20th Apr 2023 11:48
(Alliance News) - Haleon PLC's range of name-brand consumer products seem to be performing well in 2023 so far, despite elevated inflation making consumers increasingly cost-conscious.
On Thursday, the GSK PLC consumer healthcare spin-off updated on its first quarter performance, ahead of its annual general meeting.
Revenue in the first quarter of 2023 jumped 14% to GBP2.99 billion from USD2.63 billion a year earlier.
Organic revenue grew 9.9%, with most of this - 7.1% - coming from price rises, with volume mix up 2.8%.
AJ Bell investment director Russ Mould noted that prices hikes don't appear to be damping demand, given that volumes also rose.
"Companies like Haleon have faced a customer loyalty test over the past year as the cost-of-living crisis has forced many people to reconsider their spending habits, often trading down from well-known brands to cheaper alternatives offered by supermarkets," said AJ Bell's Russ Mould.
Haleon owns brands such as Sensodyne toothpaste, Panadol and Advil pain relief and Centrum vitamins.
"Haleon's empire was built around its headache and toothpaste brands and in normal economic conditions one could expect it to clean up as consumers flock to 'big brand' names. Yet we're not living in normal economic times and so consumer brand giants have not been able to sit back and wait for the cash to roll in," said AJ Bell's Mould.
Nonetheless, Haleon had a fairly robust quarter, despite the cost-conscious environment. It saw growth across its product divisions of Respiratory Health, Pain Relief, Oral Health and Digestive Health and Other.
Pain Relief revenue jumped 14% on a reported basis, or 11% in constant currency, with sales especially strong in China following the end of lockdowns and the outbreak of Covid, cold and flu.
"Working in Haleon's favour is that fact a lot of consumers seeking relief from pain will stick with the brands they trust, believing they offer a superior product. That might explain why Haleon has done well over the past quarter," Mould considered.
Haleon now expects annual revenue at the upper end of guidance of 4% to 6% growth. All other annual guidance remains unchanged, it said.
Shares in Haleon were up 2.8% to 353.15 pence each in London on Thursday late morning.
"Since the spin-off, shares initially had a shaky start, reaching a trough in September last year but the stock has been progressing nicely in recent months, rallying almost 30% over a half year period," said interactive investor's Victoria Scholar.
Haleon's shares are around 7% ahead of its initial public offering price of 330p last July.
By Elizabeth Winter, Alliance News senior markets reporter
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