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Haleon's Q3 2024 Earnings: EPS Surges, Revenues Lag Behind

AInvestSaturday, Nov 2, 2024 5:32 am ET
1min read
Haleon (LON:HLN), the world-leading consumer health company, reported its third quarter 2024 earnings on November 1, 2024, with earnings per share (EPS) exceeding analyst expectations while revenues fell short. The company's strong performance in earnings growth was driven by balanced price and volume/mix increases, as well as strategic capital allocation decisions.

Haleon's Q3 2024 earnings report highlighted a robust organic revenue growth of 6.1%, with balanced price (+3.3%) and volume/mix (+2.8%) increases. The company's Power Brands, including Sensodyne, parodontax, Advil, and Theraflu, contributed significantly to this growth with an organic increase of 5.4%. Sensodyne and parodontax, in particular, led the Oral Health category, with high-single-digit organic revenue growth. This performance reflects the strength of Haleon's brand portfolio and its ability to drive market share gains across all categories and regions.


The company's earnings per share (EPS) surpassed analyst estimates by 14%, driven by lower expenses and a higher profit margin. Haleon's EPS for the trailing 12-month (TTM) period stood at £0.046, up from £0.042 in the first quarter of 2024. The company's profit margin also improved, reaching 14% compared to 13% in the first quarter.

Haleon's capital allocation priorities, such as the disposal of non-core brands and the acquisition of an additional equity interest in the China JV, contributed to its strong third quarter performance. The company raised around £0.8 billion through the divestment of non-core brands, including the Nicotine Replacement Therapy (NRT) business outside the US and ChapStick. This move not only generated substantial cash but also allowed Haleon to focus on its core, high-growth brands. Additionally, Haleon agreed to acquire an additional 33% equity interest in its China joint venture (JV) for approximately £0.5 billion, increasing its participation to 88%. This acquisition will provide greater control and operational flexibility in the key strategic market of China, driving future growth and shareholder value.


Looking ahead, Haleon is expected to maintain its strong earnings growth momentum. The company forecasts organic revenue growth of 4-6% and high-single-digit organic operating profit growth for the full year 2024. Haleon's disciplined capital allocation strategy, balanced price and volume/mix approach, and robust brand portfolio position the company well for continued success in the consumer health sector.

In conclusion, Haleon's Q3 2024 earnings report demonstrated the company's ability to deliver strong earnings growth, driven by balanced price and volume/mix increases, and strategic capital allocation decisions. Despite revenues falling short of analyst expectations, Haleon's EPS surged, reflecting the company's solid fundamentals and growth potential. As the company continues to execute its strategic plan, investors can expect Haleon to remain a strong performer in the consumer health sector.
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