David Hayes

David Hayes asked about the sequential slowdown in emerging markets during Q4 and specific underperforming areas. He also questioned why oral care continues to perform exceptionally well, seemingly riding consumer dynamics better than other categories, excluding respiratory.

Answer

CEO Brian McNamara highlighted strong oral care performance, particularly Sensodyne's clinical range and parodontax's double-digit growth, driven by dental recommendations and innovation. He noted that other categories like pain relief and VMS were impacted by the cold and flu season. CFO Dawn Allen expressed excitement about emerging markets, detailing strong Asia PAC performance (80% volume mix growth), double-digit growth in India (Q4 acceleration, rural expansion), and mid-single-digit growth in China (strong e-commerce). She acknowledged a challenging macro backdrop and slowdown in LATAM in Q4, but overall, half of Haleon's A&P increase went to emerging markets, driving performance.

David Hayes asked about the sequential slowdown in emerging markets in Q4, seeking deeper insight into whether performance met expectations and identifying any underperforming areas. He also questioned why oral care continues to perform exceptionally well in a difficult consumer environment, unlike other categories (excluding respiratory), and what dynamics might change for other brands as consumer sentiment improves.

Answer

Brian McNamara, CEO, attributed oral care's strong performance to the clinical range in Sensodyne, progress with low-income consumers in India, and the growth of parodontax. He noted that while cold and flu impacts specific brands, other categories are also affected. Dawn Allen, CFO, expressed excitement about emerging markets, highlighting strong performance in Asia-Pac, with 80% of growth from volume mix. She specifically praised India's double-digit growth and China's mid-single-digit growth, particularly in e-commerce. Allen acknowledged a challenging macro backdrop and slowdown in LATAM in Q4, but overall, A&P investment in emerging markets is yielding positive results.

David Hayes of Jefferies asked for quantification of the growth drag from the nicotine replacement therapy (NRT) business on Q2 results and the full-year guidance. He also questioned the strategic rationale for retaining the complex U.S. NRT business. His second question sought clarity on whether the full-year guidance implies a flattish reported margin year-on-year after accounting for all factors.

Answer

CEO Brian McNamara acknowledged the complex three-way partnership structure of the U.S. nicotine business. CFO Dawn Allen quantified the drag from Smoker's Health, stating it negatively impacted total group growth by 60 basis points in Q2. Regarding margins, she indicated that the shape of H1 performance—strong gross margin, reinvestment in A&P, and cost control—is expected to continue in H2, supporting the high single-digit operating profit growth guidance and that current consensus estimates are comfortable.

David Hayes asked for a quantification of the growth drag from nicotine replacement therapy (NRT) in Q2 and for the full year. He also questioned the strategic focus on this category, given its partnership structure, and asked about the full-year reported margin outlook considering all factors.

Answer

CEO Brian McNamara described the complex three-way partnership for the U.S. nicotine business. CFO Dawn Allen quantified the drag from Smoker's Health, stating it had a 60 basis point negative impact on total group growth in Q2. Regarding the full-year margin, she confirmed the high single-digit organic operating profit growth guidance and stated the company is comfortable with current consensus.

David Hayes from Jefferies asked for quantification of the drag from nicotine replacement therapy on Q2 results and the full-year guidance. He also inquired about the complex partnership structure for the U.S. business and the rationale for retaining it. Finally, he asked if the overall guidance implies a flattish reported margin for the full year.

Answer

CEO Brian McNamara described the U.S. nicotine business as a complicated three-way venture. CFO Dawn Allen quantified the drag, stating Smoker's Health had a 60 basis point negative impact on total group growth in Q2. Regarding margins, Allen confirmed the guidance for high single-digit operating profit growth, driven by strong gross margin and cost control, and stated the company is comfortable with the current consensus, implying margin expansion, not flat performance.

David Hayes asked if the contribution from the new Oral Care whitening range could be quantified to assess future comps. He also inquired about the shift to on-market share buybacks and whether there were one-off costs from the phenylephrine switch impacting U.S. margins.

Answer

CEO Brian McNamara positioned the whitening launch as part of a consistent annual innovation model, declining to quantify its specific impact. CFO Tobias Hestler explained the buyback strategy adds optionality and clarified that any write-offs from the phenylephrine switch were not material, with the main impact being lower sales volume in H1.

David Hayes asked about Latin America's volume recovery, noting it appeared quicker than previously indicated in Q3. He inquired about the reasons for this accelerated recovery, whether innovations and relaunches played a role, and the expected volume growth outlook for Q1 or H1.

Answer

CEO Fernando Fernandez reiterated that Latin America's macro environment remains tough (Brazil, Mexico), with flattish markets. He confirmed interventions in Home Care pricing and Deodorants format focus, with positive reactions in Home Care volumes in Brazil. He expects more impact from Deodorants actions (planogram resets, investment in aerosol format) and expressed confidence in Latin America's improved contribution in 2026, citing historical trends of no two consecutive bad years.

David Hayes questioned the strategy behind current margin levels, asking if more investment is needed in markets like India and Indonesia to stimulate volume growth, and the justification for returning to 2019 margin levels. He also sought details on the 'eight power brands' focus in One Unilever markets, its impact on AMP spend for other brands, and potential growth headwinds.

Answer

CEO Fernando Fernandez explained that power brands represent ~80% of revenue in One Unilever markets, with a goal to reach 90-95%, clarifying that local jewels would still be supported through other demand drivers to reduce portfolio complexity. CFO Srinivas Phatak detailed multiple levers for margin expansion, including volume growth, mix benefits (25-30 bps), supply chain efficiencies (beating inflation by ~1%), overhead productivity, and capital deployment towards savings. He emphasized improved margin profile post-ice cream demerger and a focus on hard currency earnings growth.

David Hayes of Jefferies asked if pricing levels are too high in any markets, creating a risk to volumes, and requested a quantification of the tax leakage from the ice cream spin-off.

Answer

CEO Fernando Fernandez acknowledged that pricing went 'too far' in Brazil laundry and on TRESemmé in the U.S., but these have been corrected to protect volumes. He emphasized that the company resets pricing when competitors do not follow. He declined to quantify the tax leakage from the spin-off at this time, stating more details would be provided later.

David Hayes questioned the balance between hitting short-term margin targets versus increasing investment for long-term growth, and asked about the level of net productivity savings achieved in the first half.

Answer

CEO Hein M. Schumacher emphasized a focus on underlying operating profit growth rather than a specific margin target, allowing flexibility to invest behind strong brand plans. CFO Fernando Fernandez clarified that the new €800 million productivity plan is in motion but only 5-10% has been implemented so far, with most benefits expected in 2025 and beyond.