Haleon plc, the consumer healthcare group recently spun out from GSK plc today released its maiden results as an independent stand-alone business. These interim results showed a business trading strongly, with organic revenue growth of 11.6%, largely driven by volumes, not prices.
The group expects continued growth in the second half of the year, albeit not at such a strong pace. Cash flow was especially strong, with the group delivering free cash flow of over £550m in the half-year, compared to £364m at the 2021 half-year stage. The market reacted positively to the results, pushing the shares over 1% higher in early trading.
Steve Clayton, fund manager at HL Select:
“We were expecting a decent update from Haleon, given their earlier trading statement back in June and they have duly delivered. Their portfolio is delivering good growth, backed up by buoyant free cash flow coming from a strong stable of consumer healthcare brands. The group’s earnings should be resilient in the face of economic weakness given they address real and recurring consumer needs.
Litigation surrounding Zantac, which was previously marketed by GSK and Pfizer is a distraction, but Haleon itself never marketed this product and we do not see significant financial costs, other than those of defending the litigation, being incurred by Haleon as a result.
With strong cash flows, Haleon should rapidly deleverage, which will help to drive financial returns higher, over and above the growth from the brands portfolio. Haleon should have excellent dividend growth potential over the longer term as a result.”
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