← Back

Haleon: Haleon's Earnings Report: A Mixed Bag

Haleon's Half Year 2025 Results showed a 2% organic sales growth decline in Q2, primarily due to a challenging consumer environment, trade down in certain categories, and a shift to value channels. The company's revenue growth is expected to be 3.5% for 2025, with a focus on driving category growth, particularly in Oral Health. As Brian McNamara noted, "the company's consumption is growing ahead of the market, but not significantly." The actual EPS came out at 0.05, which is significantly lower than the estimates of 25.25. In terms of valuation, the company's P/E Ratio is 22.75, indicating that investors are expecting a significant improvement in earnings. The P/S Ratio of 2.88 also suggests that the company's revenue growth is priced in.

HLN

USD 9.82

-0.3%

A-Score: 5.1/10

Publication date: July 31, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • North America Sales Growth Experienced a 2% organic sales decline in Q2 due to challenging consumer environment and trade down.
  • A&P Spend Increase Rose by 6.8% to 20.8% in the half year, focusing on innovation and ROI improvement.
  • Gross Margin Improvement Achieved 160 basis points improvement in the first half, driven by productivity initiatives.
  • Regional Growth Asia Pac saw strong volume growth, with 2/3 of Q2 growth coming from volume, while Europe experienced high single-digit growth in Central Europe.
  • Operating Profit Growth Guidance Expects high single-digit operating profit growth driven by gross margin improvement and leverage in the P&L.

Financial Performance

The company's A&P spend increased by 6.8% in the half to 20.8%, with a focus on supporting innovation, driving growth in key markets, and improving ROI. The gross margin improvement of 160 basis points in the first half is a positive sign, and the company expects to deliver high single-digit operating profit growth. However, the nicotine replacement business has been a drag on growth, with a decline of around 60 basis points in the quarter. The company's EV/EBITDA of 17.33 indicates that the debt levels are manageable, and the ROIC of 5.68% suggests that the company is generating decent returns on its investments.

Regional Performance

The company's performance in North America was disappointing, with a 2% organic sales growth decline in Q2. However, the company is seeing strong volume growth in Asia Pac, with 2/3 of growth in Q2 coming from volume. In Europe, the company is seeing high single-digit growth in Central Europe and mid-single-digit growth in Western Europe, driven by strength in Oral Health. The company's focus on driving category growth and innovation-led premiumization is expected to drive growth in the back half of the year.

Valuation and Outlook

The company's valuation metrics suggest that the stock is fairly priced, with a P/B Ratio of 2.03 and a Dividend Yield of 0.02. The Free Cash Flow Yield of 0.0% is a concern, but the company's focus on driving growth and improving profitability is expected to improve this metric. The ROE of 8.73% suggests that the company is generating decent returns on its equity, and the Net Debt / EBITDA of 3.41 indicates that the debt levels are manageable. Analysts estimate next year's revenue growth at 4.0%, which is in line with the company's guidance.

Haleon's A-Score