Haleon plc

Haleon reported 3.1% organic sales growth in the quarter, versus 2.2% in Q1. Volume mix was 1.4%, North America grew 3.1% with 2% volume, China was up high single digit, Latin America moved from flat in Q1 to high single-digit growth in Q2, and Europe was roughly flat at about 0.4% despite a declining market. Operating margin improved 120 basis points at constant currency, with gross margin up 140 basis points and a 40 basis point FX tailwind. A&P increased 3.2% in the first half and was 20.9% of sales. EPS grew 12% in the first half. Management held full-year organic sales growth guidance at 3% to 5% and said it expects a stronger second half, with half-two volume mix likely stronger and pricing broadly similar to the first half.

Brian McNamara said he feels good about progress in North America, citing shelf resets, innovation in the clinical range, Centrum and other launches, plus strong double-digit e-commerce growth. He framed the company’s strategy as execution-driven and growth-focused, saying Haleon is investing where it sees opportunity rather than investing for its own sake. He also emphasized that the business is making progress toward its longer-term ambitions through emerging markets, low-income consumer offerings and portfolio innovation.

Dawn Allen said margin improvement came from efficiency and supply chain productivity, not from cutting A&P or pushing price above inflation. She broke the 120 basis point operating margin improvement into 140 basis points from gross margin and 40 basis points from FX, and said pricing was in line with inflation. She also said A&P was 20.9% of sales, that the company expects to absorb higher Middle East costs in the second half, and that full-year operating model savings are expected to total GBP 175 million to GBP 200 million, with about one-third landing this year. She added that first-half EPS grew 12% and expects strong EPS growth again in the second half.

Analysts pressed on whether growth can reaccelerate in the second half, especially with respiratory health weak in Q2 and Europe still soft. Management said cold and flu is expected to improve off two years of declines, but not back to 2024 levels, and said back-half acceleration should also come from North America, emerging markets and less drag from the Middle East. Questions on China focused on negative pricing and the hospital channel; management said pricing pressure was tied to volume-based procurement and Douyin investment, while margin in Asia Pacific remained strong. Analysts also challenged whether the company is investing enough and whether the LatAm pricing reset showed weak internal controls; management said it is actively reallocating A&P and that the Brazil Sensodyne issue was a specific pricing gap that was corrected.