Haleon’s full year revenue grew 3% organically (guidance 3.5%) to £11.0bn, held back by low consumer confidence in North America and a weak cold and flu season.
Underlying operating profit grew slightly faster than expected, increasing by 10.5% to £2.5bn.
Free cash flow was broadly stable at £1.9bn and net debt fell £0.6bn to £7.2bn.
2026 organic sales growth is expected between 3-5%, with a high-single digit increase in underlying operating profit. Medium-term sales growth guidance of 4-6% remains unchanged.
The final dividend of 4.9p per share takes the annual total to 7.1p, up 7.6%. £500mn has been allocated to share buybacks this year.
The shares fell 5.4% following the announcement.
Our view
Haleon had previously reined in profit expectations for 2025, but a slowdown in fourth-quarter sales growth and light top-line guidance prompted some profit-taking on the day. Lower levels of cold & flu haven’t helped, but there are emerging pockets of weakness in other product areas. Meanwhile, trading in North America (35% of sales) remains challenging.
Haleon’s broad financial footprint means it's not overly exposed to one geography. Outside of the US, growth is still holding firm. That includes double-digit growth in India and mid-single-digit growth in China, which helps validate last year’s move to take full ownership of its Chinese distributor of non-prescription medicines.
For now, improving profitability provides the company with the firepower to support its well-recognised brands. These include several household names such as Sensodyne toothpaste, Otrivin nasal spray, Panadol painkillers, and Centrum multivitamins. Continued investment in innovation and marketing is, in our view, essential to maintaining Haleon's leading brand positions. But that may also dilute the bottom-line benefits of ongoing efforts to improve gross margins.
Customers tend to happily stomach a higher price when it comes to medicines they trust. But sluggish volume growth suggests Haleon may not have much room to raise prices further in the current environment.
We're impressed with Haleon's delivery of new and improved products, which we view as key to growing market share and maintaining brand loyalty. Successful innovations of note include the introduction of new delivery systems for painkiller Voltaren (patches) and the Otrivin decongestant (nasal mist).
Tariff risks remain something to be mindful of, but the direct risks are likely to be mitigated through local production in the US and limited sourcing from China.
Despite progress on debt levels and shareholder distributions, the dividend is still lagging most of the peer group. The strong commercial focus and efforts to improve cash generation should help net debt soon reach its target of 2.5 times underlying cash profit, without compromising the new buyback. However, there are no guarantees.
Haleon’s focus on profitable sales has led to a strong recovery in investor sentiment in recent months. But doubts are creeping in around the potential for longer-term growth. Business is expected to be tough in early 2026, though we see potential upside to the full-year guide. Beyond that, emerging markets are the real growth lever, and there’s a long runway ahead if Haleon can execute well here. But the current valuation leaves little room for disappointment.
Haleon key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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