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FTSE 100 consumer health player Haleon has posted a “solid” start to the year, despite a headline revenue decline in the first three months of 2024.
Overall organic revenues at the Sensodyne owner were up 3% in the quarter, with prices up 5% and volume/mix down 2%.
Power Brands +5.2% organic revenue growth with particular strength from Sensodyne, parodontax, Polident/Poligrip and Centrum.
It said that price benefitted from both previous price increases and incremental price taken during the quarter.
Volume/mix declined due to lapping tough prior year comparatives of Fenbid and Contac in China, Advil in Canada and a strong cold and flu season in Q1 2023.
Headline revenues declined 2.2% to £2.92bn in the quarter as foreign exchange reduced sales by 4.6% and M&A by 0.6%.
Organic profits were up 12.8% in the period, driven by gross margin expansion and cost efficiencies, with strong growth in A&P.
Adjusted operating profit margin of 24.2% was up 220bps organically.
The group reiterated full year guidance of organic revenue growth of 4-6% and organic operating profit growth ahead of organic revenue growth.
CEO Brian McNamara commented: “First quarter trading was solid and in line with guidance shared when we reported FY 2023 results. Organic revenue growth of 3.0% was impacted by lapping tough comparatives in the prior year particularly in Respiratory Health and Pain Relief. Despite this, strong innovation combined with successful execution of our go-to-market strategy underpinned performance in our Power Brands which grew 5.2% with particularly strong performance in our Oral Health and VMS portfolio.
“Regionally, whilst growth was held back in the US from inventory adjustments by some retailers, Haleon’s consumption in this region was strong, up mid-single digit and ahead of the market. As such, we remain confident of delivering on our FY guidance.
“Looking ahead, we continue to expect the operating environment to remain challenging. However, we are confident that we are well positioned to deliver on both guidance for 2024 and over the medium term.”
Haleon shares have fallen 1.6% on the news to 334p.
Morning update
Domino’s Pizza Group has reported a reduction in first quarter sales as it held back marketing spend in the new year.
First quarter like-for-like system sales, excluding splits and VAT, were down 0.5% and total orders were 0.8% lower than the same quarter in 2023.
The group said that this is primarily driven by a slow January, in part because it “tactically” held back on marketing spend to support more strategic launches later in 2024.
The first quarter of 2023 also represented a tough comparator period due to 10.7% like-for-like sales growth last year.
On a reported basis, like for like sales were down 2.1%.
Delivery orders were down 5% in a softer delivery market, while collection orders continued to grow in Q1 and were up 4.7%.
14 new stores have been opened by 12 different franchisees and we still expect to open in excess of 70 new stores in 2024. The group said its store pipeline remains strong and it currently has 38 stores either under construction or with planning permission.
However, the second quarter is another “tough comparative period” and trading in April was slower given the very strong comparative in the prior year.
It continues to drive initiatives to improve trading momentum, such a £4 lunch offer, acceleration of an Uber Eats trial and the forthcoming benefit of football’s European Championships this summer.
As a result, it continues to expect like-for-like sales growth 2024.
CEO Andrew Rennie commented: “We remain resolutely focused on executing our strategy and have made strong progress in Q1, both across the core UK&I business and with our strategic growth ambitions.
“Following a slow January in part as we tactically held back marketing spend, I am pleased that we saw positive like-for-like sales and orders across February and March in an uncertain market. Like Q1, Q2 is another tough comparative period but we remain confident of delivering order count and like-for-like sales growth this year and are pleased to confirm our full year profit guidance.”
“I’m excited by the momentum we have in the business. We have a fantastic pipeline of initiatives across our UK & Ireland business driven by real energy from our colleagues and our franchisees. We launched our new £4 lunch offer in April, giving our customers an incredible value lunch option, and we’re encouraged by the early reaction.
“Our trial with Uber Eats has meaningfully accelerated, our loyalty trial is progressing well, we are at an advanced stage to sell the London corporate stores to some outstanding franchisees, which will allow us to reallocate capital within the business, and we have some exciting events such as the Men’s Euro football tournament coming up.”
On the markets this morning, the FTSE 100 is up a further 0.3% to 8,169.3pts.
Risers include Just Eat Takeaway.com, up 2.7% to 1,212p, Nichols, up 1.8% to 981.1p and Coco-Cola Europacific Partners, up 1.5% to 68.00.
Fallers include Naked Wines, down 5% to 49.5p, McBride, down 2.7% to 108p and Ocado, down 1.3% to 348.4p.
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