Haleon NYSE: HLN said its second-quarter organic sales growth accelerated to 3.1% from 2.2% in the first quarter, supported by improved execution in North America, continued growth in emerging markets and a stronger contribution from pain relief and oral health products.
Chief Executive Officer Brian McNamara said volume and mix contributed 1.4 percentage points of second-quarter organic sales growth, reflecting what he described as a better balance between price and volume. The company maintained its full-year organic sales growth guidance of 3% to 5% and said it expects a stronger second half than first half.
North America execution and emerging-market recovery
North America grew 3.1% in the second quarter, with volume and mix up 2%. McNamara attributed the performance to three factors: shelf resets and placements with key customers, new-product launches, and e-commerce momentum.
Among the U.S. launches, he cited the third product in Haleon’s clinical oral-health range, Clinical Repair, as well as Centrum Age Defy and Excedrin Rapid Relief. E-commerce recorded “strong double-digit growth,” McNamara said, at twice the market growth rate.
Emerging markets grew 6.3% during the quarter, a sequential improvement, though performance was held back by the Middle East. Haleon has relatively high market shares in the region, McNamara said, and has experienced market declines in locations including Dubai and Pakistan. The company expects improvement in the second half based on its own commercial plans, rather than assuming that regional conditions will change.
Latin America moved from roughly flat growth in the first quarter to high-single-digit growth in the second quarter. McNamara said the improvement followed a review led by new regional leader Andrés, who identified price gaps for certain Sensodyne products in Brazil and other markets. A pilot involving lower prices on a specific Sensodyne SKU generated double-digit volume growth, he said.
Haleon expects Latin America’s high-single-digit growth to continue in the second half, subject to quarterly phasing effects.
Europe and respiratory health remain constraints
Europe was more difficult, with organic sales growth of about 0.4% in the second quarter. McNamara said Haleon was gaining market share in the region, but consumer-health categories were declining at a low-single-digit rate. The company is not assuming an improvement in the European market environment for the balance of the year.
Respiratory health also remained weak, shaving about 150 basis points from organic sales growth in the second quarter, according to an analyst’s question. The portfolio includes cough and cold, allergy and smokers’ health products.
McNamara said cough and cold sales were affected by a difficult season, particularly for the Contac brand in China. Haleon believes the two-year decline in cough and cold is cyclical rather than structural and expects growth in the back half versus a year earlier, although not a return to 2024 levels. The seasonal impact is expected to be concentrated in the fourth quarter, while customer sell-in occurs primarily in July and August.
Allergy sales declined modestly in the second quarter after performing well in the first quarter, which McNamara characterized as normal seasonal phasing. Smokers’ health sales continued to decline but at a slower rate than in the first quarter, with the company seeing early signs of stabilization.
China, pain relief and oral health contribute to growth
China delivered high-single-digit growth in the second quarter, driven by increased investment on Douyin, where sales grew more than 100%, according to Chief Financial Officer Dawn Allen. Centrum and Caltrate were among the key brands supporting growth on the platform, while Haleon doubled the amount of content it created for the channel.
Voltaren also contributed after the company expanded its presence and introduced a 12-hour version of the product through China’s hospital channel. Allen said negative pricing in Asia-Pacific reflected the volume-based procurement model used in hospitals as well as investment on Douyin. She added that gross profit growth and constant-currency margin improvement in the region remained strong.
Pain relief accelerated in the second quarter, supported by Voltaren in China and the U.S., healthy Panadol growth, and the rollout of Panadol Dual Action outside the U.S. Haleon also reported stabilization and slight share growth for Advil, even as the broader category remained subdued.
Oral health organic sales grew 6.2% in the second quarter. McNamara said Sensodyne and parodontax continued to perform strongly, while denture care grew at a mid-single-digit rate. In India, a lower-priced 20-rupee Sensodyne pack accounted for more than 40% of the company’s volume in the latest quarter and roughly half of Sensodyne growth, he said.
Margin expansion supported by supply-chain productivity
Allen said constant-currency operating margin rose 120 basis points in the first half, driven by a 140-basis-point improvement in gross margin and a 40-basis-point foreign-exchange benefit. She said the margin progress resulted from supply-chain efficiency rather than reduced investment or excessive pricing.
The company’s advertising and promotion spending rose 3.2% in the first half, broadly in line with sales, and represented 20.9% of revenue. Haleon allocated 60% of that spending to digital media and increased investment in social media and expert-led communications.
Haleon expects high-single-digit operating profit growth in the second half, though freight and other Middle East-related costs are expected to rise as fixed-price contracts and hedges expire. Allen said supply-chain productivity should allow the company to absorb those costs without “exceptional pricing.”
The company also expects benefits from its operating-model changes, which it previously estimated would produce £175 million to £200 million in annual savings, with roughly one-third expected this year. Management said it will decide how much of those savings to reinvest in future capabilities and how much to retain in profit.
Allen added that Haleon is expanding artificial-intelligence tools across forecasting, manufacturing, marketing and commercial execution. Consumption-based forecasting has improved forecast accuracy by 5% to 6%, she said, while AI-enabled production scheduling and preventative-maintenance initiatives have improved operational effectiveness at certain sites.
About Haleon (NYSE:HLN)
Haleon plc NYSE: HLN is a global consumer healthcare company formed through the separation of a large pharmaceutical group's consumer health business in 2022. Headquartered in the United Kingdom, Haleon develops, manufactures and markets a broad portfolio of over‑the‑counter medicines, oral health products, vitamins, minerals and supplements, and other consumer health goods designed for daily self‑care and symptom relief.
The company’s product mix spans categories such as oral care (toothpastes and sensitivity treatments), pain relief and analgesics, respiratory remedies, digestive health products, topical treatments and nutritional supplements.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Haleon, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Haleon wasn't on the list.
While Haleon currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's list of seven stocks and why their long-term outlooks are very promising.
Get This Free Report
