Advil Maker Haleon Expects Higher 2024 Revenue After Strong 2023 Earnings, Stock Soars

Haleon Plc’s HLN fiscal year 2023 revenues increased 4.1% Y/Y to £11.3 billion, equivalent to around $14.03 billion, missing the consensus of $14.47 billion. 

Revenue grew 8.0% organically for FY 2023, with 7.0% price and 1.0% volume/mix, the company reported on Thursday.

The FTSE 100-listed business was spun out from GSK plc GSK.

FX reduced revenue by 3.8%, and M&A impact was (0.1)%.

Adjusted operating profit increased 10.4% constant currency to £2.55 billion; Excluding M&A impact, adjusted operating profit was up 10.8% constant currency, with a margin of 22.6%, up 50bps.

Adjusted diluted EPS 17.3p, down 6.0%, mainly due to annualisation of interest costs and adverse FX. 

Buyback: Haleon added that it expects to allocate £500 million to buy back shares in 2024.

“Within 18 months of our demerger, we reduced net debt by over £2 billion, bringing net debt/adjusted EBITDA down from c.4x to 3x, reflecting both strong cash conversion and financial discipline, underpinning an increased dividend payout and share buyback,” said Brian McNamara, CEO.

Guidance: Haleon backed its 2024 target of organic revenue growth range of 4%-6%. It also expects organic operating profit growth to be ahead of organic revenue growth. Medium-term targets remain the same.

The company says the disposals of Lamisil and ChapStick will dilute FY 2024 revenue and adjusted operating profit by around 1% and 3%, respectively, assuming ChapStick completes in the second quarter of 2024.

Organic revenue growth in Q1 will be just below the lower end of this range, given the tough comparatives relating to the strong cold and flu season in Q1 last year and the China rebound and performance of Advil in Canada.

“In 2024, we expect the operating environment to remain challenging. We are confident, however, that we are well positioned to deliver on both guidance for 2024 and over the medium term,” McNamara added.

Price Action: HLN shares are up 5.71% at $8.52 on the last check Thursday.

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