Haleon Reports Lower Q1 Revenue Amid U.S. Destocking and Weaker Demand

Haleon's Q1 revenue misses expectations due to US retailer destocking and cooling demand for cold/flu meds. Despite challenges, the company maintains its full-year outlook and plans to optimize costs.

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Aqsa Younas Rana
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Haleon Reports Lower Q1 Revenue Amid U.S. Destocking and Weaker Demand

Haleon Reports Lower Q1 Revenue Amid U.S. Destocking and Weaker Demand

Haleon Plc, a leading consumer healthcare company, reported revenue that fell short of market expectations due to retailer destocking in the United States and a cooldown in demand for cold and flu medications following a surge in 2023. The company, known for brands such as Sensodyne, Panadol, and Advil, reported first-quarter revenue of £2.92 billion ($3.64 billion) for the quarter ended March 31, slightly missing the consensus estimate of £2.93 billion.

The lower-than-expected revenue was attributed to two key factors. First, U.S. retailers engaged in destocking, which led to a decline in volumes. Second, there was a moderation in demand for certain medicines, particularly those that had experienced heightened sales during the previous year. Haleon had anticipated a challenging start to 2024 due to a softer cold and flu season and a slowdown in Advil sales in Canada.

In addition to the U.S. market dynamics, demand for products like Contac and Fenbid, which had benefited from pent-up demand in China following the lifting of lockdown restrictions last year, has also stabilized. This normalization of demand further contributed to the company's quarterly sales growth being impacted.

Why this matters: Haleon's revenue miss highlights the challenges faced by consumer healthcare companies in navigating shifting market dynamics and consumer demand patterns. The company's performance serves as an indicator for the broader industry, and its ability to adapt to these changes will be closely watched by investors and analysts.

Despite the revenue shortfall, Haleon maintained its full-year outlook as outlined in February. The company's adjusted operating profit grew 2.3% to £707 million in the first quarter, demonstrating its ability to manage costs effectively. Haleon also disclosed plans to shut its UK production site that manufactures Sensodyne toothpastes by 2026, citing that it was no longer viable to manufacture its products there.

Looking ahead, Haleon remains confident in delivering on its full-year guidance. The company's CEO expressed optimism in navigating the challenges and capitalizing on opportunities in the consumer healthcare market. With a diversified product portfolio and a focus on cost optimization, Haleon aims to weather the near-term headwinds and position itself for long-term growth.

Key Takeaways

  • Haleon's Q1 revenue missed expectations due to US retailer destocking and lower cold/flu demand.
  • Demand for products like Contac and Fenbid also stabilized after pent-up COVID-19 demand.
  • Despite revenue miss, Haleon maintained its full-year outlook and grew adjusted operating profit.
  • Haleon plans to shut its UK Sensodyne production site by 2026 due to unviability.
  • Haleon aims to navigate challenges and capitalize on opportunities in the consumer healthcare market.