First-half revenue came in at £5.6bn (as expected), with organic growth of 2.6%. Declines in Respiratory Health were more than offset by growth in all other segments.
Adjusted operating profit rose 8.2% to £1.4bn (£1.3bn expected), driven by revenue growth and an improved gross margin.
Free cash flow rose by 4.8% to £0.8bn year-on-year, while net debt fell by 2.7% to £7.5bn.
The group increased the interim dividend by 9% to 2.4p per share and has completed the majority of its £0.5bn share buyback programme for 2026.
For 2026, management maintained its outlook for organic revenue growth of 3-5% and high single digit adjusted operating profit growth.
The shares fell 2.0% in early trading.
Our view
Haleon’s first half offered encouraging signs that commercial actions are gaining traction in North America, where growth has been hard to come by. The region’s price-volume balance improved later in the period, while separate productivity initiatives, including greater use of robotics and a more streamlined portfolio, helped profits edge ahead of expectations.
That supports confidence in full-year guidance, though improving investor sentiment may have already priced in a decent outcome. Unchanged guidance may have disappointed on the day, but we still see room for delivery to come in ahead of expectations.
Haleon’s broad geographic footprint means it isn’t overly reliant on any single market. There are still pockets of weakness, with consumer sentiment subdued in Europe, and geopolitical instability weighing on demand in the Middle East. But Asia Pacific continues to outperform, and we remain supportive of the growing focus on emerging markets, where the group is adapting formats to offer more affordable price points.
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 the delivery of new and improved products, key to growing market share and maintaining brand loyalty. Products like parodontax Mouthwash, Centrum Age Defy and Voltaren 2% gel add clearer points of difference, addressing specific needs across gum health, healthy ageing and pain relief.
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 have helped net debt reach its target of 2.5 times underlying cash profit (EBITDA), potentially paving the way for further share buybacks - nothing is guaranteed.
Haleon’s strong commercial focus and growing reach in emerging markets are supporting a resilient financial performance, which has also been reflected by a recovery in the valuation.
Forecasts suggest earnings growth could trend upwards before stabilising in low-double-digit territory. That could still drive respectable upside, provided execution remains disciplined and a deterioration in economic conditions doesn’t cause an upset.
Environmental, social and governance (ESG) risk
The healthcare industry is medium/high risk in terms of ESG, depending on subindustry. Across the board, product governance is the most acute risk, with business ethics, labour relations and data privacy also contributing. Providing reasonable access to healthcare as a basic service is also a growing issue, with greater concerns surrounding the social implications of for-profit healthcare companies.
According to Sustainalytics, Haleon’s management of ESG risks is strong, with board-level oversight through its environmental and social sustainability committee. The company has a robust product and service safety programme, including managerial responsibility for product quality and safety. The presence of a 24-hour confidential whistleblowing line and a strong anti-discrimination policy also point to a healthy culture of accountability. Areas for improvement could include securing external quality certifications for its manufacturing sites.
Haleon key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.