Haleon delivers double digit organic revenue growth

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Haleon plc (LON:HLN) has announced its 2023 half year results for the six months ended 30 June 2023 (unaudited).

Strong growth, driven by price with another quarter of positive volume mix
●	H1 revenue +10.6% to £5,738m, organic growth¹ +10.4% with 7.5% price and 2.9% volume/mix
●	Power Brands +10.1% organic growth¹; with Sensodyne, parodontax, Panadol, Denture Care and Otrivin standouts
●	55% of our business gained or maintained market share² year to date

Increased operating profit given positive operational leverage
●	H1 Adjusted operating profit¹ increased 8.9% constant currency to £1,271m
●	H1 Adjusted operating profit margin¹ 22.2%, down 40bps constant currency
●	H1 Reported operating profit increased 26.8% to £1,141m

Strong execution in delivering on deleveraging commitment
●	H1 net cash flow from operating activities was £749m with Free cash flow of £369m
●	Net debt at 30 June 2023 was £9,525m, representing 3.4x last 12 months net debt/adjusted EBITDA¹
●	Agreed disposal of Lamisil for aggregate consideration of £235m; we expect total cash realised in connection with the disposal to be around £250m⁴. Completion expected in Q4.
●	Interim dividend declared of 1.8 pence per share

Well placed for future growth, updated guidance
●	FY2023 organic revenue growth¹ now expected to be 7-8%
●	FY2023 adjusted operating profit growth of 9-11% constant currency
●	Well placed to deliver on medium term guidance

Brian McNamara, Chief Executive Officer, Haleon said:

“One year from listing, we are very pleased with Haleon’s first half results. We delivered double digit organic revenue growth, with both price and positive volume mix. Encouragingly this trend was consistent across the first and second quarters. Our growth was also broad based across regions and categories. Performance in the first half also remained competitive with c.55% of our business gaining or maintaining share², reiterating the resilience of the brand portfolio.

Operating results constant currency were strong, underpinning the increase in full year organic sales growth and adjusted operating profit constant currency guidance shared today. At the same time, we will continue to invest in the business for long term sustainable growth.

Looking ahead, whilst we continue to expect a challenging environment given further pressure on consumer spending and global geopolitical and macroeconomic uncertainties, we remain confident in the resilience of Haleon’s incredible portfolio of category leading brands. Our strategy is delivering, demonstrated with the strength of our results, and we remain confident that Haleon is well positioned for the rest of the year, as well as over the longer term.”

1. Organic revenue growth, Adjusted operating profit, Adjusted operating profit margin, Adjusted diluted earnings per share and Free cash flow are
non-IFRS measures; definitions and calculations of non-IFRS measures can be found on pages 34 to 43

2. Market share statements throughout this report are estimates based on the Group’s analysis of third party market data of revenue for ytd May 2023 including IQVIA, IRI and Nielsen data. Represents % of brand-market combinations gaining or maintaining share (this analysis covers c.90% of Haleon’s total revenue)

3. The commentary in this announcement contain forward-looking statements and should be read in conjunction with the cautionary note on page 34

4. This includes an additional c.£15m expected to be realised from the release of working capital allocated to Lamisil

Adjusted results²			Reported results
Six months ended 30 June	2023	vs 2022		2023	vs 2022
Organic revenue growth		10.4%	Revenue	£5,738m	10.6%
Adjusted operating profit	£1,271m	8.9%³	Operating profit	£1,141m	26.8%
Adjusted operating profit margin	22.2%	(40)bps³	Operating profit margin	19.9%	260 bps
Adjusted diluted earnings per share	8.5p	(8.3)%³	Diluted earnings per share	7.4p	32.1%
Free cash flow	£369m	£(184)m	Net cash flow from operating activities	£749m	£69m

1. The commentary in this announcement contain forward-looking statements and should be read in conjunction with the cautionary note on page 34.

2. Organic revenue growth, Adjusted operating profit, Adjusted operating profit margin, Adjusted diluted earnings per share and Free cash flow are
non-IFRS measures; definitions and calculations of non-IFRS measures can be found on pages 34 to 43.

3. Change at constant currency.

Outlook

For FY 2023 the Company now expects:

● Organic revenue growth to be 7-8%. This compares with “towards the upper end of the 4-6% range” as shared in the Q1 Trading Statement on 3 May 2023.
● Adjusted operating profit growth to be 9-11% constant currency
● Net interest expense of c.£350m
● Adjusted effective tax rate of 23-24%

Dividend

Consistent with our previous guidance, the Board has declared a H1 2023 interim dividend of 1.8 pence per ordinary share.

This interim dividend is expected to be paid on 5 October 2023 to holders of ordinary shares and US American Depositary Shares (ADS) on the register as of 25 August 2023 (the record date). The ex-dividend date is expected to be 24 August 2023. For ordinary shareholders wishing to participate in the Dividend Reinvestment Programme (DRIP), the election deadline for the DRIP is 14 September 2023.

Foreign exchange

Whilst we do not guide specifically on foreign exchange, translational foreign exchange based on spot rates as at 30 June 2023 and using FY2022 results as a base, would have a negative impact of c.4% on revenue and negative impact of c.6.5% on Adjusted operating profit.

Presentation for analysts and shareholders:

A recorded results presentation by Brian McNamara, Chief Executive Officer, and Tobias Hestler, Chief Financial Officer, will be available shortly after 7:00am BST (8:00am CET) on 2 August 2023 and can be accessed at www.haleon.com/investors. This will be followed by a Q&A session at 10:00am BST (11:00am CET).

For analysts and shareholders wishing to ask questions, please use the dial-in details below which will have a Q&A facility:

UK	0800 358 1035
US	+1 646 664 1960
All other:	+44 204 587 0498
Passcode:	01 70 24

An archived webcast of the presentation will be available later on the day of the results and can be accessed at https://www.haleon.com/investors

Financial reporting calendar


Q3 2023 trading statement	2 November 2023
FY 2023 results	February 2024

Guiding strategy

Haleon is led by its purpose to deliver better everyday health with humanity.

A clear approach to deliver on our growth ambitions is built on a world class portfolio of category leading brands in a growing sector across an attractive geographic footprint. This leverages competitive capabilities combining deep human understanding with trusted science, brand building and innovation, leading route to market and leading digital capabilities.

Haleon aims to outperform through a focus on increasing household penetration and capitalising on new and emerging growth opportunities across channels and geographies, underpinned by a strong focus on execution and financial discipline to improve profitability and sustain reinvestment in growth. Critically, running a responsible business, which is integral to all that we do, allows Haleon to reduce risk and support performance.

Taken together, over the medium term, this is expected to drive organic annual sales growth of 4-6%, sustainable moderate adjusted operating margin expansion constant currency per annum. All of this, whilst supporting our investment for growth, delivering consistent high cash conversion and maintaining a focus on our clear and disciplined capital allocation policy.

Business review – Maximising growth

The strength of Haleon’s portfolio resulted in 10.4% organic growth during H1 2023, with the growth of Power Brands broadly in line with this at 10.1%. Additionally, Local Growth brands outperformed in H1 2023, increasing 14.1%, supported by the strong growth in China by Fenbid and Contac. Throughout the half, Haleon’s strategy continued to deliver strong performance, underpinned by the Company’s ability to leverage its deep human understanding combined with its trusted science capabilities.

Haleon continued to make strong progress against its four key strategic pillars during H1 2023.

Leading portfolio – performance driven by innovation, brand building and geographic and channel expansion

Across the portfolio for the year to date (to the end of May 2023), 55% of Haleon’s business gained or maintained market share with momentum improved in recent months.

In Oral Health, where revenue increased 10.5% and organic revenue grew 10.8%, Haleon sustained its track record of outperformance, driven by double digit growth by the Power Brands, and all three gained share. This very strong growth was driven by successful brand building campaigns and activation, innovation and continued geographic expansion. There were a number of launches in the first half, particularly leveraging our trusted science capabilities, including Sensodyne Pronamel Active Shield which uses our most advanced enamel protection technology. This product builds on existing Pronamel technology by optimising the formulation to drive more fluoride into enamel, creating a remineralised surface that improves resistance to acidity. Having launched in the first half in the US, this innovation will be rolled out in a number of markets during the second half of the year. We also launched parodontax Active Gum Repair which has been clinically proven to help bleeding, swollen and inflamed gums to repair, reversing early gum problems. Early results show strong consumer uptake. Additionally, we continued to see strong success from previous launches such as Polident Max Hold Plus which we launched in 2022 driving strong growth of fixatives in the first half with consumption growing faster than the market, and now present in 20 markets.

In Vitamins, Minerals and Supplements revenue was flat and declined 0.5% organically. As expected, the tough comparatives from capacity coming on stream and subsequent re-piping in the prior year impacted results as did the change in consumer behaviour in the immunity subcategory, particularly in the US, as consumers became less concerned about COVID-19. Centrum organic growth in the first half increased low-single digit overall, driven by strength in EMEA and LatAm and to a lesser extent in Asia Pacific. Haleon continued to leverage its trusted science focus through the clinical studies completed in 2022 and earlier this year on Centrum Silver, which demonstrated positive results on cognitive function of adults 65 years and older, thereby providing a new claim and activation for the product. During the half, we activated this claim across a number of markets leading to double digit growth and market share gains in the multi-vitamin segment in the US and China.

We also continued to expand our Centrum offering to new markets. Having launched Centrum in India through the e-commerce channel in October 2022 with a campaign to build awareness around multivitamin deficiency, we further expanded the portfolio to include Benefit Blends. Centrum remained the number one multivitamin on Amazon in India (by revenue), where 70% of new Centrum consumers are also new to the multivitamin subcategory. Similarly in Egypt, where we launched the brand in November 2022, Haleon continued to drive further market share gains helped by strong awareness campaigns using both traditional and non-traditional channels.

Haleon remains focused on using its unique consumer insight to evolve delivery formats and deliver new use occasions to make it easier for consumers to use our products. In the US in Q2 2023, Haleon launched Emergen-C crystals, a ‘no-water needed’ solution delivering key immune-supporting nutrients for adults and children which has seen strong initial consumer feedback.

In Pain Relief, revenue increased 12.6% and was up 12.9% organically. Fenbid and Panadol were standout performers.

Fenbid sales more than doubled, driven by the cessation of selling restrictions following the end of COVID-19 lockdowns in China. Panadol benefited from exceptional growth in EMEA and LatAm as a result of the success of the new ‘Release starts here’ campaign, which leverages the overall brand franchise at the same time as addressing specialist need states such as migraine, body pain, night and headache.

In line with our purpose and strategy to identify and support new and emerging health trends, we launched natural variants across a number of markets to expand our reach, as our natural launches are designed to engage with a younger consumer base. Recent launches included Panadol PanaNatra which we launched in Australia with strong early results providing a platform for future innovation.

Haleon also launched Voltaren 24 hour medicated patch in a number of markets which delivered 60% incremental new sales and gained leading market share in the 24 hour patch segment. In addition, we further extended the range of Advil Dual Action to Back Pain, the third most common pain indication, and an underserved consumer need with only 20% of consumers currently “very satisfied” with current back pain treatments. The product has received positive early feedback with convenience, value and back pain efficacy highlighted by users.

In Respiratory Health revenue increased 22.8% and organic revenue was up 22.0%. This growth was largely delivered in the first quarter given the strong cold and flu season and by growth in China of Contac following the end of COVID-19 lockdowns. Cold and flu added 2% to the Group’s first half organic sales.

Theraflu growth was strong, supported by successful innovation as well as strong execution in market. Theraflu Max+ saw particularly strong growth in its markets and is now c.25% of Theraflu sales in the US. Beyond this, we continued to see strong uplift from natural products launched in previous years, such as Theraflu ProNaturals.

In allergy, we enhanced our offering in allergy with Flonase Nighttime Allergy Relief, providing up to six hours relief from night time allergy symptoms. We also expanded our Robitussin range with Robitussin Medi-Soothers, a dual-action liquid-filled lozenge that soothes sore throats and treats coughs.

Digestive Health and Other saw 8.6% revenue growth and organic revenue growth of 7.7%. Revenue in this category is split across three areas, c.50% Digestive Health, c.25% Skin Health and c.25% Smoking Cessation brands. Broad based growth across all of the subcategories supported performance in the first half.

We strengthened our position in Tums in the US and grew household penetration within the strategic growth segment of young consumers.

We also rolled out a natural proposition of Fenistil across Central Eastern Europe to bring new users into the itch relief category.

Innovation accelerating growth

The focus on innovation to accelerate growth continued and we strengthened the portfolio with new launches. During the year, locally relevant propositions were launched across several markets, targeting a younger consumer base for whom relevance is increased with natural based propositions. We launched Tums + Sleep in the US, a melatonin-containing chewy bite product that addresses heartburn and helps consumers fall asleep. In India, we targeted younger consumers to Eno through Eno Chewy Bites which we launched in June through our online channel.

Marketing effectiveness

Haleon Advertising and Promotion (A&P) spend was up 4.0% at constant currency for the half and up 4.7% AER, with spend equally split between offline and online media channels. Importantly, consumer facing A&P spend excluding Russia was up 8.0% constant currency for the half.

Marketing to Healthcare professionals strengthened with Haleon’s HealthPartner portal, an online hub for healthcare professionals launched in 2019 in one market and now scaled globally to 50 markets. During the first half, we scaled more engagements with this platform and know from our analytics this helps secure more recommendations. A recent study in the US showed that experts who have engaged on the portal recommend our toothpaste about 30% more than those who haven’t.

Beyond this, we continued to roll out Otrivin “Actions to Breathe Cleaner” campaign where Haleon collects pollution by-products and uses them to make certified non-toxic pencils for underprivileged children in India. This initiative has cleaned over 8 billion cubic feet of air to date and driven over 240m impressions through earned media and won a number of marketing awards including Campaign of the Year and Gold Award (environmental category) at the Campaign PR Awards Asia.

Increased channel penetration

Within channels, there remains an opportunity for increased e-commerce penetration. e-commerce represented 9% of Haleon’s sales year to date. Improved content, optimised media, increased investment in high traffic events such as China contributed to growth. In China, one of Haleon’s largest e-commerce markets, sales grew double digit with strong Sensodyne performance during the 618 shopping festival.

Maintain strong execution and financial discipline

We fuel our growth agenda through strong execution and disciplined cost management. In combination with sales growth, this approach enables us to free up resources for reinvestment, while creating value for our stakeholders.

Haleon continued to focus on driving value from third-party expenditure and offset headwinds from input prices and commodity inflation through a combination of forward buying, value engineering and new supplier introductions.

Haleon managed to largely offset inflationary cost pressures in the half through a combination of pricing and other initiatives. However, this combined with transactional foreign exchange losses resulted in adjusted gross profit up 9.1% constant currency at £3.6bn and adjusted gross profit margin across the business down 70bps constant currency at 62.3%.

Additionally, initiatives were put in place to ensure Haleon was able to meet demand from consumers. For example, in China, Fenbid and Contac saw strong growth following the lifting of COVID-19 related restrictions towards the end of 2022 despite tight labour conditions arising from COVID-19 outbreaks. Haleon was able to double its manufacturing output at its Tianjin facility to ensure adequate supplies of these products to Chinese consumers and hospitals. Strong collaboration with partners ensured raw material supply to our facility.

Across the business, Haleon also undertook SKU rationalisation and improved logistics productivity through warehousing and outbound freight consolidation which helped to partially offset freight and distribution cost inflation. Simultaneously, the business continued its insourcing initiatives, improved return on investment on promotional spend and optimised price-pack architecture across the portfolio.

During the half, we made good progress on our programme to increase agility and productivity across the business, with implementation now underway. This is expected to result in annualised gross cost savings of c. £300 million over the next three years, with the benefits largely expected in FY 2024 and FY 2025.

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Separately, consistent with our strategy to be proactive in managing our portfolio, Haleon reached an agreement with Karo Healthcare AB for the disposal of our rights to Lamisil topical for a total consideration of £235 million. Including working capital to be released, the total cash realised from the disposal is expected to be around £250 million. This disposal will also simplify Haleon’s portfolio and allow us to reallocate resources to other drivers of Haleon’s growth. The transaction is expected to complete in Q4 2023. Proceeds from the disposal will be used to pay down debt, underpinning our confidence to de-lever to net debt/Adjusted EBITDA below 3x during 2024.

In July, it was announced that Haleon had reached a licensing agreement with Futura Medical to exclusively commercialise the first FDA approved topical erectile dysfunction (ED) treatment for OTC use in US.

At the demerger in July 2022, Haleon had net debt of £10,707m, representing leverage of around 4x net debt/Adjusted EBITDA. Strong cash generation and Adjusted EBITDA growth since then, resulted in Haleon closing the first half with leverage of 3.4x. Net debt at 30 June 2023 stood at £9,525m. As debt is largely matched to the regions where profit is earned, there is a natural hedge on foreign exchange movements over time.

Run a responsible business

Running a responsible business is one of our strategic priorities. We deliver our strategy through three interconnected focus areas: our commitment to making everyday health more inclusive, reducing our environmental impact, and operating with ethical, responsible, and transparent behaviours and standards of conduct. In March, the Board established an Environmental & Social Sustainability Committee to focus on this important area for Haleon.

Progressing against existing environmental targets

We aim to reduce our Scope 3 carbon emissions from source to sale by 42% by 2030, based on a 2020 baseline. To achieve this, we are working with our suppliers to accelerate their transition to renewable electricity, since purchased goods and services account for 56% of Haleon’s carbon emission footprint across Scope 1, 2 and 3. We held our first Supplier Sustainability Summit as Haleon with approximately 200 attendees, to share more about our Responsible Business goals and set clear expectations with our suppliers.

We are also working to make our packaging more sustainable, including our aim to reduce our use of virgin petroleum-based plastic by 10% by 2025, and a third by 2030. As part of this effort, we are exploring the use of pulp-based alternatives to plastic. We are now working with the Bottle Collective to explore the feasibility and co-development of cellulose-based technologies as alternatives to virgin petroleum-based plastics for the packaging of consumer health products. The Bottle Collective, led by PA Consulting and PulPac, has a mission to tackle single-use plastic waste by industrialising a recyclable high-speed, low-cost Dry Molded Fiber bottle process.

We are on track for all product packaging to be recycle-ready by 2025 where safety, quality and regulations permit. We continue to roll-out our recycle-ready toothpaste tubes globally and by the end of this year we expect to have launched around 1 billion tubes in market since our roll out began in 2021, two years ahead of our plan to reach this milestone in 2025.

Opportunity to make a difference with health inclusivity

Haleon aims to empower 50 million people a year to be more included in opportunities for better everyday health by 2025. Several examples in H1 2023 demonstrate the work Haleon brands are doing to translate this ambition into action. Through our Panadol brand, we’ve partnered with the Indonesian healthcare app Halodoc to set up a mobile clinic, Panadol Klinik Cekatan. We’ve extended this programme to create the Panadol Pain Phone, a telemedicine unit which connects health professionals to people with limited healthcare access. Designed to bridge the distance between rural communities and medical experts, the Panadol Pain Phone provides a video screen for face-to-face interactions, as well as sensors that measure metrics such as heart rate, blood pressure, temperature, and oxygen levels.

Voltaren in the US launched a campaign aimed at helping caregivers prioritise their own physical health and movement. The brand launched the ‘Acts of Care’ campaign, based on the idea that when caregivers hear from a loved one, it increases their overall wellbeing. Brain mapping shows a 36% increase in wellbeing in caregivers after they hear from a loved one about their value. This was measured with Emotiv EEG headsets, which measured well-being based on brain wave changes in levels of stress, relaxation, excitement, engagement, and attention. The campaign website also has advice for caregivers, to support their own physical and mental health.

Our work to help improve health inclusivity is being recognised. The Health Inclusivity Index was awarded Best Data Visualisation at this year’s Webby Awards, which honour excellence on the Internet. Haleon supported Economist Impact in the publication of the Health Inclusivity Index in 2022, which was recognised this year for demonstrating best in class use of data visualisation by representing complex datasets in innovative, visually appealing and easily comprehensible ways.

Operational review

Category performance

Revenue by product category for the six months ended 30 June 2022 and 2023:

	Revenue (£m)		Revenue change (%)
	2023	2022	Reported	Organic¹
Oral Health	1,589	1,438	10.5%	10.8%
VMS	816	816	–	(0.5)%
Pain Relief	1,405	1,248	12.6%	12.9%
Respiratory Health	839	683	22.8%	22.0%
Digestive Health and Other	1,089	1,003	8.6%	7.7%
Group revenue	5,738	5,188	10.6%	10.4%

1. Definitions and calculations of non-IFRS measures can be found on pages 34 to 43

All commentary below refers to organic revenue growth unless otherwise stated.

Key category performance was as follows:

Oral Health

Organic revenue growth of 10.8%, with all 3 Power Brands delivering robust growth and up double digit. Sensodyne was driven by growth in North America, Middle East & Africa and India. Parodontax benefitted from particularly healthy growth in Middle East and Africa. Denture Care growth was driven by strong performance from innovations such as Polident Max Hold +.

VMS

Organic revenue slightly declined at (0.5)%. As expected, Emergen-C declined double digit in North America due to a tough comparative as a result of the COVID-19 Omicron wave last year and as consumers changed behaviour in this category following normalisation of conditions post COVID-19. Centrum increased low-single digit due to a difficult comparative from trade sell-in following added capacity coming on stream last year. The brand was particularly strong in EMEA & LatAm, up double digit, and saw good growth in Asia Pacific where it increased mid-single digit, which partly offset a decline in North America. Caltrate increased mid-single digit driven by a similar level of growth in China.

Pain Relief

Organic revenue growth of 12.9% largely driven by very strong growth from Fenbid in China following the end of lockdowns in Q4 2022. Advil grew mid-single digit overall. Panadol, up high-single digit, was underpinned by strong performance in Middle East & Africa, Australia and Central & Eastern Europe. Voltaren increased mid-single digit due to strength in the US, Central and Eastern Europe, Italy and India.

Respiratory Health

Organic revenue increased 22.0% given a strong cold and flu season in the first quarter, combined with re-stocking in EMEA and LatAm, and North America given particularly low inventory levels at the end of last year. Allergy sales increased mid-single digit. Theraflu and Otrivin both increased double digit with strength in Central & Eastern Europe and Middle East & Africa. Contac sales almost doubled, driven by growth in China following the end of lockdowns in Q4 2022.

Digestive Health and Other

Organic revenue increased 7.7% with Digestive Health up mid-single digit underpinned by mid-teens growth in Tums and Benefiber, and mid single digit growth in Eno. Smokers Health revenue increased mid-single digit and Skin Health brands increased mid-single digit driven by Fenistil.

Geographical segment performance

Performance by geographical segment for the six months ended 30 June:

	Revenue (£m)		Revenue change (%)
	2023	2022	Reported	Organic¹	Price¹	Vol/Mix¹
North America	2,046	1,873	9.2%	4.7%	4.7%	– %
EMEA and LatAm	2,323	2,069	12.3%	14.9%	13.3%	1.6%
APAC	1,369	1,246	9.9%	11.6%	2.3%	9.3%
Group	5,738	5,188	10.6%	10.4%	7.5%	2.9%

1. Price and Volume/Mix are components of Organic Revenue Growth. Definitions and calculations of non-IFRS measures can be found on pages 34 to 43.

Adjusted operating profit by geographical segment for the six months ended 30 June:

	Adjusted operating profit (£m)		YoY change	YoY constant currency¹
	2023	2022	2023	2023
Group operating profit	1,141	900	26.8%	29.9%
Reconciling items between adjusted operating profit and operating profit²	130	291	(55.3)%	(56.0)%
Group Adjusted operating profit	1,271	1,191	6.7%	8.9%

North America	471	454	3.7%	(2.0)%
EMEA and LatAm	542	467	16.1%	17.6%
APAC	318	300	6.0%	9.7%
Corporate and other unallocated	(60)	(30)	100%	(13.3)%
Group Adjusted operating profit	1,271	1,191	6.7%	8.9%

1. Definitions and calculations of non-IFRS measures can be found on pages 34 to 43.

2. Reconciling items for these purposes are the Adjusting Items, which are defined under “Use of Non-IFRS Measures”. A reconciliation between Operating profit and Adjusted operating profit is included under “Use of Non-IFRS Measures”.

Adjusted operating profit margin by geographical segment for the six months ended 30 June:

	Adjusted operating profit margin (%)		YoY change	YoY constant currency¹
	2023	2022	2023	2023
North America	23.0%	24.2%	(1.2)%	(1.5)%
EMEA and LatAm	23.3%	22.6%	0.7%	0.5%
APAC	23.2%	24.1%	(0.9)%	(0.5)%
Group¹	22.2%	23.0%	(0.8)%	(0.4)%

1. Definitions and calculations of non-IFRS measures can be found on pages 34 to 43.

North America
●	Revenue grew 9.2% on a reported basis. Organic revenue growth was +4.7%, with 4.7% price and flat volume/mix. During Q2, organic revenue growth was +4.3% with 5.8% price and (1.5)% volume/mix. The decline in volume/mix in Q2 reflected some pull-forward of retailer purchasing in Q1 ahead of price increases and retailer stocking patterns.
●	Oral Health – revenue up high-single digit largely driven by strong demand for Sensodyne, up double digit underpinned by continued innovation driving market share gains.
●	VMS – revenue down double digit due to lapping capacity coming on stream in 2022. Emergen-C declined double digit given tough comparative in H1 2022 due to the Omicron wave. Centrum declined high-single digit due to added capacity in the prior year comparative.
●	Pain Relief – high-single digit revenue growth underpinned by Advil growth benefitting from price increases and market activation. Excedrin up double digit helped by innovation. Voltaren up double digit.
●	Respiratory Health – revenue grew double digit due to high incidence of cold and flu during Q1 and a shortage of cold/flu products in Canada. Robitussin up double digit helped by cold and flu in the first quarter. Flonase was flat given a softer allergy season.
●	Digestive Health and Other – revenue up low-single digit with strong demand in Tums following a restock at the start of the year as well as pricing. Nexium declined high-single digit. Smokers Health grew low-single digit. Skin Health revenues declined low-double digit due to a decline in Abreva and Chapstick.
●	Adjusted operating profit declined 2.0% constant currency, with adjusted operating margin down 150bps constant currency to 23.0%. The decline in adjusted operating margin was driven by phasing of costs incurred as a standalone company, inflationary cost pressures along with increased costs to meet unexpected volatility in demand. This was partially offset by pricing, efficiencies and strong cost management.

Europe, Middle East & Africa (EMEA) and Latin America (LatAm)
●	Revenue grew 12.3% on a reported basis. Organic revenue growth was +14.9%, with 13.3% price and 1.6% volume/mix. During Q2, organic revenue growth was +16.8% with 13.9% price and 2.9% volume/mix.
●	There was a c.3% benefit to both Q2 and H1 2023 revenue, from pricing in Turkey and Argentina which impacted the overall Group by c.1%.
●	Oral Health – double digit revenue growth with double digit growth in both Sensodyne and parodontax underpinned by the launch of parodontax Active Gum Repair in EMEA. Denture care performed well, also up double digit following the launch of Max Hold + Comfort in Europe.
●	VMS – revenue up mid-single digit driven by double digit growth in Centrum with strong growth in Latin America supported by entry into new markets including Egypt towards the end of 2022. This was partly offset by a decline in Calsource.
●	Pain Relief – high-single digit growth largely reflecting double-digit Panadol growth. Voltaren grew mid single digit.
●	Respiratory Health – revenue up double digit due to a prolonged strong cold and flu season significantly ahead of 2019 levels supported by strength in Theraflu and Otrivin.
●	Digestive Health and Other – revenue up double digit with good results in all categories.
●	Geographically, Latin America, Central & Eastern Europe, Middle East & Africa, and Southern Europe saw double digit revenue growth. Northern Europe and Germany were up high-single digit and mid-single digit respectively.
●	Adjusted operating profit increased 17.6% constant currency, with adjusted operating margin up 50bps constant currency at 23.3%. The adjusted operating margin uplift was largely driven by pricing, strong growth and efficiencies across the business. This offset phasing of costs incurred as a standalone company, cost inflation and adverse transactional foreign exchange.

Asia-Pacific
●	Revenue grew 9.9% on a reported basis. Organic revenue growth was +11.6%, with 2.3% price and 9.3% volume/mix. During Q2, organic revenue growth was +11.5% with 1.1% price and 10.4% volume/mix.
●	Oral Health – mid-single digit revenue growth with strength across Sensodyne underpinned by penetration and premiumisation particularly in India and Japan. New innovation launches across Poligrip helped drive double digit growth in Denture Care.
●	VMS – increased mid-single digit with Centrum up mid-single digit helped by new innovation including gender formulations and pricing in China. Caltrate was also up mid-single digit led by demand in China, pricing and new innovations such as Bone 50+ in Taiwan.
●	Pain Relief – double digit revenue growth largely driven by Fenbid in China due to the easing of restrictions and COVID-19 related demand in the region. Panadol was flat, primarily due to the high comparison base from Omicron wave related demand in 2022.
●	Respiratory Health – revenue grew double digit helped by COVID-19 related demand in China. In particular, Contac sales more than doubled driving growth in the category in the region.
●	Digestive Health and Other – revenue flat with strength in Skin Health partly offset by a lower than expected sell-out by Eno in India.
●	Performance in China was particularly strong, up double digit reflecting strong demand following the easing of COVID-19 related restrictions, and subsequent rise in COVID-19 cases, which benefited Pain Relief and Respiratory Health. India and Japan saw high-single digit growth with Australia up mid-single digit. South East Asia saw low-single digit growth as it lapped strong comparatives in the prior year.
●	Adjusted operating profit increased 9.7% constant currency, with adjusted operating margin down 50bps constant currency to 23.2%. The margin decline reflected higher cost inflation and phasing of costs incurred to be a standalone company, more than offsetting cost management and positive operating leverage from strong revenue growth.

Summary of financial performance (unaudited)

Income statement summary

Six months ended 30 June	2023	2022	%
	£m	£m	change
Total revenue	5,738	5,188	10.6
Gross profit	3,550	3,211	10.6
Adjusted gross profit¹	3,577	3,258	9.8
Operating profit	1,141	900	26.8
Adjusted operating profit¹	1,271	1,191	6.7
Profit before tax	960	864	11.1
Adjusted profit before tax¹	1,090	1,155	(5.6)
Profit after tax attributed to shareholders of the Group	687	517	32.9
Adjusted profit after tax attributed to shareholders of the Group¹	791	883	(10.4)
Diluted earnings per share²
Reported (p)	7.4	5.6	32.1
Adjusted¹ (p)	8.5	9.6	(11.5)

1. Definitions and calculations of non-IFRS measures can be found on pages 34 to 43.

2. Earnings per share calculation for the period ended 30 June 2022 has been adjusted retrospectively as required by IAS 33 ‘Earnings per share’ due to the increase in the number of ordinary shares outstanding as a result of the demerger activities that took place in July 2022. Diluted earnings per share for the period ended 30 June 2023 has been calculated after adjusting the weighted average number of shares used in the basic calculation to assume the conversion of all potential dilutive shares.

Revenue

Revenue increased 10.6% to £5,738m (H1 2022: £5,188m). Favourable foreign exchange added £11m to total revenue for the half year. This included a translational foreign exchange benefit of £99m in the first quarter which largely reversed in the second quarter to £(88)m as Sterling strengthened against a broad set of currencies. Revenue grew 10.4% organically for H1 2023.

Gross profit

Reported gross profit increased by 10.6% to £3,550m (H1 2022: £3,211m) with gross margin flat at 61.9%. Adjusted gross profit increased by 9.8% to £3,577m (H1 2022: £3,258m) with Adjusted gross margin of 62.3% (H1 2022: 62.8%).

Adjusted gross profit margin was driven by pricing and ongoing supply chain, and manufacturing efficiency benefits. This helped offset higher commodity related costs and cost inflation, with the decline in margin largely driven by transactional foreign exchange losses.

Operating profit

Operating profit increased by 26.8% to £1,141m (H1 2022: £900m) and operating profit margin increased 260bps to 19.9% (H1 2022: 17.3%). Adjusted operating profit increased by 6.7% to £1,271m (H1 2022: £1,191m) and Adjusted operating profit margin at AER declined 80bps and 40bps at constant currency to 22.2%.

Adjusting items within operating profit totalled £130m in H1 2023 (H1 2022: £291m) and included Separation and Admission Costs of £60m (H1 2022: £229m) representing the tail end of costs relating to separating the business from GSK and listing in July 2022. Amortisation and impairment of intangible assets was £23m (H1 2022: £40m). We incurred restructuring costs of £30m (H1 2022: £20m) largely relating to restructuring associated with our programme to increase productivity and agility. Disposals and others totalled £10m (H1 2022: £2m). Transaction related costs were £7m (H1 2022: nil).

Adjusted operating profit growth was driven by strong revenue growth partly offset by higher commodity and raw material costs, cost inflation, and phasing of costs related to operating as a standalone company.

During H1 2023, A&P spend was up 4.7% and 4.0% at constant currency representing 18.4% of revenue (H1 2022: 19.4%). A&P spend benefitted from bringing production in-house and ceasing advertising in Russia. Consumer facing A&P spend excluding Russia was up 8.0% (constant currency) for the half.

R&D expenditure for H1 2023 was £142m (H1 2022: £136m). Adjusted R&D expenditure totalled £141m, up 2.9% and 1.5% at constant currency (H1 2022: £137m).

Net finance costs

Net finance costs were £181m (H1 2022: £36m). This reflected finance costs of £219m primarily related to the issuance of £9.2bn in notes in March 2022 and finance income of £38m. In H1 2022, Haleon received interest income of £43m mainly related to the on-lend of funds to GSK Group and Pfizer Group before the demerger which did not occur in H1 2023.

Tax charge

The statutory tax charge of £230m (H1 2022: £320m) represented an effective tax rate on IFRS results of 24% (H1 2022: 37%). The H1 2022 tax charge included a £104m non-cash charge due to the revaluation of US deferred tax liabilities given the increase in the blended rate of US state taxes expected to apply as a result of the demerger. The tax charge on an Adjusted basis was £256m (H1 2022: £245m) and the effective tax rate on an Adjusted basis was 23% (H1 2022: 21%).

Profit after tax

Profit after tax attributable to shareholders of the Group was £687m (H1 2022: £517m), and Adjusted profit after tax attributable to shareholders was £791m (H1 2022: 883m), down 10.4% and 7.8% constant currency. The decline is largely driven by the annualisation of interest costs and the higher tax rate described above which more than offset growth in Adjusted operating profit.

This resulted in diluted earnings per share of 7.4p (H1 2022: 5.6p) and adjusted diluted earnings per share of 8.5p (H1 2022: 9.6p).

Net capital expenditure

Net capital expenditure of £133m (H1 2022: £88m) included £144m (H1 2022: £92m) related to the purchase of PP&E and intangible assets. Proceeds from disposals of intangible assets was £11m (H1 2022: £3m). There were no proceeds from the sale of PP&E (H1 2022: £1m).

Net debt

At 30 June 2023, the Group’s net debt was £9,525m. Net debt is calculated as follows:

	As at 30 June 2023	As at 31 December 2022
	£m	£m
Cash and cash equivalents	490	684
Short-term borrowings	(1,097)	(437)
Long-term borrowings	(8,768)	(10,003)
Derivative financial assets	64	94
Derivative financial liabilities	(214)	(206)
Net Debt	(9,525)	(9,868)

As of 30 June 2023, the Group’s senior unsecured long-term credit rating was BBB from Standard and Poor’s Global Ratings and Baa1 from Moody’s.

Risks and uncertainties

The principal risks facing the Group are as set out on pages 56-60 of our 2022 Annual Report and Accounts under the following headings and have not changed: growth model; people and organisation; trusted ingredients; supply chain resilience; environmental, social and governance; cyber security; geopolitical instability. In our view, the nature and impact of these principal risks are expected to remain unchanged for the remaining six months of the year. In addition to the principal risks, Haleon also faces other enterprise risks that we manage as part of our integrated risk management framework, such as employee health and safety, financial, regulatory governance, legal & compliance, product quality and product user safety.

Directors’ responsibility statement

The Directors confirm that to the best of their knowledge:

a) the condensed set of financial statements on pages 20 to 33 has been prepared in accordance with UK-adopted IAS 34 ‘Interim Financial Reporting’;

b) the interim management report on pages 1 to 17 includes a fair review of the information required by regulations 4.2.7 and 4.2.8 of the UK Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

The Directors of Haleon plc are listed on pages 64 to 65 of Haleon’s Annual Report and Form 20-F 2022. A list of current Directors is maintained on the Haleon plc website: https://www.haleon.com/who-we-are/leadership/

Approved by the Board and signed on its behalf by:

Brian McNamara	Tobias Hestler
Chief Executive Officer	Chief Financial Officer

1 August 2023

Independent review report to Haleon plc

Conclusion

We have been engaged by Haleon plc (“the Company”) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 which comprises condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK, IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”), and the Disclosure Guidance and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”).

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity (“ISRE (UK) 2410”) issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.

The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK and IAS 34 Interim Financial Reporting as issued by the IASB.

In preparing the condensed set of financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Nicholas Frost

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square, London, E14 5GL

1 August 2023