Sensodyne maker Haleon warns of rising costs, but keeps 2026 outlook as US rebounds
Haleon's Financial Performance and Market Outlook
By Raechel Thankam Job
April 29 (Reuters) - Haleon warned of rising costs sparked by the Iran conflict on Wednesday, though the consumer healthcare firm maintained its annual outlook as it expects U.S. growth to speed up this year after a weak flu season dampened quarterly sales growth.
Impact of Global Conflicts on Costs
Global consumer companies, including Procter & Gamble and Reckitt, are taking a hit from rising energy and freight costs after U.S. and Israeli strikes on Iran began in late February, disrupting global supply chains and clouding the outlook.
Freight Surcharges and Cost Management
"We started to see surcharges on freight, quite small, but I would expect that to increase," finance chief Dawn Allen said in a call with analysts.
Shares of the FTSE 100 company fell as much as 3.4% on Wednesday.
Regional Performance and Consumer Spending
Middle East Revenue and Pricing Strategies
While the conflict has not impacted Haleon's first-quarter results, CEO Brian McNamara said consumer spending in the Middle East, which accounts for 5% of its revenue, is down by a low-double‑digit percentage.
McNamara said the company would "tweak" its pricing if opportunities arise, adding that it has fixed-price contracts and hedging in most areas until the end of the year, which is helping it contain costs.
Quarterly Revenue Growth and Market Comparison
A weak cold and flu season tempered Haleon's organic revenue growth to 2.2% for the first quarter, lower than the 2.3% expected by analysts in a company-compiled consensus.
Soft demand for cold and flu products also dragged rival Reckitt's quarterly results.
Long-term Outlook and Strategic Initiatives
2026 Growth Targets
Haleon, which owns Theraflu and Robitussin cold medicines, reiterated its organic revenue growth and high-single-digit adjusted operating profit growth for 2026.
North America Growth Set to Pick Up Pace
NORTH AMERICA GROWTH SET TO PICK UP PACE
Recent Performance in North America
Organic revenue in its largest market, North America, grew 1% in the three months to March, beating expectations, on robust Sensodyne and Parodontax toothpaste sales.
Growth Initiatives and Future Prospects
It expects momentum in the region to be supported by growth initiatives, including shelf resets, wider distribution and a U.S. soccer partnership ahead of the FIFA World Cup.
An acceleration in North American sales would be a welcome lift as the region has weighed on Haleon’s growth through 2025 amid weaker consumer spending and intense competition.
Analyst Commentary
"Haleon isn’t a million miles away from being a very good story, but it needs more than the toothpaste business to start performing,” Quilter analyst Chris Beckett said.
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Ronojoy Mazumdar, Bernadette Baum and Sharon Singleton)
