Haleon (HLN) reported its first-quarter trading statement Wednesday. Revenue declined by 2.2% year over year, but the company reported strong organic profit growth.
Revenue for the three months ended March 31 came in at £2.92 billion, with FX impact of -4.6% and mergers and acquisitions impact of -0.6%. The company noted its Power Brands organic revenue growth was 5.2% with particular strength from its Sensodyne, parodontax, Polident/Poligrip and Centrum products. Organic revenue growth rose by 3%.
Strong performance was also recorded in the Oral Health and VMS units, "underpinned by successful innovation and good in-market execution."
Haleon's organic profit growth of 12.8% was helped by strong operating leverage from gross margin expansion and cost efficiencies. Meanwhile, its adjusted operating profit margin was 24.2% up 220bps organically. The company reported an operating profit of o £655 million, up 4.5% year-on-year.
The company reiterated its full-year guidance, expecting organic revenue growth between 4% and 6%.
Reacting to the report, analysts at UBS said: "Haleon's Q1 organic sales growth (OSG) came in at +3.0%, slightly short of Visible Alpha (VA) consensus of +3.2% (UBSe for +3.2%).
"Price growth of +5.0% was well ahead of cons of +3.5% (UBSe +4.0%), reflecting incremental pricing taken across most regions in Q1."
Analysts at Jefferies said the update from Haleon was "not the most supportive."
"Vol/mix miss (-2% v buyside est c-0.8% we think) is attributable to US & comping (high cold/flu season) & retailer inventory reset," they wrote. "But this will weigh today. An op margin beat is more about phasing (input costs/ cost saves), with outlook unchanged. The comp base starts to even out now, but this is not a day for the bull case."