 and moving forward. We've always said that the right price volume mix split for this business is around 60-40, 40-60. I already talked about Asia Pac in terms of 80% of that growth is coming from volume on Asia Pac, and we feel really good about that. When I look at EMEA, LatAm, if I take out the two shoulders of the year, so if I take out Q1 and Q4 for 2025, where we had a soft cough, cold and flu season, actually, in Q2 and Q3, we did see a more balanced price volume mix profile. And that obviously should give us confidence moving forward that we can deliver that.
And then if I look at North America, look, it's been a really challenging market in North America in 2025. But as Brian has talked about, we have put in place the key actions to drive volume growth in 2026, whether it's about us no longer doing destocking, whether it's about reducing the drag from smokers health, the distribution builds that we expect to get from shelf resets as well as the strong activations. These are all important drivers in terms of driving the volume growth. So whilst for '26, I'm not going to guide to specific volumes, I would expect us to be improving the split of price volume mix in '26.
Our next question is from Olivier Nicolai with Goldman Sachs.
I got one question first. Could you go back to the change you have implemented in the U.S. over the last 12 months and specifically also the incentive structure you put in place for the new management there? And just following up on the press release on Page 5 regarding the overall equipment effectiveness. It has improved by 7 points in 2025. It's a bit lower than what you expected at H1. Should we assume a stronger improvement in '26 compared to '25 on these metrics?
Yes. So thanks for the question. Let me talk a bit about the U.S. As you know, we announced a new leader in the U.S. in May. As we looked at our operating model structure broadly, we worked very closely as an executive team to define that. I talked a little bit earlier when Warren asked the question about that and we worked that very closely with the U.S. So one of the things we've done is we've created [indiscernible] category General Manager role, which obviously report directly up to our President of the U.S. and also are connected to our global category heads, which is going to help us really drive kind of this strategy to execution even faster.
We're making a number of changes around net revenue management and the tools that we're providing. We've made a number of changes in our sales force and our sales leadership and structure. And all of that was really pretty much done on January 8 when we announced the broader stuff in the U.S., you obviously move much faster on those kind of changes. So I feel really good about those changes and how they're going to drive growth. And as I said, we've seen progress to date. There's no question about it.
We ended up again where we expected to. Inventories are kind of where we expected to. Oral Health has been extremely strong. Advil grew share in Q4. So that was a really important element. We're seeing -- we see these opportunities on the distribution and stuff that I talked about in Q2. So I feel like we're in a very good place to really drive those changes in the U.S.
Yes. And I think, look, in terms of the productivity program, Brian talked about it, we're really pleased with our supply chain productivity program. It was even better than we expected. I mean, 220 basis points improvement in gross margin is incredible in the year, and it is a collective effort across the whole organization. And that's important because it helps to drive flexibility and agility in the P&L to be able to invest for growth.
And if you remember, we talked about 3 drivers of how are we going to deliver that gross margin improvement and productivity benefit. The first one we talked about was immediate accelerators. So this was reducing complexity in our supply chain, whether it's around number of languages on pack, harmonizing packaging, formulations. And let me give you an example. So in Europe, in 2025, on our Aquafresh brand, we had 44 single language packs. And we've now reduced to 18 multi-language packs in the year. And that is a huge optimization piece in terms of supply chain.
The second area that you referenced in your question was around operational efficiency. And this is all about debottlenecking upfront, process improvements, equipment optimization. And let me give you an example of that. In our Levice factory in Europe, we reduced formulations by 30%. So if you think about the impact of that, that reduces change over time, but it also increases the capacity, the available capacity on that line, which is really important.
So I think, as I said, it's an incredible effort that is helping us to continue to invest in the business to drive growth. Moving forward, I wouldn't expect to see, it would be great if we had that level of improvement each year. But moving forward, 50 to 80 basis points is what we've built into our guidance. That will be a strong performance on supply chain productivity.
Our next question is from Jeremy Fialko with HSBC.
So the one for me is more on the U.S. market more generally. So the first element is just the pharma channel within the U.S. Do you see that continuing to be under pressure in 2026? Or do you think with some of the ownership changes there, there's the possibility that the channel could become a little bit better in some of the broader drops there, which have, I guess, led to pressure on inventories and overall sell-through could abate? And then maybe if you look at the U.S. more broadly, is it just a case of waiting for the consumer to get a bit better before the market growth can improve? Or are there some other elements that you think are kind of specific to the market getting a bit better, let's say, putting aside any cold and flu impacts?
Thanks, Jeremy. Thanks for the question. Let me take that. I think as you talk pharmacy channel, really, what we've talked about is the 2 big retailers in the U.S., which is Walgreens and CVS. What I can say is we see the channel shift that we've seen for many years, which is drug channel and obviously, e-com. E-com growing quite aggressively and that's walmart.com or that's amazon.com, that will continue. The dynamic we saw in 2025 was lower inventory levels in those retailers as they were dealing with their own challenges. We believe we're where we need to be, and now we're just managing normal channel shift as we can.
And by the way, that channel shift is not a bad thing for us. If we look at our Amazon shares, 18 brands on Amazon account for 90% of our business on Amazon and 16 of those 18 brands have higher share online than offline. So as that channel shift moves, it's something we can take advantage of. We have good capabilities there. So we feel good about that channel shift. Yet to be seen what happens under new ownership at Walgreens, if that's a positive or not a positive.
But again, I don't feel like this is a situation that if gets worse, we baked it in. We proactively managed our inventory levels to try to be at a place where we felt good about so we can stop talking about it as we move forward.
In the overall market, you said ex seasonality, so I will take that out because there's certainly a seasonality impact that we're kind of seeing. Listen, what we see in the dynamic is we see club channel doing a bit better, dollar channel doing a bit better as consumers are looking for more value. Some consumers looking for lower price points, some consumers looking for -- different consumer want value, higher price point, lower price per use. We're very focused on those 2 channels and increasing our offering to make sure that we're meeting the affordability issues of consumers in the U.S.
And we believe we can also play a role, and we do play a role certainly in Oral Health in driving that category growth. So we're not sitting back and waiting for the categories to change. We're just acknowledging that we -- there are some things we can't control. We're focused on competitiveness, growing market share. We feel confident in that, and we're focused on driving that category growth where we can.
Our next question is coming from Sarah Simon with Morgan Stanley.
Just one question from me. How important is it in terms of securing shelf space and sort of with your retailer negotiations to have that cold and flu business? Because I think in your bit to become a sort of steady compounder with predictable top line, this is obviously the kind of bit that's causing the biggest issue. So I'm just wondering how much do you need to own that business?
Okay. Sarah, thanks for the question. Let me take that. Listen, I think cold and flu plays an incredibly enormous role in consumer health and for consumers. And if you look over the history, I've been involved in the -- in consumer health now for over 20 years. So I've seen quite a few cold and flu seasons. This year, we're seeing kind of two seasons in a row that are down because if you remember last year, we were down. We know that Q1 is also going to be down. It doesn't happen that often, but it has happened in the past. We've experienced that in the past.
I believe if you look over time, you're going to see growth in this category going forward. It's a bit exasperated this year because we are dealing with multiple headwinds in the U.S. environment, which this has compounded on. But I think it's a very important category. We feel good about our positions in the category and our portfolio. I think it's going to -- it plays a very important role for our customers, too, as you were saying, this is category management around pain and cold and flu. And frankly, cold and flu and pain have some common brands, Panadol Cold and Flu, Advil Cold and Flu. So we think it's an important part of the portfolio as we move forward.
Our next question is come from Karel Zoete with Kepler.
I'd like to go a bit deeper into 2 categories. The first one is the Digestive Health business. Historically, a good business for you, not so seasonal, but we've seen a slowdown in '25. What should we anticipate for '26? Why should things get better? And then coming back to pain, I know there's a bit of cold and flu impact in there. But if you zoom out, 2024, '25 have not been great years for pain despite of some of your strongest franchises such as Panadol in Asia are there. So what is needed for the pain franchise to start performing more in line with the anticipated growth rates?
Okay. Thanks very much, Karel. I appreciate the questions. So let me start with Digestive Health. If you think about our Digestive Health business, just to get us grounded, it is -- over 80% of that business is focused in 3 countries: U.S., India and Brazil. In India and Brazil, it's ENO, which is a fantastic brand and does very well in both cases and is part of our strategy and our growth strategy, certainly in both those countries and certainly in India.
So now you get to the U.S. where we have Tums, we have Nexium, brands like Gasx and XLax, Benefiber, which is a fantastic brand. We have seen a drag on Nexium in the U.S. There's no question that is one brand in one category, and we're not alone in this that has been impacted by private label. If I zoom out and look at the U.S. overall, we've gained share versus private label. But Nexium has been a bit of a challenge there.
One of the opportunities we see in Digestive Health, and we feel really good about and we're now working is supporting consumers on GLP-1s because there's multiple side effects on GLP-1s that brands like Tums and brands like Benefiber address. There's also side effects like dry mouth, which we have a mouthwash brand. We don't talk about much in the U.S., Biotene, which is actually quite effective in dry mouth. And there's nutritional supplementation, and we've actually created the Centrum variant that's specifically focused to GLP-1 consumers.
So we see an opportunity across our categories to drive that. Tums is a tremendously performing brand and so is Benefiber. We have dealt with a little bit of a drag from the Nexium side of the business.
Listen, on Pain Relief, it's a great portfolio. I mean, Voltaren is #1 topical analgesic in the world. By the way, we talk about -- a lot about the topical. We also have a very strong patch business. I mentioned earlier, we're launching 24-hour patch in a number of markets around the world, and we're seeing quite a successful pickup of that. Panadol has done quite well in Asia. We don't have quite the same strength of a systemic pain relief business through Europe, and we're addressing that. We're launching there.
And the big thing is on Advil. Like I said, we're growing Advil share in Q4. We're really confident that now with the new structure, with the new focus, our ability to invest and everything else that will get Advil back to a more consistent performer. That's going to be important for us. So that's one of the things we need to make sure that we drive and deliver on the business.
But overall, listen, we've always said the OTC categories in general would be 2% to 3% growth categories, and we could outgrow that. They've seen a little bit of headwinds here and in the U.S. as all categories have been a bit muted, again, not super declines, but a bit muted. So we're addressing that, but we feel very good about that franchise and the global nature of that franchise.
Our next question is from Edward Lewis with Rothschild & Co Redburn.
Brian, just returning to the medium-term guidance. Should we think that getting back to that range is all about the U.S.? Or do you think you can deliver against that with a structurally slower U.S. market but greater contribution from the rest of the world, given the confidence you're obviously expressing about India and China?
Yes. So listen, as I think about the medium-term guidance, I do expect that the U.S. will perform better. There's two things. We've outperformed the market, to be clear, in 2025. But do I feel like the performance is -- we're hitting it on all cylinders? We have not. We can do better. Just outperforming the market isn't enough, and I am confident we can do better. So we do expect an improvement in that U.S. environment. And I believe over the next couple of years, we'll get that U.S. environment, if not too close to the bottom end of our algorithm growth.
Outside of that, we also expect that, again, over time, emerging markets will continue to be a strong contributor and the low-income consumer strategy we have, which is taking hold in certain places, and we're learning a lot, to be very clear. And that takes a bit of time to kind of build up to be significant, and we see those opportunities. So overall, I do feel the medium term of 4% to 6% that nothing has fundamentally changed versus what we have said and what we've said in the past about our strategy and our opportunities.
What you're hearing from us this year is 3% to 5% because the market is still quite uncertain, and we want to make sure we're providing the proper context for everyone on where we see things are at. And again, where we sit now, knowing Q1 is going to be softer due to cold and flu, middle of the range is kind of where we're at on that, and we'll update as the year goes on.
Our next question is from Tom Sykes with Deutsche Bank.
One quick follow-up and one on A&P, please. Are you able to quantify the shelf space stocking benefit that you'll get in either Q1 or Q2 in North America, please? And then just on the A&P spend, I mean, there can't be many consumer companies that have increased A&P by almost 8% to 20% of sales and still running at negative volumes. So where is the A&P ineffective? And where is it effective? And does it make much of a difference in your non-oral care businesses at the moment? And can you talk about whether you're allocating more of that A&P increase to oral care or to non-oral care, please?
Thanks, Tom. Thanks for the question. Let me take the U.S. stocking, and I'll pass it to Dawn on the A&P question. Listen, we're not going to guide to specific improvements on the shelving increases. But let's just say it's part of the thing that gives us the confidence as we progress through the year that we'll see stronger results because it's real. Consumers will see more of our brands. We will have a bigger shelf space and in a number of cases, we'll be at a better visibility point in some key resellers. Dawn, do you want to talk about A&P?
Yes. Look, thanks for the question. And I think it also builds on one of the comments that Celine talked about in terms of the margin profile as well. So let me say a few words about that. I think, look, it's often easy for companies to cut A&P when the market is more challenging. We have not done that, and we haven't done that because we're really focused on ensuring the long-term sustainable growth for this business. So we -- you're right, we've increased A&P 7.5%. We've increased R&D 7.7% in the year. And we invest in our brands at a healthy and the right level to drive that sustainable growth.
So if I kind of give a bit more color behind that. So what -- where has that increase in A&P, where has it gone? We've already talked about it. Half of that increase went to Oral Health. You've seen the growth momentum on that this year in terms of high single digit and acceleration in Q4 and the ROI on that Oral Health is incredibly strong. The other half, I referenced it earlier, went to emerging markets. So India, D-com in China, and that's really important.
And the third area actually is around experts. So expert is a critical part of our business model in terms of the work that we're doing around the Haleon Health portal, where registrations have increased 27% in the year and on our field force engagement, which has also increased 16% in the year. So that's where the spend has gone.
The other thing that we are particularly focused on as well as ensuring it's the right level is also around the return, the efficiency and the effectiveness. So in the year, we've improved our working, nonworking split, so 12% growth in working media. We've also increased our overall ROI mid-single digit, and we've increased the coverage, the global coverage to around 3/4 of our business. The other thing that we're focused on is also the mix. So 60% of our working media is allocated to digital. And that's an important balance for us as we think about the shift in the broader economy.
So I would say, overall, look, it's an important focus area for us. We invest at a healthy level, 20.5%. I feel really good about that. And we also continue to focus on improving the efficiency and effectiveness of our spend as well as ensuring that we are shifting and having the right mix around digital versus legacy.
Okay. Super. Thanks, Dawn. Listen, I think we are going to close the call now. So thanks, everyone. I appreciate you joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free to reach out to the IR team if you have any further questions. Really appreciate your continued interest and support in Haleon. Thanks, everybody.
Thank you. That concludes Haleon Fiscal Year 2025 Results Q&A. Thank you for your participation. You may now disconnect your lines.
Haleon — 2025 Pre Recorded Earnings Call
1. Management Discussion
Hello, and welcome to our full year results presentation. 2025 was an important year for Haleon, and we made good progress against our 3 strategic priorities: first, delivering competitive growth in a challenging environment; second, unlocking productivity gains; and third, embedding an agile performance-focused culture. In terms of growth, in 2025, we delivered 3% organic sales growth, which is lower than our medium-term guidance of 4% to 6%. That was primarily the result of lower category growth than we've seen historically, which was related to our winter season portfolio, along with consumer confidence reaching multiyear lows in some of our key geographies, impacting consumer spending.
Against that backdrop, our brand portfolio performed well, outperforming our global categories with 60% of the business gaining or maintaining share. We remain confident that we can continue to outperform as we focus on the key opportunities we outlined at our Capital Markets Day. Let me give you some examples. In China, we're closing the incident versus treatment gap through the launch of parodontax. As the largest gum health market in the world, there is a significant opportunity in China. And parodontax has become one of the top-selling innovations across China's 3 largest cities: Beijing, Shanghai and Guangzhou and now in over 10,000 stores.
We're accelerating the rollout to 20 cities this year to drive further penetration. And within sensitivity, Sensodyne's expanded clinical range, including Sensodyne Clinical White, Clinical Repair and Clinical Enamel Strength have driven strong uptake among younger consumers. The range is now in 30 markets globally, with Sensodyne growing over 1.5x the overall category. We're also delivering innovation-led premiumization. In North America, we launched our Nasal Mist technology under the Theraflu brand following its success with Otrivin. And that's driving strong market share gains. We also brought Advil Liqui-Gel Minis to consumers in North America. We've continued to make good progress driving penetration among lower-income consumers.
Take India, where we're growing our categories by bringing in more consumers. We're doing that by doubling our direct coverage in small towns and villages to 600,000 outlets. We've also launched new products such as the INR 10 Centrum Recharge and ENO 3-in-1 as well as driving more users into oral health through our INR 20 Sensodyne pack. Turning now to our productivity agenda. We've made excellent progress with our GBP 800 million gross cost savings program, which enabled us to deliver strong operating leverage across the year. We're also tracking well against our targets to reduce SKUs, packaging and formulations by around 30% over the next 3 years.
We have also increased our multi-sourcing of ingredients to around 90%. That progress is enabling us to close the gap between our peers on service, cost and inventory. At the same time, we remain best-in-class on safety and quality measures. And finally, culture. We're making real strides in transforming Haleon into a world-class consumer company with an agile performance-focused culture. In January, we announced plans to evolve our operating model to drive growth and agility in support of our Win as One strategy. I'll come back to this in a minute, and we'll talk through how our new operating model will drive our performance.
Now let's look at our results in more detail. As I just mentioned, full year organic revenue growth was up 3% for the year. That was split 2.3% price and 0.7% volume mix. In Q4, we grew 2.1%. That was a result of a much weaker cold and flu season, which had a drag of 40 basis points on our full year organic revenue growth and 150 basis points in the fourth quarter. To be clear, we are not satisfied with our organic revenue performance in 2025, and we are focused on delivering stronger top line growth. I'll say more about how we're going to do this in a minute, looking specifically at how we're evolving our operating model to drive growth and agility and the progress we're making in North America to return the business to growth.
That said, we delivered very strong gross margin performance in the year, up 220 basis points, resulting in 10.5% organic profit growth with 60 basis points of margin improvement at reported rates. Importantly, we did that while prioritizing investment in innovation, A&P and building capabilities in critical areas such as data and technology. Cash performance was also strong, and leverage is now at 2.6x net debt to adjusted EBITDA. Consistent with our capital allocation priorities, we have allocated GBP 500 million to share buybacks in 2026 and remain focused on identifying value-accretive bolt-on acquisitions.
Turning to our outlook for 2026. We are not planning for a material improvement in global category growth with consumers in some markets likely to remain cautious. We expect to return our North America business to growth. To do that, we are building on the actions we've already taken over the last 6 months. And we're also expecting continued strength in our emerging markets. We'll drive our performance through disciplined targeted actions. We'll be investing in A&P and R&D, accelerating our innovation agenda and sharpening our commercial execution. This will allow us to drive category growth and to continue to outperform the market.
Against that backdrop, we expect full year 2026 organic revenue growth to be in the range of 3% to 5%. Strong gross margin expansion through our ongoing productivity initiatives will allow us to continue to invest and deliver high-single-digit operating profit growth. Looking further ahead, we are confident in our medium-term guidance of 4% to 6% annual organic revenue growth with high-single-digit adjusted operating profit growth at constant currency.
My confidence comes from the strong progress we continue to make against our Win as One strategy, driving stronger performance in North America, continuing to deliver on our productivity agenda, which underpins our investment in building leading brands and market positions and unlocking growth and agility through our new operating model. I'll now hand over to Dawn to talk through our full year results in more detail.
Thank you, Brian. Good morning, everyone. In 2025, we delivered strong organic operating profit of 10.5% and free cash flow of GBP 1.9 billion, in line with our value creation framework. Operating leverage was strong driven by gross margin improvement of 220 basis points. This was ahead of our expectations and enabled further increases in investment in A&P and R&D, while delivering more to the bottom line. Cash generation was fueled by an 11-day reduction in working capital, and we continued our track record of disciplined capital allocation, completing our China JV acquisition and returning GBP 1.1 billion of cash to shareholders.
Despite these strong financial results, to be clear, we are not satisfied with our organic revenue growth. I am focused on unlocking productivity to drive flexibility and agility in the P&L to enable further growth. Let's look at the performance in more detail, starting with revenue. Organic revenue growth was 3%, split 2.3% price and 0.7% from volume mix. The key drivers of revenue growth were continued outperformance in Oral Health, strong volume growth in Asia Pac, resilient growth in Europe, helped by strength in the pharmacy channel. This was offset by lower category growth, especially in the U.S. and LatAm, proactive inventory actions in North America and lower-than-expected levels of cold and flu incidents in quarter 4.
Overall, reported revenue declined 1.8%, impacted by a drag of 2% from divestments and 2.8% from foreign exchange. Turning to profit. We delivered 22.9% of operating profit margin, up 60 basis points at actual rates. This was driven by 160 basis points of organic operating profit margin, offset by 100 basis points of headwinds from translational foreign exchange and divestments. Looking at the drivers in more detail. We continue to invest in our core portfolio, innovation and key growth markets such as India, and we increased A&P spend by 7.5% at constant currency to 20.5% of sales. At the same time, we are focusing on maximizing the efficiency and effectiveness of our spend and improving our ROI.
We continue to invest in new and differentiated claims as well as accelerating our innovation pipeline with R&D spend up 7.7% at constant currency. On supply chain productivity, we have made excellent progress with more opportunity ahead. The key productivity drivers were reduction of SKUs and formulations, increased equipment effectiveness and optimized freight routes as well as network optimization. Diving a bit deeper into our revenue drivers, starting with performance across our categories. Oral Health continues to outperform, delivering high-single-digit growth in 9 out of the last 12 quarters. For the year, we grew 7.9%, around 1.5x ahead of the market through a combination of excellent execution, expert recommendation and superior innovation.
We continue to attract incremental consumers and drive category growth. This is demonstrated by high-single-digit growth in Sensodyne and double-digit growth in parodontax. We are confident in the runway for future growth in Oral Health, underpinned by a strong innovation pipeline and further geographic expansion. VMS grew 1.9%. Good performance outside the U.S. continues with mid-single-digit growth driven by premium innovation such as Centrum Daily Kits in China and Korea as well as Centrum Kids in Philippines. VMS in North America was impacted by a softer multivitamin category and distribution losses, which have now been addressed.
Across OTC, pain relief grew 2.3%. Panadol grew ahead of the market with mid-single-digit growth, driven by the activation of our Optizorb technology and the launch of dual action. The launch of Voltaren patches in Europe and 2% formulation in China drove an improving trend of low-single-digit growth with strength across several markets. And the new campaign and launch of Advil Liqui-Gels Minis in the U.S. is showing early positive signs. Respiratory Health declined 1.9%. Within this, Otrivin Nasal Mist continues to grow the category, driven by increased trial and strong repurchase intent above 80%. This strong performance was more than offset by a continued challenging consumer and competitive environment on U.S. smokers health, which declined double digit in the year as well as a slower-than-normal start to the cold and flu season in the fourth quarter.
This impacted the group revenue by around 150 basis points in the fourth quarter and 40 basis points for the full year. Stepping back, while 2025 has been a challenging year for our seasonal business, we have a high-quality portfolio of leading brands and Respiratory Health remains an attractive category that is very relevant for consumers. We expect this business to return to growth in the future. Digestive Health grew 0.5%, driven by Tums Gummy Bites innovation and retail exclusive flavors, along with Benefiber's Grow What Feels Good campaign. These strong performances were offset by a decline in Nexium. And finally, Therapeutic Skin Health and Other grew 2% with strength in Zovirax, partly offset by a decline in Fenistil.
Turning now to the regions, starting with North America. In North America, category growth is soft. Consumer confidence is low. And as a result, consumers are increasingly seeking convenience and value. Against this backdrop, trust in our brands remains strong, and we have outperformed a weak market with an acceleration in the fourth quarter. Organic revenue for the year declined 0.4%, split 1% price and 1.4% decline in volume/mix. As expected, performance in the second half of the year was in line with the first half. In quarter 4, the region delivered 1% organic revenue decline, split 2.7% price and 3.7% decline in volume mix. This was driven by tailwinds of pricing and a better-than-expected outperformance, particularly in Oral Health, which was offset by a weaker cold and flu season compared to 2024, the lapping of the Eroxon sell-in and further proactive inventory reduction in the drug channel, which is now at a more appropriate level.
For the year, we delivered adjusted operating margin down 20 basis points versus the prior year. Turning now to EMEA and Latin America. In most of Europe, we have seen a resilient performance this year despite fragile consumer confidence. The economic picture in Middle East and Africa remains positive. And in Latin America, particularly in Brazil, the macro picture is increasingly more challenging. Organic revenue increased 4.7%, split by 4.2% from price and 0.5% from volume/mix. In quarter 4, organic revenue growth was 3.2%, split 3.5% price and a decline of 0.3% in volume mix. While Oral Health strength continues, quarter 4 was impacted by a weaker cold and flu season and a more challenging macro picture in Europe and LatAm.
For the year, operating leverage was strong with adjusted operating margin up 90 basis points versus the prior year. In Asia Pacific, consumers continue to prioritize everyday health spending. This underpins our excitement in the growth opportunity that China and India represent. Organic revenue grew 5.2% with 80% of growth coming from volume. China grew mid-single digit, driven by strength in Pain Relief and Oral Health, including Sensodyne and the continued rollout of parodontax. India delivered double-digit growth, driven by expanded distribution and excellent in-market execution. This strong performance also benefited from macro changes, including, for example, GST.
In the fourth quarter, organic revenue grew 5.9%, split by a decline of 0.3% price and growth of 6.2% in volume/mix. The slight decline in price was driven by the year-on-year timing differences of pricing and promotional phasing in some markets. For the year, we delivered adjusted operating margin of 21.5%, up 40 basis points versus the prior year. Let's now look at the remaining drivers of earnings. Adjusted diluted EPS grew 5%. In addition to the operating profit drivers I have already outlined, EPS growth was also driven by a lower net interest charge from a reduction in net debt, lower interest rates and favorable foreign exchange on U.S. dollar-denominated debt. A shift in the geographic mix of profit drove a small increase of 50 basis points in our effective tax rate to 24.5%, lower noncontrolling interest following our purchase of the China JV and a 1.6% reduction in average share count.
Adjusting items of GBP 114 million were significantly lower than last year. Key items included a net amortization and impairment charge for intangible assets of GBP 60 million and restructuring costs of GBP 89 million, mainly due to the GBP 300 million productivity program, which is now complete. Haleon is a highly cash-generative business. We delivered GBP 1.9 billion of free cash flow, GBP 194 million more than the prior year on a like-for-like basis. We are making good progress on reducing working capital with an 11-day reduction versus 2024. This was driven by a 4-day reduction in inventory days as a result of the supply chain initiatives, along with the optimization of payment terms.
CapEx increased to 3.7% of sales, driven by additional spend on growth and productivity. This increase in CapEx was offset by GBP 125 million lower restructuring costs and GBP 68 million lower dividend to our China JV partner. Before looking at capital allocation, I'd like to take a moment to talk through the financial impacts of our new operating model. As Brian mentioned, we are evolving our operating model to drive growth and agility. While cost savings are not the primary driver, these initiatives should result in GBP 175 million to GBP 200 million of gross annualized savings, which I expect to be delivered 1/3, 2/3 weighted over the next 2 years. These savings will largely be driven by a flatter, more streamlined organization as well as leveraging automation and AI. One-time costs to deliver these savings are expected to be in the ratio of 1:1 with a higher weighting of cost to the first year.
We expect the majority of these costs to be cash related. In addition to the supply chain productivity program, these savings will provide even more fuel to drive growth, flexibility and agility in the P&L. We have a strong track record of disciplined capital allocation. Our priorities are focused on investing for growth, bolt-on M&A and returning excess cash to shareholders. This is all underpinned by our strong investment-grade balance sheet and our commitment to a medium-term leverage target of around 2.5x net debt to adjusted EBITDA.
Consistent with our track record of delivering attractive shareholder returns, we are announcing GBP 500 million allocation to share buybacks for 2026. In line with our dividend policy to grow dividends at least in line with earnings, the Board has proposed a final dividend of 4.9p, which represents a 7.6% increase in the total dividend for the year to 7.1p. So turning to the outlook for 2026. We expect to deliver 3% to 5% organic revenue growth with North America returning to growth, continued strength in emerging markets, particularly India and China, ongoing resilience in Europe and a more challenging macro picture in Brazil.
We expect another year of high single-digit adjusted operating profit growth at constant currency, driven by gross margin improvement of 50 to 80 basis points, fueling further investment in A&P and R&D. We expect net interest expense to be around GBP 255 million and an estimated effective tax rate on adjusted profit of around 24.5%. Overall, this will drive operating leverage, strong EPS growth and a healthy free cash flow generation.
In summary, we delivered good financial performance despite the lower revenue growth, 60 basis points of operating margin improvement, 5% adjusted diluted EPS growth and strong free cash flow generation of GBP 1.9 billion. Looking ahead, I am focused on building flexibility and agility in our P&L by unlocking productivity savings to drive sustained investment in growth. Alongside this, an even sharper focus on return on capital reinforces our confidence in our medium-term guidance. And with that, back to Brian.
Thanks, Dawn. Now I'd like to come back to culture and specifically our new operating model. I'll talk briefly about how it will enable our transformation into a world-class consumer company and how it will drive growth and agility in support of our Win as One strategy. In January, we set out what our new operating model will look like, starting with my leadership team. It's built to create the conditions for our long-term success, simplifying how we work, bringing consumers closer to our strategic decision-making and enabling faster speed of execution in our markets. We've created a new Chief Growth Officer role with responsibility for bringing together category leadership, marketing and strategy.
We've also established a new global commercial excellence team. Together with R&D, they will lead our growth and innovation agenda, making strategic choices, priorities and trade-offs through the lens of our categories. And we announced the creation of 6 new operating units. They will be led by President, who all sit on the Haleon executive leadership team. These include high-growth markets like India and Latin America. This line of sight from category strategy to operating unit execution will be sharper and it will allow us to scale innovation across the business, support faster execution and growth across the board. At the same time, as Dawn mentioned, these changes will make us a more efficient organization.
I'd like to take North America as an example of the changes we are making through our new operating model alongside implementing a broader action plan to return the business to growth. First, in May 2025, I appointed Nathalie Gerschtein as our President of North America. She brings deep consumer experience and a track record of strong execution and of driving growth. Under her leadership and aligned with our new operating model, we strengthened our North America team, and we've invested in best-in-class capabilities in 2 critical areas, improving our net revenue management to drive distribution with key retail partners.
This includes putting in place a comprehensive program to drive both volume and value through optimizing consumer purchase occasions and driving a sharper focus on marketing effectiveness. We are building AI-powered tools to improve return on spend across our brands and channels. Early signs are showing encouraging results. Second, we have appointed new leaders in North America for our Oral Health, VMS and OTC categories. In partnership with our global teams, they will drive end-to-end category leadership from improving innovation, market competitiveness and execution. We have also established a cross-category growth platform team responsible for driving growth with opportunities such as GLP-1 support.
Third, we are doubling down on our efforts to scale innovations in North America faster and leverage the full strength of our portfolio to drive penetration. That includes making significant changes to drive an improvement in the competitive position of our pain relief and VMS categories. Take Advil, where our No Pain More Gain campaign is resonating with consumers. And in VMS, we are excited about the pipeline for Centrum with even stronger claims on Centrum Silver for slowing cognitive aging. Taken together, we expect these initiatives to deliver meaningful top line benefits as the year progresses, supported by effective market execution and new innovations, giving us confidence in returning North America to growth in 2026.
So to conclude, we're making good progress against our Win as One strategy to transform Haleon into a world-class consumer health company. While market category growth slowed during the year, we outperformed through the strength and scale of our trusted brand portfolio. We made excellent progress against our productivity agenda, driving strong profit growth. 2026 will be another important year for Haleon, and we remain confident in the opportunity ahead. Thank you for your continued support and interest in Haleon.
Haleon — Q3 2025 Earnings Call
1. Management Discussion
Good morning. Thank you for attending today's Haleon 2025 Quarter 3 Trading Statement. My name is Sarah, and I'll be your moderator today. [Operator Instructions]
I would like to pass the conference over to our host, Jo Russell, Head of Investor Relations. Please go ahead.
Good morning, everyone, and welcome to Haleon's conference call for our third quarter trading statement. I'm Jo Russell, Head of Investor Relations. And with me today is Dawn Allen, our CFO.
Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements, including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements.
Following Dawn's remarks, we will take your questions. For those listening to our webcast who would like to ask a question, you can find the dial-in details on Page 3 of today's press release. And with that, I'll hand over to Dawn.
Thank you, Jo, and good morning, everyone. We made good progress in the third quarter, driven by strong in-market execution and the continued rollout of our innovation pipeline, leaving us on track for our full year guidance. We delivered 3.4% organic revenue growth in the quarter with a good balance between price at 1.8% and volume mix of 1.6%.
Looking across the regions, we saw consistent growth and sequential volume improvement across EMEA and LatAm and Asia Pacific, with emerging markets in both these regions up 7% led by India and strong growth in a number of smaller markets, including Thailand and Malaysia.
In North America, despite the challenging consumer backdrop on consumption, we have outperformed the market each quarter this year, with particular strength in Oral Health, Respiratory and Digestive Health. Oral Health was once again the standout performer as Sensodyne continues to drive penetration with strong growth in a number of key markets, including the U.S., India and China.
In India, we are continuing to make good progress by expanding our reach through expert coverage, which is up 70% since the start of the year. And we are bringing new innovations, including Sensodyne Pronamel to market. Our Sensodyne offering for lower-income consumers is now in over 500,000 outlets across 10,000 villages.
From a strategic perspective, we are making great progress against our objectives as outlined at our Capital Markets Day. From a growth perspective, we continue to focus on driving category growth through innovation-led premiumization with a number of new market launches in Q3, closing the incidence treatment gap, an example is Otrivin Nasal Mist, which is seeing an over 80% repurchase intent amongst users and expanding reach to lower-income consumers with household penetration gains in India and Brazil.
We also continue to deliver against our value creation framework. Our supply chain productivity agenda continues to move at pace. We have made significant progress across service, cost and inventory. And since the beginning of 2024, we have reduced the number of our SKUs by 19%, and we have improved overall equipment effectiveness by double digit. This improves both gross margin and results in better working capital and improved cash conversion.
On A&P, we continue to invest at healthy levels as well as making progress on effectiveness and efficiency, where we are focused on improving both contribution to revenue and ROI. We are also continue to be disciplined in our cost base and are on track to deliver the remainder of our GBP 300 million target savings this year. All of this provides us with flexibility and agility in our P&L, enabling healthy investment in our brands and further strengthening our innovation pipeline to drive future growth. And finally, we are delivering on our capital allocation principles, having completed in the quarter the GBP 500 million we allocated to share buybacks for 2025.
Now let's look at the quarter in more detail. Organic revenue growth was 3.4%, balanced between 1.8% from price and 1.6% from volume mix. Volume mix saw sequential improvement in the third quarter in EMEA and LatAm and Asia Pacific. Reported revenue grew 0.7% in the third quarter, impacted by the drag from divestments of 2.3% and 0.4% from foreign exchange. It's worth bearing in mind that this is the final quarter with a drag on reported revenue growth from announced divestments.
Now let's look at the growth drivers, starting with our performance across the categories. Oral Health continued to deliver strong growth, up 6.9% in Q3. Growth was underpinned by innovation-led premiumization and geographic expansion. The key drivers of this were penetration growth in more than 80% of our major brand market combinations, high single-digit growth on Sensodyne, more than 2/3 of which came from volume and innovations, including the Sensodyne Clinical Platform and Pronamel Kids, and continued double-digit growth on parodontax, driven by innovation and our continued successful rollout in China. With exciting plans for continued innovations across our Oral Health business, the runway for future growth is strong.
VMS grew 4.9% in Q3 with double-digit growth in Centrum. Key highlights were premium innovations, including Centrum Daily Kits in China and Korea, strength in Philippines from increased distribution of lower-income consumer packs and expanding distribution of local brands such as Caltrate in Latin America.
In Pain Relief, we grew 3.7% for Q3. Panadol was up high single digit, underpinned by outperformance in U.K. and Southern Europe. Improved consumption in Voltaren, supported by innovations, including Voltamed, our new natural herbal product. Growth in these brands was partly offset by Advil. Whilst consumption continues to improve following the activation of new campaigns, performance was impacted by short-term supply constraint on Liqui-gels, which has now been resolved.
Respiratory Health declined 1.8%, lapping elevated COVID cases in Q3 last year. The impact of declines in Smokers' Health moderated in Q3 compared to Q2. Otrivin continues to perform really well with Nasal Mist bringing new consumers into the spray category in markets, including Sweden, Poland and the U.K. Ahead of the start of the cold and flu season, we saw the sell-in of cold and flu products in Q3 at relatively normal levels.
And Digestive Health grew 2.1%, including growth in Tums, thanks to innovations, including Tums Gummy Bites+, a strong performance in Benefiber from our Grow What Feels Good campaign and an improved performance from ENO in India. This performance overall was partly offset by a decline in Nexium.
And finally, Therapeutic, Skin Health and Other declined 1.1% with strength in Bactroban in China, offset by a decline in Fenistil from a weak mosquito season in Europe.
Turning now to the regions, starting with North America. In North America, we delivered organic revenue growth of 0.4%, driven by 0.7% price with volume/mix down 0.3%. In the quarter, we continued to drive market share with our consumption outperformance widening as we progress through the year. Organic revenue growth was driven by continued strength in Oral Health, driven by innovation, including Pronamel Clinical Enamel strength and successful activations, including Gum Expert on parodontax, a better VMS performance with Centrum growth and a strong performance from Benefiber and Tums. All of this was partly offset by Respiratory Health, which declined due to the continued weakness in Smokers' Health and from Pain with growth in Voltaren offset by a decline in Advil that I mentioned earlier.
As we shared at half year, we feel there is more growth to be had from our North America business. We are focused on a number of initiatives, which will drive stronger results. These include further strengthening our innovation pipeline, accelerating net revenue management through strategic pricing, price pack architecture and channel mix and reinforcing our relationships with partners through key activations. And collectively, these actions, combined with our focus on ensuring inventory is in an appropriate level by the end of the year, sets us up well to return to growth next year.
Turning now to Europe, Middle East, Africa and Latin America. Organic revenue increased 5.3% with sequential improvement in volume mix of 1.8% and price at 3.5%. Growth was driven by innovation-led premiumization across the clinical platform on Sensodyne Pronamel Kids and Otrivin Nasal Mist, a strong performance in VMS with Centrum up double digit, underpinned by a number of new launches, including Centrum Vital+ nutrient. And in Pain Relief, growth came from higher consumption of Voltaren and Panadol from innovation launches like Voltamed that I mentioned earlier.
Looking across the region, Europe performed well with particular strength across the pharmacy channel, which makes up the majority of our revenue in the region. Whilst category growth slowed, we continue to outperform given our innovation and excellent in-market execution. Latin America grew double digit, driven by Colombia and Mexico. This was partly offset by weakness in Brazil, given a softer macroeconomic environment impacting category growth.
And finally, turning to Asia Pacific. Organic revenue increased 5.1% with strong growth across India and Southeast Asia and sequential improvement in China. Across the region, volume/mix, which was up 4.4% and price was up 0.7%. With a relatively stable consumer market backdrop, we continue to drive category growth and expand our offering to lower-income consumers.
India delivered double-digit growth. This was largely driven by strength in Sensodyne as we further increase distribution and drive penetration. We expect continued strong growth in the fourth quarter, driven by our sales force investment and an improving macro environment.
Also in the quarter, China saw mid-single-digit growth with continued strength in Oral Health and VMS supported by key innovations, including Caltrate for Kids, Voltaren 2% and Fenbid Gold. Across China, consumers continue to invest in health and wellness, and we are well placed to capture on this trend given our focus on building trusted brands, closing the incident treatment gap and innovation-led premiumization. Our products are available across different channels, including pharmacies, hospitals and digital platforms, ensuring we can effectively serve a wide audience with different shopping habits. Digital has been a particular strength, growing 20% with our online to offline platform growing 25% and representing 1/3 of our e-commerce business.
We have now fully integrated the OTC joint venture and are realizing the benefits of a more efficient route to market. We expect growth in China to improve further in the fourth quarter, helped by distribution and increased investment in the faster-growing e-com channel.
Turning now to our 2025 guidance. We expect organic revenue growth of around 3.5%, assuming a normal cold and flu season. In North America, we expect growth in the second half to be broadly similar to the first half, with Q4 reflecting further action on inventory at slower-growing channels. We expect this to be completed by the end of the year.
In Asia Pacific, we should see an acceleration in Q4, driven by stronger growth in China and India. And in EMEA and LatAm, we continue to expect a good performance driven by Europe with market share gains, offsetting a slightly softening macro picture. And in Latin America, we are closely watching the macro environment given the consumer pressures in the region.
Finally, the pace of progress on our supply chain productivity initiatives provide a strong underpin to our expectation of high single-digit organic operating profit growth.
So in conclusion, we delivered a good performance in Q3 and remain on track to deliver our full year guidance. We are pleased with the actions we are taking in the U.S., which sets us up to return to growth next year. We're continuing to invest behind our brands to build flexibility and agility in our P&L by unlocking productivity savings. Altogether, this should give us confidence in delivering against our value creation framework and our medium-term guidance.
Now let's turn to questions. Operator, please, can you open up the lines?
[Operator Instructions] Our first question comes from Guillaume Delmas from UBS.
2. Question Answer
2 questions for me, please. The first one on North America. Dawn, I was wondering if you could talk a bit more about your performance in the region in the third quarter, which was clearly better than expected. I mean, what were the main drivers behind this sequential improvement? And were there any one-offs restocking benefits we should be aware of that may have flattered your performance in the region in Q3? And still on North America, looking ahead, so your guidance for the second half to be similar to the first half seems to suggest around minus 1% organic sales growth in Q4. So maybe if you could talk a little bit about the reasons for this anticipated slowdown sequentially? And last question on North America. I know it's early days, but for 2026, what would be your expectations? Because looking at the last 3 years, you've been growing by an average of, let's say, 1.5%. Wondering if your ambition is to materially accelerate next year versus this 1.5% run rate?
And then the second question, shorter one, I promise, on Asia Pacific, strong but decelerating sequentially despite India being in double digits. So it would be helpful if you could shed some light on the main moving parts behind this slowdown. You sound confident about a Q4 uptick. Do you think you can maintain this momentum going into 2026?
Thanks, Guillaume. So let me take your 3 questions in turn, and I'll start with North America. So as we said at the half year, we expect half 2 to be broadly similar to half 1, and we're tracking in line with our expectations. As we know, it's a challenging environment in the U.S. We have outperformed the market in terms of consumption every quarter this year with particular strength across Oral Health and Digestive, and that gap has actually widened as we've moved through the year. Obviously, in our results, that's been masked by the inventory movements, the difference between sell-in and sell-out as retailers have managed their inventory and working capital.
And if we look at Q3, there's a few moving parts. So of the 220 basis point swing from Q2 to Q3, there's 2 main things to call out. The first one is the drag from Smokers' Health has halved. So in Q2, this was 160 basis points drag. In Q3, it's now 80 basis points drag. And the remainder of the difference comes from better performance in Oral Health and Digestive Health, as I mentioned.
If we then look forward to Q4, if we're working on the assumption that we expect half 2 to be broadly similar to half 1, that implies, as you said, around about a 1% decline in Q4. and that reflects tough comparatives from the prior year. Obviously, we're lapping the launch of Eroxon, and we have some further action to do inventory.
So I think when we look towards next year, as I said, we expect the region to return to growth. You talked about where it had been historically. We would expect to get back to that level. I think as I referenced in the overview, we feel really good about the actions that we're taking in North America. Obviously, next year, we won't have the drag between sell-in and sellout. We would expect that to be -- we would expect that drag to kind of disappear, but as I said, I think with Natalie, I mean, Natalie is bringing deep consumer expertise and execution. We are focused on net revenue management, got new innovations coming to market. So I think we feel good about return to growth next year.
So if I step out of North America and the U.S. and talk about Asia Pac, I'd say, overall, we're really pleased with our performance in Asia Pac. We've got double-digit growth in India. We've got mid-single-digit growth in China. And actually, in those markets, we continue to perform incredibly well. Yes, we are lapping some phasing in the prior year in terms of North Asia, particularly given the price increase phasing that we put through in Japan last year. But actually, given the momentum in that region, given that we expect the macro environment to improve in India in Q4 on the back of GST and on the back of tax changes as well as our activations and expanded distribution, I think we feel really good about that. And I'd say the same in China as well.
And Dawn, just to follow up and to confirm, so no one-offs in the third quarter in your performance in North America?
Yes, I wouldn't say that. I mean I'd say in Q3, that's the quarter where we sell-in ahead of the season. So we're obviously shipping in, in terms of the season. We have a price increase that goes live early November in the U.S. So -- but I guess, quarter 3 is still -- there's still quite a big time lag between those 2 pieces. And if you remember, in terms of tariffs, we always said that they were in the low tens of millions, and we're taking supply chain actions to mitigate that. The other piece, obviously, that we see is the pricing action that we're taking.
Our next question is from Olivier Nicolai from Goldman Sachs.
Just 2 questions, please. First of all, at group level, you had a strong pipeline of innovation across many categories in this year in 2025. Looking at next year, how do you see the strength of the pipeline? And is there any Rx to OTC that we should expect as well for full year '26?
And then just going back to your guidance, I know it's early stage, but you did mention that you assume a normal cold and flu season. I know that the U.S. does not provide data at the moment. But perhaps anecdotally, how do you see things for the coming cold and flu season?
Yes. So let me kind of take the innovation pipeline question first, Olivier. So as I said, across actually all of our categories, we've seen real strength in terms of our innovation pipeline. From an Oral Health perspective, the Clinical range on Sensodyne continues to perform really well in terms of bringing new users into the category. We're actually gaining or holding share in more than 80% of our brand market combinations on Sensodyne. And actually, if you think about on Clinical, we've got 5 variants. On average, you've maybe got 2 of those variants in the market. So actually, there's huge, huge runway in terms of Oral Health. I also talked about Nasal Mist in terms of respiratory, in terms of Otrivin Nasal Mist. We are -- that innovation is recruiting new users into the category. I referenced purchase intent is now over 80%, and we've obviously got further rollout behind that.
And maybe just to mention another one in VMS. So on Centrum, we have a new claim in terms of slowing cognitive aging that we've just launched as well as Centrum Essentials and Daily Kits. So actually, across all of our -- I could talk about that across all of our categories. We have an incredibly strong innovation pipeline that's actually performing really well, not only for us, but it's also growing the categories where we've launched it as well.
I think from -- in terms of switches, we've always said that, that would be on top. We don't need switches in terms of our growth forecast. So I would focus more on the innovations that I've talked about in terms of driving growth. We have 2 that we're progressing, but I mean, it just continued -- it continues to progress. I wouldn't take that into account in terms of our growth at the moment.
I think if we look at the second question, your question in terms of cough, cold and flu and our guidance, I mean, it's fair to say we have a great portfolio in cough, cold and flu. It's an attractive and relevant category for consumers. As you know, it's more seasonal. We have shared in the past, you'll see in the appendix, we've shared our normal chart that we show for the U.S. in terms of incidences. What you will see from that chart is obviously no 2 years are the same. It depends on the size of the peak and the timing of the peak. Sometimes it can be in Q4, sometimes it can be in Q1. if you remember, about 1/3 of our business for cough, cold and flu is in North America. We've got about half in EMEA, LatAm. And the thing I would say about that is the variability of when that peak happens and the size of the peak, that's the variability around the -- around 3.5% guidance for the year. So we plan for a normal season, but we obviously stay agile from a supply chain point of view in terms of is it better or worse.
Our next question is from David Hayes from Jefferies.
Just going to follow up on Guillaume's question if I can, in the U.S., just to sort of maybe quantify or get the dynamics a bit more. So just to be clear that you're saying there wasn't really any prebuying into the price increases that you've taken in oral and cough and cold in the quarter. Is that a fair summary?
And then just in terms of the channel dynamics, can you talk us through maybe the growth rate comparisons in new channels, if we call them that like Amazon and Walmart versus the pharma channels? And is there an element of as the shift continues to happen, Amazon and Walmart are stocking up more as they're getting more of the market? Or is there no really offset in that sense?
And then the second question is just on the supply chain cost savings all running to plan and very extensive. Is there any incidence or evidence that, that affects the service levels, the sales performance at all? Is there an inevitability that as you go through some of those changes there are some hindrances that will dissipate? Or would you say it's a completely separate dynamic?
Yes. David, so I think I obviously talked about the pricing piece coming early November. Let me talk a bit more about some of the other moving parts in terms of inventory and the channel dynamic. So as you know, we work closely with our retail partners on inventory levels. There isn't a one size fits all, and it obviously depends upon consumption. So for example, in the drug channel, our inventory is down double digit compared to this time last year. But obviously, in faster-growing channels like [ decom ], Actually, our inventory levels have increased, as you would expect on the back of more traffic and stronger consumption trends. And just to say there's obviously more work to do in Q4 on inventory, as I referenced. And our objective is to exit the year in a clean place on inventory and obviously grow on the back of that next year.
I think from a channel dynamic, I mean, we continue to see really strong growth in the U.S. actually on digital. We're growing kind of double digit on Amazon. And I think we continue to partner really well.
In terms of your other question, in terms of supply chain, I mean, as I talked about in the brief, we're actually making progress across service cost and inventory. And the reason that we're doing that, a, we're working closely with our customers, but also we're rolling out new supply chain, new systems and processes in terms of improving our forecast accuracy. And that's also helping us not only to reduce inventory, but also to improve service.
Our next question is from Jeremy Fialko from HSBC.
I know we've had quite a lot on the U.S. But I wanted to ask one more, but more a general question on the consumer because it feels like it's a very bifurcated environment where you've got certain things that are doing well, certain things that are struggling. So perhaps you could sort of break your business down a bit and explain from a consumer standpoint, which -- what stuff is going well, what things are going badly and why that's the case?
And then secondly, you could talk a bit more about China. As you say, you're kind of most of the way through this merger of the sales forces from the 2 businesses that you bought together. So perhaps you could just talk about the progress that you've made there and how you think that you can be more effective over the coming quarters as a bigger combined organization?
Yes. Thanks, Jeremy. So let me talk about the U.S. first. So I think from a consumer perspective, I mean, we have seen consumption in the market track down this year. As I said, we are outperforming the market on consumption, and that gap has widened. So in Q3, we're outperforming around 100 basis points versus the market. So I think we're tracking well.
I think from a consumer perspective, what's important for us is that we are across all channels, which we are so that we are where consumers are shopping. We have seen types of behaviors that we're seeing. We're seeing consumers buy either larger packs where the unit price is lower. We're also seeing consumers buy lower price point packs, for example, from dollar stores. So we are seeing them adjusting their purchasing behavior across the piece. And as I said, what's important to us is that we are across all channels so that we can cater for that behavior and also that we have a variation around our price pack architecture.
In terms of China, I mean, we're really pleased with the joint venture. We have integrated the sales force. That means that we are able to optimize our visits to retailers. It also means that we are expanding our distribution to more tiers in terms of cities in China. And we continue to invest in that space. And I'd say I referenced it in the brief, we are across all channels in China. And we're actually outperforming the market across every channel. So I think there's a real underpin in terms of excellence in execution in that market.
Our next question is from Celine Pannuti from JPMorgan.
So I have 2 questions, but I'm sorry, I just want to clarify something on the U.S. So first of all, thank you for providing clarity on Q4 expectation. But just to put it simple, you basically are guiding at minus 0.5% for the U.S. this year. And I think sellout is somewhere between minus 1% and minus 1.5%. So -- and you're saying that you are -- so like it seems that your sell-in has been better than your sellout, yet you talk about easy stock levels for next year. So I just want to understand this part.
And then my 2 questions. First, on Latin America and EMEA. If you can talk about the pricing evolution. We've seen that pricing has been a bit weaker and you were commenting about softness in consumer there. So we've seen sequential pricing deterioration. Should we expect that to continue? And maybe as well, whether that pricing in APAC, you were mentioning lapping Japan would improve or not in the fourth quarter. So that's on pricing.
And then my second question is on the outlook for the year. So if I look at what you said for Q4, minus 1% Europe, U.S., EMEA, good and then an acceleration in APAC, I get to a growth rate that's lower in Q4 versus the 9 months. Is that the right level?
Yes. Let me take the -- I'll take the middle question first in terms of pricing. I think what we always see when we see a softer consumption environment, there's always the competitive pressure increases, the promotional activity increases. And as I talked about, we see a shift in terms of consumer behavior, either buying larger packs, cheaper unit price or smaller packs in terms of smaller initial outlay, and that obviously impacts pricing.
The other thing I would say is actually in EMEA, LatAm, we have seen sequential volume improvement this year, which I think is good. The other thing to say is whilst we are seeing softness in consumption, actually, in Europe, we're pretty resilient. I'd say we're holding our own and Oral Health is the one category that is seeing -- that is not seeing the same level of softness. And the other thing to say in Europe is given our strength in pharmacy channels, we're also -- we've also got the resilience around that as well.
I think when I look at the outlook for the year, I talked about an acceleration in Asia Pac, particularly in India and strong continued growth in China. In Europe, I talked about challenging consumption in some categories, but actually a resilient performance from us in terms of holding up. LatAm, we're obviously looking at -- we're obviously monitoring the macro environment. Whilst we had a good performance in Q3, driven by Colombia and Mexico, that macro environment, we're watching that closely. And obviously, I've talked through the moving parts in North America. And what's important there is that half is broadly similar to half 1.
In terms of consumption in the U.S. and sell-in and sell-out, I think what I would say is we said at the beginning of the year, we had roughly 200 basis points difference between sell-in and sell-out. We've seen that gap narrow as we progress through the year. And as I talked, that's been different across different channels depending upon the consumptions in those channels.
I think the other thing to say within that, I mean, Oral Health continues to be strong consumption. We continue to see strong growth. And in decom, I talked about our continued strength. I mean, our top 18 brands that, for example, that are on Amazon, 16 of those, we have a higher share online than we do offline. So I think that reflects the strength in that channel. And as I said, Q3, we always have the sell-in of cough, cold and flu. But as we look to Q4, we want to close that final gap in sell-in, sell-out. I probably think about that depending upon consumption is probably broadly another week, I think, to come out. And as I said, what's important for us is that we exit the year clean and that we return to growth in North America next year.
Our next question is from Karel Zoete from Kepler Cheuvreux.
I have a follow-up question with regards to the contribution of innovations in the third quarter and how that might look going forward because you highlighted a lot of things that you're enthusiastic about, part already answered on it. But can you quantify a bit more the contribution during Q3, some of the listing of it? And then how that might develop in the quarters thereafter?
And then the second question is on Pain. The Pain franchise looked better, but the U.S. was quite soft. So can you speak about your Pain franchise, what goes well? And how should we look at the U.S?
Yes. Let me take the pain question first. I think, look, we talked about Advil. We launched our No Pain, More Gain campaign in July this year. That has -- we have seen improvement in some of our key metrics. So purchase intent is up. The messaging around relevancy is also up and actually ahead of the benchmark. Yes, we did see some supply issues in the third quarter in terms of Advil Liqui-gels, but that has now been resolved. And I think on Advil, what I would say is, whilst it's early days, we are seeing green shoots in terms of some of the metrics on Advil. And I think that should give us confidence, but it is early days.
I think when we look at innovation, I talked about it. We had a number of new market launches in Q3. That's making a good contribution in terms of our growth and market expansion. I talked about some examples earlier in terms of our Clinical range, Otrivin Nasal Mist. If I give some others, I mean, across pain, if I reference pain a bit more, I mean, Voltaren and 2% in China, our natural Voltamed products in Germany, and also on Panadol in terms of whether it's Dual Action or whether it's our Panadol Four Count in Indonesia.
So actually, what you see is across every category, innovation plays a really important role in our growth strategy, not only in terms of reaching lower-income consumers, but also in terms of driving premiumization through innovation. And I think that the science and the strength of the product differentiation is also what's setting us apart in terms of driving growth. So this is a really important growth lever. The contribution to growth varies across the categories. but we have significant headroom in terms of continued rollout across all of the pipeline of innovations that we have.
Our next question is from Ms. Misha Omanadze from BNP Paribas.
I have 2, please. So the first one would be on how you view the category in general terms. From the moment that Haleon came to market, you were saying that consumer health is relatively insulated from down-trading pressures. This is a category where brands matter a lot. Has 2025 and particularly the U.S. market, the evolution there changed your view in any sense on this category being not so much affected by down-trading?
And I guess a follow-up question on that is that do you -- in the plus 4 to 6 medium-term growth target, has the regional composition of your growth expectation changed compared to 2022? Do you expect less growth to come from North America and more growth to come from the other 2 regions or not?
Thanks, Misha. So I think -- look, I think in terms of consumer health and in terms of our categories, I mean, there's incredible growth opportunity across all of our categories that we talked about at Capital Markets Day, whether it's broadening our reach to lower-income consumers, whether it's driving premiumization through innovation or whether it's closing the incidence treatment gap. So I think we continue to see huge headroom in terms of category growth. Consumers are increasingly more aware in terms of health. They're more focused on health and improving kind of daily lives in terms of health. So I think that continues.
I think I would say also compared to other categories, we are a lot more resilient. I mean you see that. And if you think about Oral Health, it's been pretty resilient this year, in particular. Obviously, we're not immune to the macro environment, of course, that will have an impact. But I think what's important is the relative resilience versus other categories that's important. So I think that would be one thing to say.
I think in terms of our regional expectations, I mean, we continue to see runway in terms of emerging markets growth, and you see that in our performance. In terms of North America, the size of the North America consumer health market, the consumer trends that underpin it, we do see growth potential in North America. We have said that we think there's more runway to go in terms of what we've seen versus our historic performance, and that is the proactive actions that the team are taking to ensure that we unlock that growth and that it plays an important role in terms of our 4% to 6%. So I think we feel really confident in terms of our medium-term guidance of 4% to 6% growth.
Our next question is from Tom Sykes from Deutsche Bank.
Sorry, I'm going to flog the U.S. horse again. But just in terms of the drag from the drug channel in Q4 versus Q3, are you expecting that drag to be similar? And then in terms of the budgeting for next year on the drug channel, are you saying that your inventories are in the right place for the existing drug channel footprint? Or are your inventories below where they would normally be because you're expecting the drug channel sellout to be worse next year?
And then, please, just on China, sorry, I may have missed what the offline, online exposure you have is -- and sorry, whether you gave the sort of old e-com versus sort of the live streaming new e-com split, if it's possible to have that, please? And just are you targeting 11/11 in a different way to last year because that seems to be quite important to the Asia Pac or China pickup, please?
Yes. Let me take the China first. So as I talked about, we are present across all channels in China. E-com represents broadly 1/3 of our business. Within that, in terms of the different parts of that channel, obviously, Douyin, we're growing -- that channel is growing very fast and we are growing incredibly fast on the back of that.
Online to offline actually also continues. We have strong presence there. That also continues to drive strongly double-digit growth and the same on e-com. So I think we're across -- we see growth across categories, driven by innovation on parodontax and VMS in terms of decom in China. And I think we're well placed to unlock that growth.
And in terms of 11/11, you're right, it is an important event. It's a good growth driver. We are increasing our investment in that -- in the quarter. And that is one of the reasons that underpins our confidence in terms of Q4 growth in China.
I think in terms of the U.S., I mean, I talked about it. We're working closely with retailers across every channel in terms of ensuring that we exit the year with the right level of stock so that we can grow next year. Obviously, it's not an exact science because it depends on consumption. But I think what we're demonstrating is that we're working closely. We're being agile to what's happening in terms of the different dynamics.
The other thing I would say is this dynamic is not new. We have been dealing with this dynamic for a number of years quite successfully, and we'll continue to work with that dynamic in terms of where we're seeing stronger growth in some channels and where we're seeing less growth in other channels. And as I said, I think what's important for the U.S. is that we expect to see a return to growth next year.
Yes. And sorry, Dawn, just on that, just the drag from drug Q4 versus Q3, is that viewed as being similar in the U.S?
Yes. I think as I referenced earlier, in Q4, we still got more work to do in terms of ensuring that inventory lands in the right place. And I talked about depending upon consumption, the way to think about it is broadly another week to come out in terms of inventory.
Our next question is from Warren Ackerman from Barclays.
It's Warren here at Barclays. So I got kicked out for a little while, so I didn't catch everything that was being said. But can I just clarify a couple of things. On the Oral Care business, the 6.9% in the quarter, that was a bit lower than consensus, Dawn. Is there anything weird going on with Aquafresh and the Denture business outside of Sensodyne that's worth calling out this quarter? That's the first one.
And then secondly, are you able to say something about the kind of promo environment that you're seeing in, say, U.S. VMS and maybe in Germany, our data is showing both are ticking up quite substantially. Just wondering whether you've got any comment on that?
And then just finally, on the inventory side of things. You said that the -- and again, you might have answered this already. You said that you're outperforming the market in the U.S. by 100 bps. I think you said the 100 bps. But we can see that the U.S. sell-out this quarter is down 1.5%. So if you're outperforming by 100 bps, are you saying that the U.S. market sell-out this quarter is down 2.5%? And if that is the case, are you able to maybe highlight why -- where the market in the U.S. has slowed sequentially? I'm still not 100% clear on that piece.
Yes. So let me talk about Oral Health. I mean, I think you're right, we have seen a softer performance from Aquafresh, from Denture Care. And obviously, we're lapping the phasing pricing from the prior year in Japan. But as I said, I think we feel really positive about Oral Care. We're performing incredibly well. Yes, in markets, as I talked about, where you see increased competition and promo, we're seeing some of that, particularly you referenced VMS. So when consumption is soft, competitive intensity increases and alongside that often promo increases, we are seeing that in VMS in the U.S.
In terms of the inventory piece, I mean, yes, you're right. The consumption has continued to drop in North America. So the number that you quoted in Q3, that would be broadly consistent with what we're seeing. And as I said, we are outperforming the market by around about 100 basis points in the quarter. The main drag that's coming from -- I mean, you talked about it. VMS, we're seeing increased promo. That's one of the main reasons why the category is coming down.
The other category to talk about would be Respiratory because if you remember, we're lapping a COVID spike last year. So I think between those 2 categories, they're probably the biggest drivers in terms of why would the total market consumption be lower in Q3 or worse in Q3 than Q2. But as I said, in terms of our performance, we continue to outperform in terms of consumption and that outperformance has improved every quarter this year in the U.S.
Okay. Can I just clarify one other thing, Dawn, just quickly. So just sell-in, sell-out thing. So the sell-out, we think or we can see was down 1.5% this quarter on the scanner data, but you printed 0.4% organic growth. So that looks like a 200 bp restock compared to a 200 bps destock in the first half. So sequentially, that's 400 bps. And that includes the pharma destock. So if you actually look at the kind of gross restock, it's probably even higher than 200 bps, maybe 250, 300 bps. And you're saying, I think that a lot of that is not one-off. It's due to the fact that your inventories are naturally going up more in the faster-growing retailers like Amazon. So can you just clarify that, that actually that is the case rather than there's been buying ahead of pricing or any kind of weird kind of really early ordering? I'm just -- I'm still not quite clear on that piece.
Yes. I think there's a couple of things to say. I mean I referenced that different channels were in different spaces. I talked about we reduced inventories in drug channel versus the prior year. And we've also seen an increase in inventory in growing channels like Amazon, which is up double digit in the quarter.
The other thing to say, obviously, in Q3, you've got the sell-in of cough, cold and flu. And I think that muddies the water a bit in terms of sell-in and sell-out. And obviously, as that stock sells through as we progress through Q4 and then obviously, depending upon the season, then we'll see the restock.
But I think the important message around this is that we are making progress in terms of reducing the gap between sell-in and sellout. We expect to finish the year in a clean position, and we expect North America to return to growth next year.
Our next question is from Edward Lewis from Rothschild & Co Redburn.
Just 2 quick ones for me, I guess. Just looking at volume/mix growth in Asia Pac, I think it was up 4.4% this quarter on the 7.1% growth in the prior year. I guess there would have been some headwind potentially from GST in India. So it'd be interested to hear, Dawn, just sort of the difference there between sort of volume mix breakdowns.
And then just on the SKU reduction, I see that's down to 19% now against minus 16%. I think it was in H1. How much impact would that have had in the quarter on volumes, if any at all? And is that -- do we expect more SKU reductions going forward?
Yes. So if I take the volume/mix question first in Asia Pac. I mean, if you look historically, 3/4 of our growth, 2/3 to 3/4 of our growth in Asia Pac is volume led. So I think it's a strong quality growth, and we continue to see that. And that's an important piece in terms of reaching lower-income consumers, broadening distribution. And that is driven by India and China, and we see double-digit volume growth in China.
In terms of the SKU piece, you're right, we are making really good progress on this. And that is a key driver in terms of our productivity agenda. What we are doing as part of that exercise, whilst we are reducing the number of SKUs, what we're also thinking about is how do we ensure that for the consumer and for the shopper, a few things. One is that we have the range of our portfolio in terms of the consumers want. The other thing that we're doing is ensure that we're improving the shopability of our displays and our products are easier to find on shelf. So yes, there's an efficiency play with the SKU reduction, which is helping to take cost out, remove complexity in our supply chain, reduce inventory. But there's also a consumer benefit in terms of shopability, improvement on shelf and being really clear in terms of what are the range of our products.
So I'd say from a volume perspective, I think we're managing that really well. And as we're taking SKUs out, what we're seeing is increased sellout of kind of our main runners or our top SKUs, which is what you would expect to see.
And I think in terms of GST in India, actually, we didn't see a negative impact from that. It's an incredible job that the Indian team have done in terms of managing the execution of this across all of our packs at short notice. It's a reflection of the close partnership that we have with our customers, with our distributors and the team have managed it incredibly well. And as I said, we would expect that -- we would expect the benefit from that in terms of consumer offtake as we move into Q4 and as we move into next year as well.
We have a follow-up question from David Hayes from Jefferies.
I'm going to just flog this North American horse one more time, if I can. Just in terms of the -- just getting into the fourth quarter guidance of minus 1% and some of the context that you said. So broadly speaking -- I know I'm trying to simplify it probably too much. But broadly speaking, is the assumption that consumption will be basically flat year-on-year and then the 1-week reduction in the pharma channel will be, let's say, 100 basis points of headwind, and that's how you get to the minus 1% if you're thinking about the offtake shipment levels. Is that broadly the picture?
I think consumption is quite difficult to call. And I think there's a few moving parts. The first thing is, obviously, we've got a price increase, a modest price increase going live early September. We obviously need to see how the season plays out. We've talked about the variability in the cough, cold and flu season. And what we've said is globally on a full year basis, that could be -- in terms of the variability, either side of a normal season, that could be in the region of 50 to 100 basis points. So I think that that's probably a big swing factor. I think you've got the price increase.
We could assume in that number, no change in consumption. But honestly, depending upon what happens with cough, cold and flu, as I talked about, there could be some variability around that. And as I said, I think the important message on North America is that we expect to end the year with clean inventory levels and get North America back to growth next year.
We have a follow-up question from Warren Ackerman from Barclays.
Again, it's Warren here. Just on pricing, are you able to kind of indicate to us, Dawn, roughly when your pricing lands in North America, how much pricing you're taking and how you feel your pricing timing, I guess, relative to peers? And are you building in any kind of elasticity assumptions on the volume elasticity assumptions on that pricing that you're taking? That's just one follow-up.
And then second one, you may have mentioned this already on Brazil, did you break down or can you break down what you're seeing in Brazil by category in terms of like the market is obviously slower, but is there any kind of specific kind of category call-outs where you're seeing kind of more local competition or any other kind of sort of change in trend in that country?
Yes. I think in terms of the pricing, so as I said, the pricing goes live. It's effective at the beginning of November. It's across parts of our portfolio. It's kind of -- it varies across SKU, but I'd say kind of low single digits. It's mainly across Oral Health and cough, cold and flu. I think we -- given that the market has moved and others have taken pricing, it's hard to call on elasticity. But I'd say given that the market is moving, then you would expect to see a lower level of elasticity. And as I said, the strength of our brands, so why do consumers buy our brands, they're buying it in terms of the science, the strength of formulation and the differentiation in terms of the delivery of our brands. And obviously, the pricing is related to tariffs. As I said, we're mitigating the tariffs through supply chain initiatives and then there's a small amount of mitigation coming from price.
If I think specifically about Brazil, I mean, it's well documented in terms of the macro environment in Brazil, in terms of interest rates and the challenge for consumers. I think in Brazil, we have a strong performance. We're outperforming the market in terms of pain and VMS, but the market is soft. I think the area of weakness is specifically coming from EO, actually, in Brazil. But as I say, I think across LatAm, we have a strong performance in Q3, up double digit. We continue to outperform, but we are watching the macro environment in LatAm because it is changeable. But I think long term, LatAm remains and will remain a key growth driver for us.
There are no questions waiting at this time. So I'll turn the conference back over to Dawn Allen for any further remarks.
Okay. Well, thank you, everyone, for your time and interest in Haleon. We look forward to meeting a number of you at our up-and-coming conferences. Our next formal update will be our full year results in February. If you have any further questions, please contact our Investor Relations team. Thank you.
Thank you.
Financial data from Haleon
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 11,152 11,152 |
1%
1%
100%
|
|
| - Direct Costs | 3,849 3,849 |
9%
9%
35%
|
|
| Gross Profit | 7,303 7,303 |
7%
7%
65%
|
|
| - Selling and Administrative Expenses | 4,405 4,405 |
1%
1%
39%
|
|
| - Research and Development Expense | 310 310 |
1%
1%
3%
|
|
| EBITDA | 2,940 2,940 |
12%
12%
26%
|
|
| - Depreciation and Amortization | 352 352 |
1%
1%
3%
|
|
| EBIT (Operating Income) EBIT | 2,588 2,588 |
14%
14%
23%
|
|
| Net Profit | 1,623 1,623 |
7%
7%
15%
|
|
In millions GBP.
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Haleon Stock News
Company Profile
Haleon Plc provides personal healthcare products. The firm focus on consumer healthcare and driven by its purpose of delivering better everyday health with humanity. Its brands are built on science, innovation and human understanding and are trusted by millions of consumers globally. The company is headquartered in Brentford, the United Kingdom.
StocksGuide Premium
| Head office | United Kingdom |
| CEO | Mr. Mcnamara |
| Employees | 24,535 |
| Founded | 2021 |
| Website | www.haleon.com |


