Q1 2025 Haleon PLC Earnings Call
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Unknown Executive: Good morning, everyone. Hello, and thank you for attending.
Good morning, everyone Hello, Thank you for attending.
Unknown Executive: My apologies, please go ahead.
My apologies. Please go ahead.
Okay.
Jo Russell: Good morning, everyone, and welcome to Haleon's conference call for our first quarter trading statement. I'm Jo Russell, Head of Investor Relations, and with me today is Dawn Allen, our CFO.
Speaker Change: Good morning, everyone and welcome to hedge earnings conference call.
Groups trading statement I'm Jeremy.
dual island: And with me today is dual island as you said.
Unknown Executive: Just to remind listeners on the call that in the discussion today, the company may make certain forward-looking statements, including those that refer to our estimates, plans, and expectations. Please refer to this morning's announcement and the company's UK and SEC filings for more details, including facts that could lead to adverse results if misused and those expressed in or implied by any such forward-looking statement.
dual island: Just to remind listeners on the call, especially the discussion today the company may make certain forward looking statements, including those that research estimates plans and expectations.
dual island: And as you said, it's Moody's announcement and the colors you pay in our SEC filings we detail.
dual island: Important factors that could result.
dual island: And those expressed in or implied any such forward looking statements today will focus on organic revenue performance. There's a full reconciliation of organic directly independents. The company's slide presentation. So trying to what's your thoughts and take your questions.
Unknown Executive: Today we'll focus on Organic Revenue Performance. There's a full reconciliation of Organic Revenue in the appendix of the company's slide presentation.
Unknown Executive: freund tones remarks and take your. Those listening to our webcast who would like to ask a question, you can find the details on page 3 of today's press release.
Speaker Change: Listen to our webcast who'd like to ask a question you can find the details on Patriot. Thanks, Chris.
Dawn Allen: And with that, I will hand over to Dawn. Thank you, Jo, and good morning. We've had a good start to the year with our first quarter performance in line with our expectations. We delivered organic revenue growth of 3.5%. driven by strong market share gains across our key markets. We saw growth across all our categories and we which demonstrates the strength and resilience of our portfolio, despite a more challenging market backdrop. Our emerging markets continue to perform particularly well, up 6.5%. with Mark Strength in India and China. which saw double digit growth in Sensodyne across both markets.
David: And with that Austin, David should do.
Speaker Change: Thank you Joe and good morning, we had a good start to the year with our first quarter performance in line with our expectations.
We delivered organic revenue growth of three 5%.
Speaker Change: Driven by strong market share gains across our key markets.
Speaker Change: So growth across all our categories and regions, which demonstrates the strength and resilience of our portfolio.
Speaker Change: Despite a more challenging market backdrop.
Speaker Change: Our emerging markets continue to perform particularly well up six 5%.
With more strength in India and China.
Speaker Change: So double digit growth in funds to dine across both small case.
Dawn Allen: Innovation continues at pace. And during the quarter, we had a number of successful launches, including Voltaire and 2% Strength in China. and expanding the Sensodyne clinical platform range and Oshabin Nasal Mist in a number of more.
Speaker Change: Innovation continues at pace and during the quarter, we had a number of successful launches, including Voltaren Tusa science strength in China.
Speaker Change: And expanding some Sudan clinical platform range.
Speaker Change: <unk> nasal mist and a number of markets.
Dawn Allen: Whilst the macroeconomic backdrop continues to be volatile, our full year guidance is unchanged. and we expect to deliver 46% organic revenue growth with organic profit ahead of this.
Speaker Change: Well have some macro economic backdrop continues to be volatile our full year guidance is unchanged.
Speaker Change: And we expect to deliver 4% to 6% organic revenue growth with organic profit ahead of that.
Dawn Allen: Now let's look at the first quarter in more detail. Revenue of £2.9 billion reflected 3.5% organic growth. Spitz, 2.4% price and 1.1% volume mix. Reported revenue declined 2.3% in the quarter due to a 2.9% drag from the disposals of Chapstick and non-US Smokers' Health Business. and a 2.9% drag from translational foreign exchange due to sterling strength against a number of currencies.
Speaker Change: Now, let's look at the first quarter in more detail.
Speaker Change: Revenue of 2.9 billion pounds reflect to three 5% organic rice.
Speaker Change: Split Q4 percent price and one 1% volume mix.
Speaker Change: Reported revenue declined two 3% in the quarter due to a 2.9% drag from the disposals of chapstick unknown U S Smokeless house business under 2.9% drag from translational foreign exchange.
Speaker Change: Sterling strengthened against a number of currencies.
Dawn Allen: Now let's turn to the categories where we saw broad-based growth. In oral health, revenue grew 6.6% ahead of the market, driven by a strong performance in Sensodyne with continued share gains. underpinned by successful innovation and in-market execution across the Sensodyne clinical range. Clinical Y continues to attract a younger demographic to the brand and has amongst strongest repeat rates in the sector. Strong performances were seen in a number of markets, including India, China, Central and Eastern Europe and the UK. Paragon Tax Group, double-digit, with strength across a number of markets. including China, where we are seeing strong consumer feedback following our launch at the end of last year.
Speaker Change: Now, let's turn to the categories, where we saw broad based right.
Speaker Change: In order of how revenue from six 6% ahead of the market driven by strong performance in sensor dine with continued share gains.
Speaker Change: Underpinned by successful innovation and in market execution across our science Saddam clinical range.
Speaker Change: Clinical wide continues to attract a younger demographic to the brand.
Speaker Change: Hum amongst the strongest repeat rates in the sector.
Speaker Change: Strong performance as was seen in a number of markets, including India, China, Central and Eastern Europe, and the U K.
Paragon tax grew double digit with strength across a number of markets, including China, where we are seeing some consumer feedback following our launch at the end of last year.
Dawn Allen: We're also seeing a strong performance across a number of markets from Parodontics Gum Strengthen & Protect and multi-format range across toothpaste and mouthwash, which has driven incremental share gains, and in the UK, we have seen a record market share for Parodontics. In VMS, revenues grew 0.9% underpinned by innovation driven growth in emergency and Caltrade. Centrum declined mid-single digit. We saw good growth in Asia-Pacific, EMEA and EMEA and LATAM, particularly in Middle Eastern Africa, Southeast Asia and Taiwan. This was more than offset by a decline in North America. This decline was driven by lapping a tough comparative from the activation of the cognitive function claims on Centrum Silver last year, overall weakness in the multivitamin category, and increased promotional activity amongst competitors in North America.
Speaker Change: We're also seeing a strong performance across a number of markets from Paragon tax gum strengthen and protect our multi format range across toothpaste, and mouthwash, which has driven incremental share gains and in the UK, we have seen a record market share.
Speaker Change: For powered on tax.
Speaker Change: In Vms revenues grew no, 0.9% underpinned by innovation driven growth in emergency and contract.
Speaker Change: Centrum declined mid single digit we saw good growth in Asia Pacific EMEA, and a man and lifetime, particularly in Middle East and Africa, Southeast Asia and Taiwan.
Speaker Change: This was more than offset by a decline in North America. This decline was driven by <unk>.
Speaker Change: Nothing of tough comparison from the activation of the cognitive function claims on centrum silver last year.
Speaker Change: Overall weakness in the multi vitamin category and increased promotional activity amongst competitors in North America.
Dawn Allen: In China, we had a number of successful innovation launches, including Centrum Daily Wellness Taylor to Asian Lifestyle. which we have also launched in South Korea and it is performing well. In Caltrate we rolled out a vitamin D with glucosamine that has had an even stronger effectiveness claim. Across the OTC, pain relief grew 2.6%. This was driven by Advil and Voltaren, which were both up mid-single digit. During the quarter, we launched Volterra 2% Strength in China. Whilst it's early days, initial performance indicators are strong. Panadol was up low single digit, with growth held back by phasing of retailer stocking patterns in the Middle East and Africa.
Speaker Change: Yeah.
Speaker Change: In China, we had a number of successful innovation launches, including Centrum daily wellness packs tailored to Asian lifestyles.
Speaker Change: Which we have also launched in South Korea, and it is performing well.
Speaker Change: In <unk>, we wrote down to vitamin D. With glucosamine has had an even stronger effectiveness claim.
Across the OTC pain relief grew two 6% this was driven by AD. So volt tavern, which were both up mid single digits.
Speaker Change: During the cold shot we launched fault tolerant to defense strength in China.
Speaker Change: Whilst its early days initial performance indicators are strong.
Speaker Change: Tonnage all without low single digits with growth held back by phasing of retailers stocking patterns in the Middle East and Africa. This is expected to reverse in Q2.
Dawn Allen: This is expected to reverse in Q2. As part of our drive to reach lower income consumers, we launched the Sonridol brand in Brazil, which uses Panadol's Optisol technology. Initial results have been encouraging. In respiratory health, revenue was up 1.7%, with a stronger than expected cold and flu season towards the end of the quarter in North America, driving growth in robitussin and seroflu, which saw strong share gains in the US.
Speaker Change: As talked about drive to reach low income consumers, we launched the summary to old friend in Brazil, which uses pan adult T cell technology.
Speaker Change: Initial results have been encouraging.
Speaker Change: And my spirits Treehouse revenue was up one 7% with a stronger than expected cold and flu season towards the end of the quarter in North America driving growth in grocery to sudden theraflu, which so strong share gains in the U S.
Dawn Allen: This is Paul Aylset by Week of Seasons, elsewhere. Outrevin performed well, helped by the rollout of Outrevin nasal mist, which is driving share gains and market penetration, with 50% of users being non-spray users in the UK. And finally, digestive health and other was up 3%. This was driven by innovation in Tums and Eno, which was partly offset by decline in Smoker's Health and NXIVM due to market softening.
Speaker Change: This was partly offset by weak season elsewhere.
Speaker Change: <unk> performed well helped by the rollout of <unk> to the nasal mist, which is driving share gains of market penetration with 50% of users being non spray uses in the U K.
Speaker Change: And finally digestive health in Nevada, with a 3% this was driven by innovation in tones, and <unk>, which was partly offset by decline in smokers house on Nexium due to market softness.
Dawn Allen: Now let's look at the regional performance starting with North America. As others have observed, the consumer and customer environment is cautious and uncertain. This has been seen in consumer confidence measures, which are at the lowest level since 2021. Despite this, organic revenues grew 1% in the quarter, made up of 1.8% volume mix and 0.8% from negative price. with the latter largely driven by higher promotional activity relative to last year. The consumption saw healthy growth and was ahead of organic revenue growth. We have a strong position in North America, with the top five retailers making up more than half of our revenue.
Now, let's look at the regional performance, starting with North America.
Speaker Change: As others have observed the consumer and customer environment is cautious I'm doing so at least.
Speaker Change: This has been seen in consumer confidence measures, which are at their lowest levels since 2021.
Speaker Change: Despite this organic revenues grew 1% in a quarter.
Speaker Change: They don't have 1.8% volume mix I know, 0.8% from negative price with the latter largely driven by higher promotional activity relative to last year.
Speaker Change: The consumption, so healthy growth and with our head of organic revenue growth.
Speaker Change: We have a strong position in North America with the top five retailers, making up more than half of our revenue.
Dawn Allen: Whilst it appears that some retailers are more cautious in ordering patents, our products continue to demonstrate their resilience.
Speaker Change: While ctrip pants that some retailers are more cautious in ordering patterns I products continue to demonstrate our resilience.
Dawn Allen: In Europe, Middle East, Africa and Latin America, organic revenue increased 5% with 5.6% price and 0.6% decline in volume made. Pricing in Europe was up around 4% and higher across markets in MIR and NACAM in line with inflation. The decline in volume mix was largely driven by weakness from the cold and flu season. Excluding this impact, volume mix would have been up around 1% for the region. Looking across the region, we saw strong growth in Latin America, up double digits, helped by pricing and the launch of Sonridol.
Speaker Change: In Europe, Middle East Africa, and Latin America organic revenue increased 5% with five six at the time of price I know, 6% decline in volume mix.
Speaker Change: Pricing in Europe was up around 4% on higher across small kit in math and enough time in line with inflation.
Speaker Change: Kind of volume mix was largely driven by weakness from the cold and flu season. Excluding this impact volume mix would have been up around 1% for the region.
Speaker Change: Looking across the region, we saw strong growth in Latin America.
Speaker Change: Double digit helped by pricing and the launch of some we do.
Dawn Allen: Both Europe and Middle East and Africa grew mid-single digit, with strength in oral health and VMS. Finally, in Asia-Pacific, we saw good momentum. Organic revenue increased 4.2% with growth coming from price of 1.5% and 2.7% from volume mix. We saw growth across all categories, except in respiratory health, which was impacted by a weaker cold and flu season. India performed well, up high single-digit, helped by double-digit consumption growth in Sensodyne. China was up mid-single digit with strength in all health and VMS. underpinned by the innovations I mentioned earlier. We are well positioned in China with strong market positions and favourable structural tailways.
Speaker Change: Both Europe, and Middle East and Africa grew in mid single digit with strength in all house on Vms.
Speaker Change: Finally in Asia Pacific we saw good momentum.
Speaker Change: Organic revenue increased four 2% with growth coming from price of one 5% and two 7% from volume mix.
Speaker Change: We saw growth across all categories.
Fat and respiratory house, which was impacted by weaker cold and flu season.
Speaker Change: India performed well.
Speaker Change: High single digit helped by double digit consumption growth in sense of dying.
Speaker Change: China was up mid single digit with strength in all house on Vms underpinned by the innovations I mentioned earlier.
Speaker Change: We are well positioned in China with strong market positions and favorable structural towers with consumers increasingly focused on health products, which which we are supporting through our e-commerce platforms.
Dawn Allen: with consumers increasingly focused on health products, which we are supporting through our e-commerce platform.
Dawn Allen: Turning now to our 2025 guidance. While the macroeconomic environment remains both challenging and uncertain, we remain confident in our four-year outlook. We expect to continue to deliver the guidance we set out at year end, with organic revenue growth of between 4-6% and organic profit growth ahead of organic revenue growth. Whilst the situation on tariffs remains dynamic, based on what we know today, the impact across our business is limited and is included in our guidance. On foreign exchange, the FX impact on revenue and profit in quarter one was broadly in line with our expectations. As you'll recall, at Follier Results, we provided an estimate of the translational FX impact for 2025 based on Bloomberg consensus rates averaged over the year.
Turning now to our 2025 guidance.
Speaker Change: Whilst the macroeconomic environment remains both challenging and uncertain, we remain confident in our full year outlook.
Speaker Change: We expect to continue to deliver the guidance, we set out at year end with organic revenue growth of between 4% to 6% and organic profit growth ahead of organic revenue growth.
Speaker Change: What's the situation on tariffs remains dynamic based on what we know today the impact to cross shop is nuts.
Speaker Change: Limited and is included in our guidance.
Speaker Change: On foreign exchange, the FX impact on revenue and profit in quarter, one was broadly in line with our expectation.
Speaker Change: As you'll recall our full year results, we provided an estimate of the translational FX impact for 2025 based on Bloomberg consensus right average drive to be yeah.
Dawn Allen: As of the 31st of March, this consensus indicates a headwind of 2% on revenue and 3% on adjusted operating profits. there is no change to our net interest expense or tax guidance.
Speaker Change: As of the 31st of March this consensus indicates a headwind of 2% on revenue and 3% on adjusted operating profit.
Speaker Change: There is no change to our net interest expense or tax guidance.
Dawn Allen: So, in summary, our first quarter trading was in line with the expectations we set out earlier in the year, despite a dynamic and more challenging backdrop, which continues to remain uncertain. Our global portfolio is resilient, with strong brands solving consumer needs. Our innovation launchers are performing well. And as I just mentioned, we have confidence in our Follier guidance.
Speaker Change: So in summary, I first call to trading was in line with the expectations. We set out earlier in the year, despite a dynamic and more challenging backdrop, which continues to remain uncertain.
Speaker Change: Global portfolio is resilient.
Speaker Change: With strong brands solving consumer needs.
Speaker Change: Our innovation launches are performing well.
Speaker Change: And as I, just mentioned, we have confidence in our full year guidance.
Dawn Allen: Before I open up to Q&A, I want to remind you all that we will be hosting a Capital Markets Day in London tomorrow. We will share more on our continued confidence in driving long term growth. with deep dives on categories and regions. and we'll share the opportunities we see across our supply chain.
Speaker Change: Before I open up to Q&A I want to remind you all that we will be hosting a capital markets day in London Tomorrow.
Speaker Change: We will share more on our continued confidence in driving long term growth.
Speaker Change: With deep dives on categories and regions.
Speaker Change: Sure the opportunities, we see across our supply chain.
Unknown Executive: And with that, let me hand over to the operator to open up for Q&A. Thank you. If you would like to ask a question, please press star float by one on your telephone keypad. To remove your question, please press star float by two. Again, to ask a question, please press star one. As a reminder, if you are using a speakerphone, please remember to pick up your headset before asking a question. We'll pause here briefly as questions are registered. Thank you.
Speaker Change: And with that let me handover to the operator to open up for Q&A.
Speaker Change: Thank you.
Speaker Change: I would like to ask a question.
Suppress thoughtful to buy one or the old telephone keypad.
Your question please press thoughtful by two.
Speaker Change: I'm going to ask a question. Please press star one.
Speaker Change: As a reminder, if youre using a speakerphone. Please remote members who pick up dog has said before asking a question.
Speaker Change: Youll see a birthday crushes over interested.
Speaker Change: Thank you.
Guillaume Delmas: We have our first question from Guillaume Delmas from UBS. Thank you very much. And good morning, Dawn and Joe. A couple of questions for me, please.
Speaker Change: We have Oh first question from Amit <unk> from UBS.
Amit: Thank you very much and good morning, Don and Joe.
Amit: Couple of questions for me. Please first one on the Q1, specifically and what May have surprised you either positively or negatively during the month of March because if I remember at the time of the full year 'twenty four results in early March.
Guillaume Delmas: First one on Q1 specifically, and what may have surprised you either positively or negatively during the month of March? Because if I remember, at the time of the full year 24 results in early March, you sounded probably a little bit more cautious on respiratory, but you ended up posting like a nice positive number in Q1, thanks to that double digit development in the US. So if US respi was potentially stronger than you anticipated, what were the areas that maybe proved a little bit softer in the Q1 and specifically that month of March?
Amit: You sounded I thought there'd be.
Amit: A little bit more cautious on respiratory.
Amit: Ended up first thing like a nice positive number in Q1, six without double digit development in the U S.
Amit: So.
Amit: If if you worse recipe was potentially stronger than you anticipated.
Amit: What were the areas that maybe proved a little bit softer in the Q1 and specifically about the month of March.
Guillaume Delmas: Um, and then my second question, it's on your outlook for the year. So you know, everything confirmed reiterated this morning, you're still guiding for four to 6% organic sales growth. Maybe Don, can you say if you will be back in that four to 6% range as early as Q2, or whether we will have to wait for the third quarter? And on this, again, what underpins your confidence in that material acceleration step up in organic sales growth in the second half? Is it down to pricing? Is it the current retailers inventory level that may be a bit low in some categories?
Amit: And then my second question is on your outlook for the year. So you know everything confirmed reiterated this morning, you're still guiding for 4% to 6% organic sales growth.
Amit: Maybe Don can you say if you.
Amit: You will be back in that 4% to 6% range as early as Q2 or whether we will have to wait for the third quarter.
Amit: And on this.
Amit: What underpins your confidence in the material acceleration step up.
Amit: Organic sales growth in the second half is it dumped.
Amit: Thing is at the current retailers' inventory level that maybe a bit low in some categories and so you would expect some strong sell in.
Guillaume Delmas: And so you would expect some strong selling from Q3 onwards. So any column that would be a very helpful. Thank you very much.
Amit: From Q3 onwards, so any color on that would be very helpful. Thank you very much.
Dawn Allen: Thank you, Guillaume, and good morning. Yeah, so I think, look, I think 2.1, we had a good performance in 3.5% growth. And I think that reflects strength and resilience across our global portfolio. In terms of what surprised us, you're right, respiratory in the US towards the end of the quarter, you know, ticked up in terms of the number of cough, cold and flu incidences. But that was also balanced by softness, actually, in other parts of the globe. The other probably the other difference was in the US and others have reported in this that the US environment, you know, is uncertain, consumers are cautious, and we are seeing retailers or we have seen retailers take action in terms of their inventory levels in line with consumption.
Amit: Thank you Jim and good morning, Yeah. So I think no I think Q1, we had a good performance in three 5% growth and I think that we strike that reflects strength and resilience across our global portfolio in terms of what surprised us.
Amit: Youre right respiratory in the U S towards the end of the Cold shot you know take talk in terms of the number of cough cold and flu incidents says, but that was also balanced by softness saatchi in other parts of the plan B.
Amit: The other probably the other difference was in the U S and others have reported in the U S environment.
Amit: Is onsets and consumers all cautious and we are seeing retailers. So we havent seen we try let's take action in terms of their inventory levels and in line with consumption, but as I said at the beginning I think what you'd see from as these are strong you know balanced performance across.
Dawn Allen: But as I said, at the beginning, I think what you see from us is a strong, you know, balanced performance across all across parts of the globe and across our portfolio.
Amit: Across parts of the globe and across our portfolio.
Dawn Allen: In terms of the outlook for the year, we remain confident in our 46% guidance. As we said, at we are expecting second half to be stronger than first half. And in Q2, we're expecting that to be broadly similar to Q1, given what I talked about in terms of the US Shambhala.
Amit: In terms of the outlook for the year, we remain confident in a 4% to 6% guidance as we said at year end, we are expecting second half to be stronger than first half and in Q2, we're expecting that to be broadly similar to Q1.
Amit: One given what I talked about in terms of the U S performance in terms of the U S small cap well it gives us confidence in the second half is three things number one is in terms of our innovation I called it out in the summary, our innovation continues to perform.
Amit: I'm incredibly well.
Amit: In the second half, we're launching into a number of new markets and we'll also get the benefit of markets that we launched in the first half as we see continued momentum.
Dawn Allen: The second area is in terms of our investment levels. So we continue to invest at healthy levels in A&P and in our route to market. And the third area is in a couple of pieces. So if you remember from Q4 last year, we saw a soft cough, cold and flu season. If we see a normal season this year, we'd expect to get a benefit from that. And when I look at certain geographies, you know, geographies like India, where we expect to see the total market pick up in the second half on the back of government stimulus, we'd also expect to see, you know, its benefit from that.
Amit: The secondary is in terms of our investment levels. So we continue to invest at healthy levels in A&P and in our route to market and the third area is in a couple of pieces. So if you remember from Q4 last year, we saw a soft cough cold and flu.
Amit: Lou season, if we see a normal season. This year, we would expect to get a benefit from that.
Amit: When I look at certain geographies, you know jokes, he's like India, where we expect to see the total market pick up in the second half on the back of government stimulus. We'd also expect to see benefit from that so I think that's what underpins our outlook.
Dawn Allen: So I think that's what underpins our outlook for the year.
Amit: For the year.
Unknown Executive: Thank you very much.
Amit: Very clear thank you very much.
Amit: Thank you.
Rashad Kawan: We'll have our next question from Rashad Kawan from Morgan Spanish. Hey, good morning, Don and Joe. Thanks for taking my questions. A couple for me, please. First, I mean, you talked about the challenging and uncertain environment. No surprise, obviously. But can you talk about just a bit more detail around what you're seeing in terms of change on the ground and consumption habits, since your last update at the end of February, particularly in the US? I know you've called out multivitamins in particular being weak. And you mentioned kind of retailer patterns. But have you seen any weakness or deterioration in other categories, in terms of consumption?
Speaker Change: We will have all this question from restaurant column from Morgan study.
Speaker Change: Hey, good morning, Don and Joe Thanks for taking my questions.
Speaker Change: A couple for me please.
Speaker Change: First I mean, you talked about the challenging and uncertain environment.
Speaker Change: No surprise, obviously, but can you talk about just a bit more detail around what you're seeing in terms of change on the ground in consumption habits. Since your last update at the end of February, particularly in the U S. I know you've called out Multivitamins in particular being weak.
Speaker Change: And you mentioned kind of retailer patterns, but have you seen any weakness or deterioration in other categories in terms of consumption.
Rashad Kawan: And then second question, just on tariffs, I know, Don, you addressed that in your opening remarks, but I think over 80% of your business in the US is local. But of the imported aspects here, can you remind us how much comes from China and what you think the impact could look like as things stand today and what mitigating actions you're thinking about here? Thank you.
Speaker Change: And then second question just on tariffs I know Don you addressed that in your opening remarks, but I think over 80% of your business in the U S is local but of the important aspects here can you remind us how much comes from China, and what you think the impact could look like as things stand today, and what mitigating actions you're thinking about yes. Thank you.
Dawn Allen: Yeah, good morning. So a couple of pieces. So in terms of the US, you know, I talked about and others have talked about consumer confidence being soft, which we, you know, we're seeing that and also from a retailer perspective, I mentioned that retailers have lined up inventory more in line with consumption trends. I think if I look at our categories in particular, I mean, oral health continues to perform well. Innovations in terms of clinical, the clinical range is driving strong trial and strong repeat rate. And we feel very confident in that. Yes, we had some phasing of shipments in the first half, but actually the fundamentals on oral health both globally and in the US remain very strong.
Don: Yeah. Good morning, so type of pieces. So in terms of the U S. You know I talked about and others have talked about consumer confidence.
Don: <unk> soft, which we you know we were seeing that and also from a retailer perspective, I mentioned that retailers have lined up inventory more in line with consumption trends.
Don: I think if I look at our categories in particular, I mean oral house continues to perform Wow innovations in terms of clinical the clinical range is driving strong trial and strong repeat rate and we feel very confident in not yes, we have.
Don: Some phasing of shipments in the first half, but actually the fundamentals on our own have both globally and in the U S remain very strong in terms of D. M. S. We have seen a softness in terms of the overall category I think in the first pool to the Vms category was broadly.
Dawn Allen: In terms of VMS, we have seen a softness in terms of the overall category. I think in the first quarter, the VMS category was broadly flat. You know, and that is of all of our categories, that is a more discretionary category in terms of choice of the consumer. So we're seeing that. I think in terms of the other categories, respiratory, pain and digestive, actually a strong performance from us in the quarter. We are seeing slightly softer consumption trends. But overall, as I said, I think the fundamentals are strong. And, you know, if I if I come back out of that and, you know, what I talked about in terms It's not just about the U.S.
Don: Flat.
Don: You know I'm not is of all of our categories that are more discretionary category in terms of choice to the consumer. So we're seeing that I think in terms of the of the taxi grades respiratory pain and digestive actually as strong performance from us.
Don: In the quota, we all seeing slightly soft our consumption trends, but overall as I said I think the fundamentals fundamentals are strong and you know if I if I come back house at that and you know well I talked about in terms of it's not just about the U S and globally.
Dawn Allen: We have a global portfolio and we're balanced across the categories. And if I look at Europe, Latin America, and the Asia-Pacific, they continue to perform incredibly well.
Don: Our global portfolio and with balanced across the categories and if I look at Europe, Latin America, and Asia Pacific They continue to perform incredibly well.
Dawn Allen: If I move on to your second question in terms of tariffs, what we said at year-end is that tariffs, you know, we expected tariffs to be in the kind of tens of millions, and that is built into our guidance. Yes, tariffs have changed in terms of the moving from impacts in Canada and Mexico to actually a more global piece, as you called out, and also a shift in terms of just finished goods to actually also impacting raw materials. But as I said, the overall impact remains, you know, very similar to what we talked about from year-end, and actually the impact from China is relatively small.
Don: If I move on to your second question in terms of tariffs. What we said at yearend is that tariffs would you know we expect to tariffs to be in the kind of tens of millions.
Don: And that is spelled seem to us that he's built into our guidance.
Don: Yes.
Don: Top changed in terms of the moving from impacts in Canada, and Mexico to watch your more global our global pieces as you called out I know, it's always shift in terms of just finished goods to watch you some impacting raw materials, but as I said the overall.
Don: The impact remains you know very similar to what we talked about from year end and actually the impact from China is relatively small so as I said you know the overall impact for the low tens of millions from what we know today on tariffs.
Dawn Allen: So, as I said, you know, the overall impact for these low tens of millions from what we know today on tariffs, and that is fully built into our guidance. Thank you very much.
Don: And that is fully built into our guidance.
Don: Thank you very much.
Don: Thank you.
David Hayes: We have our next question comes from David Hayes from Jefferies. Thank you. Good morning all.
Don: We have all the questions comes from David Hayes from Jefferies.
Don: Great. Thank you Gabor legal.
David Hayes: I'm just going to quickly follow up on that last comment if I can, Dawn, in terms of the tens of millions, just to clarify, is that a group... number before any kind of mitigation plans that you might have in terms of And then my two questions were after that, just in terms of the puts and takes on the shipments relative levels in terms of oral care. to be a bit of a lag into the second quarter, but maybe a little bit of pre shipment in terms of pain relief, pain relief. So just trying to understand whether the net of those two.
Don: Liquidity follow up on that last comment that I can't do it in terms of the tens of minutes just to clarify is that a gross number.
Don: But before he kind of plans that you might have.
Don: Etc, but my two questions after that.
Just in terms of the puts and takes on the ship with shred it.
Don: <unk> levels, it's absorbed care about 60 people there, but like its the second quarter, but maybe a little bit of free.
Don: Sure.
Don: Pain relief pain relief.
Don: So just trying understand what the.
Don: To us, it's pretty neutral or whether you should get a little bit of that benefit is.
David Hayes: pretty neutral whether you should get a little bit of net benefit in. And then the last one was just on FX, so you obviously called out that it was, um, the guys dated as the end of March, but I guess the US dollar sterling...
Don: So I've been in the last one was just on FX and you obviously called out but it was.
Don: The guidance states that we have to watch, but I guess the U S dollar Sterling.
Dawn Allen: Don Curtin, Google Translate Yeah, I think, look, let me kind of run through your questions, David. So in terms of, in terms of tariffs, you know, as I said, kind of in the low tens of millions, we, you know, we're working proactively in terms of mitigation, in terms of leveraging dual sourcing where we can, inventory levels. In all of these situations, there's always, you know, we always look at to balance the risk. But we also look at it from the other side and go, where could this be an opportunity for us? It's an opportunity to develop deeper relationships with our retail partners.
Don: 3% or something.
Don: In the last few weeks or is there a spot.
Don: They push it above available.
Don: He was just take today's rates if that's what it feels like.
Don: Yeah, I think so let me kind of run through your questions. David said in terms of in terms of tariffs, yeah, but as I said kind of in the low tens of millions. We you know we are working proactively in terms of mitigation intense.
Don: All leveraging Joe so, saying why we can inventory levels in all of these situations. There's always you know we always look to balance the race, but we also look at it from the other side and go why could this be an opportunity for us it's an opportunity to develop.
Don: Our relationships with our retail partners and eat food. So you know an opportunity in terms of it changes some of the competitive dynamics. So when we think about current as well as managing you know changing tariff.
Dawn Allen: And it's also, you know, an opportunity in terms of it changes some of the competitive dynamics. So when we think about tariffs, as well as managing, you know, changing tariffs, we also think about, you know, how do we look at risk mitigation, but also, you know, where are there opportunities? Where can this open up opportunities for us? So when we talk about the tens of millions or low tens of millions, you know, that would be after those mitigation actions. The second thing in terms of the shipment phasing in the U.S., so yes, you're right, you know, we had phasing of shipments lower on oral health in Q1, which we would expect to pick up as we, you know, move through the year.
Don: We also think about you know how do we look at risk mitigation, but also you know where all of that it's units, whose WAC necessarily pick up also.
Don: Unity stores, so when we talk about the tens of millions of low tens of millions you know that that would be after those mitigation actions.
Don: The second thing in terms of their shipments shipment phasing.
Don: Phasing in the U S. So yes, you're right you know we had phasing of shipments slower on oral health in Q1, which we would expect to pick up as we move through the year on the reverse of the reverse some paying many if I would think about those two is broadly neutral as it said what's important for us.
Dawn Allen: And the reverse on the reverse on pain relief. I would think about those two as broadly neutral. As I said, what's important for us, you know, is our consumption and share performance. And I think overall in the U.S., you know, we continue to perform well.
Don: As you know is our consumption in shacks performance and I think overall in the U S. You know we continue to perform well and then in terms of you said your question on FX. So you know a few things to say on that so.
Dawn Allen: And then in terms of your third question on FX. So, you know, a few things to say on this. So. Q1 translational FX impact came in where we expected it to be. We always expected the FX impact to be higher in the first half of the year than the second half of the year. If you remember what we're lapping in terms of Q3 last year, which was a big drag in terms of FX. So we always expected that phasing, it's come in line with that. When we update our Bloomberg consensus forward rates at the end of March, we've called that out in the press release that is broadly similar to what we said at the end of February.
Don: Q1.
Don: Translational FX impact came in where we expect today to be we always expect to the FX impact to be high in.
Don: In the first half of the year than the second half of the year. If you remember what we're lapping in terms of Q3 last year, which was a big drag in terms of backpacks. So we always I expect about phasing it's come in line with that when we update I believe the consensus forward rates.
Don: The end of March we've called that out in the press release that is broadly similar to what we said at the end of February and actually when we look at spot rates at the end of March that's all so very consistent with that Oh, Wow, you're right to call out April and what we've seen.
Dawn Allen: And actually when we look at spot rates at the end of March, that's also very consistent with that as well. You're right to call out April and what we've seen over the last few weeks has been incredibly volatile. If I give you a forecast today, I'd probably have to change it maybe this afternoon or even tomorrow. I'd be updating it every day. So I think we're obviously watching that situation closely.
Don: Over the last few weeks has been incredibly.
Don: Volatile if I gave you a forecast today I'd probably have to change it maybe the tough to noon or even tomorrow I'll be updating it every day. So I think you know, we're obviously watching that situation closely and we'll update you again, a half yes, hopefully when things are.
Dawn Allen: We'll update you again at half year. Hopefully when things have settled down. But I mean, let's see.
Don: You noticed that was down but I mean, let's say.
Speaker Change: Great. Thanks.
Don: Thank you.
Rowan Ackerman: We will have our next questions, comes from Rowan Ackerman from Barclays. Yeah, good morning, Dawn and Joe. It's Warren here from Barclays. I've got a couple as well. And the first one, Dawn, how much visibility do you have on U.S. retailer inventory? Just thinking about where do you think inventory days are versus the start of the year? I mean, you said that five customers are 50%. But what about the other 50%? How does that sort of split? And, you know, are you seeing any specific caution by channel?
Speaker Change: Oh this questions comes from when the Akamai from Barclays.
Speaker Change: Yeah, Good morning, Don and drive somewhere in here from Barclays I've got a couple as well on the first one Don how much visibility do you have on your U S retail inventory.
Speaker Change: Just thinking about where do you think inventory days are versus the start of the year, but you said the five customers at 50%.
Speaker Change: But what about the other 50% how does that sort of split.
Speaker Change: And are you seeing any specific caution by channel.
Rowan Ackerman: That's the first one. Second one, just on Centrum U.S., I think you said that the category for VMS was flat, but Centrum was down double digits. So it looks like you're losing share in the U.S. Are you responding to the higher promos that you're seeing in the U.S.? And is there any difference that you're seeing between Centrum Silver and kind of core Centrum sort of everyday multivitamins in terms of kind of, you know, what's holding up better?
Speaker Change: The first one second one just from Centrum U S. I think you said that the category for Vms was flat.
Speaker Change: Centrum is down double digits, so it looks like you're.
Speaker Change: Youre, losing share in the U S are you responding to the high program is.
Speaker Change: You'll see in the U S and is there any difference you're seeing between centrum silver and kind of cool send from sort of everyday multivitamins in terms of kind of whats holding up better and just finally, just on India. I think you said, Don but you expect the India.
Rowan Ackerman: And just finally, India, I think you said, Dawn, that you expect the India category to accelerate on better macro. Can you maybe just spell that out? What kind of acceleration are you expecting in terms of the market growth? Thank you. Yeah, so I think in terms of, in terms of your first question, so in terms of US retailer inventory, you know, what we saw as we came into the, what we saw as we came into the quarter is higher inventory levels in terms of respiratory, given the soft, soft season in Q4, which is, you know, which is worked through in the quarter, given the stronger performance on respiratory.
Speaker Change: Categories to accelerate on better macro can you, maybe just spelled out what kind of acceleration that you're expecting in terms of the market growth. Thank you.
Speaker Change: Yeah. So I think in terms of in terms of your first question. So in terms of U S retailer inventory you know what what we saw as we came into the what we saw as we came into the poetry is higher inventory levels in terms of respiratory.
Speaker Change: Given the soft soft season in in Q4, which as you know which is worked through in the course of a given given the strong performance on respiratory we do have good visibility achieved particularly in terms of our top 10 retailers in the U S that we partner with.
Dawn Allen: We do have good visibility, actually, particularly in terms of our top 10 retailers in the US that we partner and work really closely with. I think at the end of the quarter, you know, we would see them broadly flat, as I referenced, retailers have, you know, looked at their inventory levels and balanced that with consumption. I think from a channel perspective, I mean, very consistent trends in terms of what we've seen, drug continues to be under pressure, which is not, which is not new. We've been seeing that, we've been seeing that for a while now.
Speaker Change: Really closely with I think at the end of the quarter.
Speaker Change: We'd see them broadly flat as I referenced retailers have you know look to their inventory levels and balance that with with consumption I think from a channel perspective.
Speaker Change: And very consistent trends in terms of what we've seen drove continues to be under pressure, which is not which is not new we've been saying that we've been saying that for a while now well we always safe thing from a consumer perspective, you know given the consumer confidence P C.
Dawn Allen: What we're also seeing from a consumer perspective, you know, given the consumer confidence pieces, consumers are either moving to, you know, buying in bulk from the larger retailers, if you think Costco, or they're moving to lower, you know, initial outlay in terms of some of the dollar stores. So, we are seeing some of that dynamic. But actually, if you look at our distribution and our coverage across the US, we're well placed. And as I said, we, you know, we've been dealing with that channel dynamic for a while. So, I think we're in a good position there.
Speaker Change: As consumers are either moving to you know buying in bulk from the larger retailers. If he think Costco or then moving to low are you know weakness show outlay in terms of some of the dollar stores. So we are seeing some of that dynamic but not cheap.
Speaker Change: Our distribution and our coverage across the U S. We're well placed and as I said, we've you know we've been dealing with that channel dynamic for awhile. So I think we're in a good position that the other thing I'd say from a channel perspective, when I look I e-commerce business in the U I thought she wouldnt, forming you know what's informing really.
Dawn Allen: The other thing I'd say from a channel perspective, when I look at our e-commerce business in the US, actually, we're performing, you know, we're performing really well. So, I'd say, you know, balanced across there. When I look at Centrum, we are, I mean, we have the number one multivitamin brand globally with Centrum. And, you know, it's underpinned by Science, and Clinical Claims. And if I just looked globally, you know, for Centrum for a minute, I mean, in China, you know, as I mentioned, we've launched our daily wellness kits. They're personalized, you know, to the consumer, to the Asian consumer.
Speaker Change: Well, so I'd say, it's balanced across the board.
Speaker Change: I don't know Kids center, and we all I mean, we have the number one multi vitamin brands globally with centrum.
Speaker Change: And you know, it's underpinned by deep Science, and you know clinical claims and if I just looked globally, you know essentially for a minute I mean in China.
Speaker Change: Mentioned, we launched our daily wellness kits that Personalised, you know to the consumer to the Asian consumer they are performing incredibly well. We've done you know we've also launched centrum essentials in Brazil, which again are tailored to the local market.
Dawn Allen: They are performing incredibly well. We've done, you know, we've also launched Centrum Essentials in Brazil, which again, are tailored to the local market. That's a pack more aimed at lower income consumers. And that's driving value, you know, and both, you know, both areas are gaining share. And also, if I look at Caltrade, and some of our local jewels, you know, across BMS in Italy, they're also performing incredibly well.
Speaker Change: Lots of pack more aimed at lower income consumer and not driving value you know and both you know same salaries are gaining share and also if I look at how trade and some of our local jewels.
Speaker Change: Cross the B M S N, Italy, they're also performing incredibly well.
Dawn Allen: So I think we need to look at the broad picture first. And then if I think about the US, yes, we are lapping in quarter one, a very strong quarter one from the previous year where we had activation on Centrum Silver, you know, it was close to around 30% growth in the first quarter last year. And, you know, as we've talked about, we've also seen the category slow down in the first quarter too. But I think when we look at that, you know, we always look at the balance across the categories. And I think Centrum Silver in particular, continues to perform well, not just in the US actually, but more broadly globally.
Speaker Change: So I think we need to look at the broad picture first in 95 think about the U S. Yes, we are lapping in quarter, one a very strong push one from the previous share why we had activation on centrum. So well that you know it was close to around 30% growth in India.
Speaker Change: Sports and last yeah.
Speaker Change: And you know as he talked about we've also seen the category.
Speaker Change: So down in the first quarter, two but I think when we look at that you know, we we always look at the balance across the categories and I think <unk> Centrum silver in particular continues to perform well not just in the U S that she put more broadly globally.
Dawn Allen: and India. Oh yeah, India. Thank you. Thank you for reminding me that. I was out in India actually a few weeks ago and it was great to see the team on the ground. We went out, we visited, you know, some of the villages outside of Delhi. It was good to see, you know, some of our packs out there. So I sent a dime 20 rupee pack, which continues to perform well. We also talked to consumers, the consumer that, you know, I was speaking to, he had a sachet of Eno that he got out. He got a few sachets of Eno that he got out his pocket to talk to us about that.
Speaker Change: But India.
Speaker Change: Oh, Yeah, India. Thank you. Thank you for reminding me of that.
Speaker Change: I was actually in India are actually a few weeks ago and it was it was great to see the team on the ground. We went out we visited you know some of the vintages outside of Delhi. It was good to see you know some of our tax out there so I sense a diet.
Speaker Change: 23, P pack, which continues to perform well, we also talked to consumers to consume and that you know I was speaking to he had a sachet of you know that he got out a few sachet to me you know that he got out of pocket I'm to talk to us about that and I think you know well.
Dawn Allen: And I think, you know, what I'm also seeing in India is just the coverage and the reach. Since we took the sales force in-house, you know, we're continuing to build that team and we're continuing to increase our coverage and reach. So we feel really good about India. The vast majority of our portfolio is gaining share. So I think, you know, it's a really strong performance. And as I referenced earlier on, if I think about some of the government stimulus that we expect to come through in the second half of the year, I think, you know, that gives us even more confidence in terms of India.
Speaker Change: I'm also seeing in India is just the coverage on the reach since we took the sales force in house you know, we continuing to build that team, we continuing to increase our coverage and reach so we feel really good about India. The vast majority of April.
Speaker Change: So yeah, it's gaining share. So I think it's you know, it's a really strong performance and as I referenced earlier wrong. If I think about some of the government stimulus that we expect to come through in the second half of the year. I think you know that gives us even more confidence in terms of.
Speaker Change: India.
Unknown Executive: Okay, many thanks, Dawn.
Many: Okay. Many thanks Don.
Many: Thank you.
Celine Pannuti: We have our next question, comes from Celine Pannuti from J.P. Morgan. Thank you. Good morning, Don. My first question is on the balance between volume mix and pricing. I think you had mentioned that for the year you expect that to be balanced. So, with the 1 plus percent in Q1, do you still expect around 2 plus percent volume mix for the year? Given what you said about Q2 being roughly in line with Q1, that would imply quite an acceleration to around 3 percent in H2, and I wanted to understand where that would be coming from, since it seems that it will need to see a pickup in the U.S.
Speaker Change: All of this question comes from so then policies from J P. Morgan.
Speaker Change: Thank you and good morning, Don and my first question is on the balance between volume mix and pricing I think you had mentioned that for the year you expect that to be financed so we.
Speaker Change: With the one 6% in Q1 do you still expect around two plus percent food mix for the year given.
Speaker Change: Given what you said about Q2 being roughly in line with Q1 that would then imply quite to an acceleration to around three percentage to one I wanted to understand.
Speaker Change: Well that would be coming from since it seems that the need.
Speaker Change: We need to see a pickup in the U S market, while you flagged a lot of uncertainty and my second question is on.
Celine Pannuti: market, where you flag a lot of uncertainty.
Celine Pannuti: My second question is on the region EMEA and LATAM. Could you please give us, which now is growing in the mid-single-inch range, could you please give us the split between LATAM performance and EMEA? And in both, some of your peers have been talking about the slowdown in LATAM, but as well normalization in the European market, with some consumers as well starting to be a bit more cautious. So, could you give us a view of what the market is looking like in those two regions? Thank you. Okay, so I think, look, I think in terms of pricing volume mix, what you've seen in the quarter is a balance.
Speaker Change: It does.
Speaker Change: Division in the region EMEA and that time could you please give us which.
Speaker Change: It's growing in the mid single digit rent could you. Please give us the split between Latam performance in EMEA and.
Speaker Change: In booth and some of your peers.
Speaker Change: Yes, ive been talking about the feeling that some but that's when no monetization in the European market with some consumables as well as now starting to be a bit more Cushing Cushing so could you.
Speaker Change: Give us a view of what the market is just came and I can go to Richard Thank you.
Speaker Change: Okay. So I think look I think in terms of pricing volume mix, what you've seen in the quarter is a balanced performance in terms of price volume mix, which is a continuation of what we saw in the second half of the year as we move forward.
Speaker Change: Through the year, we'd expect to continue to see that that balance obviously, you know it it's different across different geographies and across different parts of the portfolio, but I think we would expect to see that balance continue.
Speaker Change: In terms of Europe, and not you know, we we see a very strong performance across both.
Speaker Change: You know I think last time in particular is you know I mean, so it's high single digit and European is mid single digit them. So I think we feel really I think we feel really good about that we're gaining share you know what.
Speaker Change: Parts of the portfolio and I think you know I think he's a good performance and I think we would expect to see that continue as we move through the year.
Filippo Lanzi: Baugh, Filippo Lanzi, Filippo Lanzi, Haleon Baugh, Filippo Lanzi, Filippo Lanzi, Haleon Follow up on the first question. Last year, fiscal year 24, volume X was 1.3%. Do you expect an improvement this year on that number? Can you just repeat the question? Yes, I'm just trying to understand your point about balance, because I thought the balance meant that volume mix would be at least around 50% of your total likes, so at least 2% volume mix. Do you expect volume mix to be at least 2% this year? As I said, I think it'll be balanced price-volume mix.
Speaker Change: Yeah.
Speaker Change: Just to follow up on the first question last year fiscal year 'twenty four.
Speaker Change: Mix was one 3% do you expect an improvement this year on that number.
Speaker Change: Can you just repeat the question.
Speaker Change: Yes, no I'm just trying to understand your point that that balance because I saw the balance what meant that to fully mix would be at least around 50% of your total like for like through at least 2% really mix do you expect when it makes to be at least 2% this year.
Speaker Change: As I said I think I think he'll be balanced price volume mix is that is that 60 40 46 day.
Filippo Lanzi: Is that 60-40, 40-60? It's difficult to say. I think what is important is that we have the balance, and as I said, that varies across different categories, across different geographies. Thank you.
Speaker Change: It's you know it's difficult to say I think what is important is that we have the balance and as I said that varies across different categories across different geographies.
Speaker Change: Thank you.
Speaker Change: Thank you.
Tom Sykes: We have our next question come from Tom Sykes from Deutsche Bank. Yeah, morning, everybody. Thank you. Just on the trying to unpick the inventory issue a bit more in the in the US. How different are the ordering patterns of drugstore chains versus e-commerce and large retailers? And perhaps how different are the inventory to sales that they hold. Because the channel shift does seem to be deflationary continually on the level of inventory that's held. And I guess in particular, around cold and flu, I would assume that drug stores would order more earlier than others. So if cold and flu is based more on demand rather than pre-buying.
Speaker Change: We have one question come from Tom Sykes from Deutsche Bank.
Speaker Change: Yes.
Tom Sykes: Morning, everybody.
Speaker Change: On the.
Speaker Change:
Speaker Change: Inventory issue a bit more in the in the U S.
Speaker Change: How different are the.
Speaker Change: The ordering pattern as drug store chains. This is e-commerce, and large retailers and pumps, how how different.
Speaker Change: The inventory to sales that they hold.
Speaker Change: Does the channel shift does seem to be deflationary continually on the level of inventory that's held and.
Speaker Change: And I guess in particular around cold and flu I'm would assume the drugstores.
Speaker Change: Would order more earlier than other.
Speaker Change: Those.
Speaker Change: So if cold and flu is based more on demand rather than pre buying.
Tom Sykes: Would that not make it less profitable over time?
Speaker Change: Would that make it less profitable over time.
Tom Sykes: And then just finally on A&P, when you step up or you are stepping up A&P, as you said, is that around specific launches? Or is that in general a step up in A&P? And how long is normally the lag that you see between an A&P step up and improved purchases? Yeah, so thanks, thanks, Tom.
Speaker Change: And then just finally on A&P.
Speaker Change: When you step up anywhere you are stepping up A&P. As you said you said around specific launches or is that in general the step up in A&P.
Speaker Change: And and how long is normally the lag that you see between A&P step up and.
Speaker Change: Improved purchases please.
Speaker Change: Yeah, I think thanks, So let me so let me start with that let me start with your second question first I think her name pace. So we yeah. We have a we have a healthy level of A&P and we feel really good about that last year, we were at 19, 2% and a M P.
Dawn Allen: Let me start, let me start with, let me start with the second question first. I think in AMP, so we, you know, we have a, we have a healthy level of AMP and we feel really good about that. Last year, we were at 19.2% AMP of the sales. I think what's important when we look at AMP is that we have the flexibility. So you've seen us dial it up, particularly in areas such as Sensodyne Clinical Platform, where it's performing incredibly well. You know, we're also investing in key markets, in key geographies. You know, I talked about India earlier on, but we also dial it down in areas where we're not seeing the ROI come through, and you've seen us do that.
Speaker Change: Styles I think what's important when we look at a M. T is that we have the flexibility so you've seen us dollar, particularly in areas such as sensor Dawn clinical platform, where it's performing incredibly well you know we were also investing in key markets.
Speaker Change: T gel for bids.
Speaker Change: It's about India earlier on but we also doubling down in areas why we we're not saying they are why come through and you and you've seen us do that and I think over time, you know as well as ensuring that we continue at healthy right.
Dawn Allen: And I think over time, you know, as well as ensuring that we continue at a healthy rate, we're also very focused on improving the effectiveness and the ROI. And the other thing that's important in AMP actually is expert, because expert is a key part of our business model. You know, we have very strong relationships with experts, and that is an area that we continue to invest in across the globe.
Speaker Change: So very focused on improving the effectiveness on the hour of ROI and the other thing that's important in Ames. He actually is X, but because expert is a key part of our business model. You know we have very strong relationships with experts and that is an area of the week.
Speaker Change: Continue to invest in across the globe. So I think that's in terms of A&P I think on your inventory question is it you know as I talked about earlier.
Dawn Allen: So I think that's in terms of AMP. I think on your inventory question, you know, as I talked about earlier, we have really good relationships with retailers in the US. You know, on our top 10 retailers, we have visibility in terms of inventory levels. And, you know, we're very well versed in terms of working with retailers on different ordering patterns across different categories. And I think, you know, we'll continue to do that.
Speaker Change: Have really good relationships with retailers in the U S. You know when I talk time retailers, we have visibility in terms of inventory levels and you know, we're very well versed in terms of working with retailers on different ordering patterns across different categories.
Speaker Change: Yeah, we'll continue to do that.
Unknown Executive: Rod? Thank you.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Yeah.
Edward Lewis: We have our next question comes from Edward Lewis from Webburn, Atlanta. Yes, thanks very much. I guess just a couple of questions for me, just thinking about the whole VMS category, particularly in the US, you know, it's been on a pretty good run of, I guess, since COVID and coming into a more softening consumer economy over there. How do you think about sort of the category and the kind of feedback from retailers about the category? Any thoughts there? And that's right, wait tomorrow on that.
Speaker Change: Thank you.
Speaker Change: Oh This question comes from.
Speaker Change: From both.
Speaker Change: Atlantic.
Speaker Change: Yes, thanks, very much I guess, just a couple of questions for me just thinking about the whole BMS category, particularly in the U S.
Speaker Change: A pretty good run.
Speaker Change: Since since Covid.
Speaker Change: Renewable suffering a consumer economy over there how do you how do you think about sort of the category and the kind of feedback from retailers about the category and any thoughts there.
Speaker Change: Switch Tomorrow now to then I guess.
Edward Lewis: And then, I guess, we haven't really touched on China, looks as though it was a good quarter, just sort of initial thoughts on China as you consolidate your JV and you're having success with innovation. Just, I guess, I got an update on China, be appreciated. Yeah, let me let me take your second question first in terms of China. I mean, we feel really good about China. We were mid single digit in the quarter. Like India, I was also out in China earlier in the year. And as I as I referenced, in terms of the sales force perspective, we've obviously announced that we're buying out the remaining 12% in the China OTC joint venture.
Speaker Change: It really comes from China, It looks as though it was a good quarter, just just sort of initial thoughts on China as you as you consolidate your JV and are you having success with innovation just statistically I guess I've got an update from China would be appreciated.
Speaker Change: Yeah.
Speaker Change: Yeah, Let me let me take your second question first in terms of China, I mean, we feel really good about China and we were up mid single digits in the quarter like India. I was also in China earlier in the year.
Speaker Change: As I as I referenced in terms of the sales force perspective, we've already seen them stuff. The though we're buying out the remaining 12% in the China or OTC joint venture. So that will mean that we will have a combined sales force and you know, we expect to get broad reach and Ben.
Dawn Allen: So that will mean that we will have a combined sales force. And, you know, we expect to get broader reach and benefit from that. The other thing to call out in China, you know, strong performance across the categories, but also our e-commerce performance, which actually we have real strength in online to offline, you know, that we've developed over the last few years. We're also working with key influencers in terms of digital channels, you know, Diane and WeChat. And, you know, I think that continues to perform well. And also our Bonop campaign in terms of Caltrate, where we're partnering with the government in terms of bone strong position in China.
From that the other things to call out in China, you know strong performance across the categories, but also our E. Commerce performance, we try to be a real strength in online to offline you know that we've developed over the last few years, we're almost there.
Speaker Change: Working with key M. So with influences in terms of digital channels, you know Diane on Wechat, and you know I think that continues to perform well on almost all of them I better not having pain in terms of couch I well with PA.
Speaker Change: And with the government in terms of bone density tests are not cheese solving for osteoporosis. So I think I think we have you know really strong position in China, we feel really good as I referenced we launched powered don't tax and that's performing incredibly well and as you you know you know in China.
Dawn Allen: We feel really good. As I referenced, we launched Paragon tax and that's performing incredibly well. And as you know, as you know, in China, gum health, you know, is a challenge in terms of population. So I think that brand is well placed actually to help in terms of that health need on China. So I feel good about that.
Speaker Change: <unk> got on how you know is a challenge in terms of population. So I think that Brian. This is well placed to help them in terms of if that helps me on China. So we feel good about that in terms of the M. S. I mean, I talked you know I talked about this earlier in <unk>.
Dawn Allen: In terms of the MS, I mean, I talked, you know, I talked about this earlier in terms of our strength globally, you know, on Centrum and in the VMS portfolio. Yes, VMS, particularly in the US, is a more discretionary category. We have seen the category slow down in the first quarter. But I think the strength of products, the strength of our claims underpinned by science, I think is consumer confidence continues to come back in the US, then we would expect to see a stronger performance. The other thing I would say in the US is actually our emergency brand performed really well, actually, as we as we saw an uptick in the cough, cold and flu season, emergency also benefited from that.
Speaker Change: The bi strength globally, you know on centrum and in the BMS portfolio, yes. The M S, particularly in the U S is a more discretionary category, we have seen the category slowed down in the first quarter, but I think the strength of that.
Speaker Change: Products strength Salt-box planes underpinned by science, I think as consumer confidence continues to come back in the US Then we would expect to see is strong with performance. The other thing I would say in the U S is actually our emergency brand performed really well.
Speaker Change: Actually as we as we saw an uptick in the cough cold and flu season emergency also benefited from that.
Speaker Change: Yeah.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Victoria Petrova: We will take our next question, comes from Victoria Petrova from Bank of America. Thank you very much, Joe. Thank you, Don. My first question is on your expectations through the year.
Speaker Change: We would say Oh. This question comes from Victoria Petrova from Bank of America.
Speaker Change: Thank you very much Julie. Thank you doing my first question is on your expectations through the year your friend, but you correctly Q2 should be kind of around Q1, and then our previous discussions our understanding was that Q3 is supposed to be better.
Victoria Petrova: If I understand you correctly, Q2 should be kind of around Q1, and then our previous discussions or understanding was that Q3 is supposed to be better than Q2, and Q4 should also be better than Q2, not necessarily stronger than Q3, suggesting that a sell-in into cold and flu season would be absolutely crucial. Are you confident that inventory levels are at the right level everywhere, not just in the U.S.? And what are your assumptions on the flu season in the fourth quarter to meet your expectations? That's probably number one.
Speaker Change: Other than Q2, and Q4 should also be better than Q2, not necessarily stronger than Q3, suggesting that a sell in into <unk>.
Speaker Change: Cold and flu season would be absolutely crucial are you confident that inventory levels are at the right level everywhere not just in the U S and what are your assumptions on the produce season in the fourth quarter or two to meet your expectations, that's probably number one.
Victoria Petrova: My second question is balance between disposals and them and the opportunity. You obviously have smoker's health, which is non-core for you in the United States. do you think the environment for potential M&A changing and does it also offer some more lucrative opportunity for you on the buy side of this equation?
Speaker Change: My second question is balanced between disposals on them and the opportunity you obviously have smokers kill switches noncore for you in the United States.
Speaker Change: Do you think.
Speaker Change: The environment for potential and be changing and does it also for some more lucrative opportunities.
Speaker Change: Were you on the buy side of this equation and very less clarification question is there any update or change in trend on the rexam. Thank you.
Dawn Allen: And very last clarification question, is there any update or change in trend on Ericsson? Thank you. Yeah, okay.
Speaker Change: Yeah, Okay. So let me kind of to see that so I think I outlined the reasons why we have early and why we have confidence in terms of second half versus first talk whether it's surround that renovation I continued investment levels.
Dawn Allen: So let me kind of talk through those. So I think I outlined the reasons why we have earlier why we have confidence in terms of second half versus first half, whether it's around our innovation, our continued investment levels, and also a more normalized season and certain geographies where we see stimulus from the government in terms of the geography picking up in terms of India. So I've outlined that. I think from an inventory level, I think, you know, we would expect to see there at normal level across the globe, we would expect to see that pick up as we, you know, our expectations are for a normal season in the last quarter of the year.
Speaker Change: I know, so a more normalized season and certain geographies, where we see stimulus from the government in terms of the joke free picking up in terms of India. So I've outlined now I think from an inventory levels. I think you know we would expect to see there are no more level across across.
Speaker Change: The globe, we would expect to see that take hold.
Speaker Change: As we you know our expectations all for a normal season them in the last quarter of the year.
Dawn Allen: I think in terms of your second question, what we've seen in terms of the M&A backdrop is obviously a softness across all categories in terms of M&A. But I think we've done a really strong job in terms of portfolio optimization. If you think about the disposals that we've done, which has helped to de-lever the business, we're also very focused on acquisitions in terms of building depth and breadth in the categories that we're in. And we continue to remain focused on that.
Speaker Change: I think in terms of your second question well you know what we've seen in terms of the M&A backdrop piece, obviously, a softness across all categories in terms of M&A, but I think we've been you know we've done a really strong job at.
Speaker Change: In terms of portfolio optimization do you think about the disposals that we've done which helped to delever. The business. We're also very focused on acquisitions in terms of building depth and breadth in the categories that we're in and we continue.
Speaker Change: As you know we continue to remain focused on that and in terms of your third question in terms of the rock song So.
Dawn Allen: And in terms of your third question, in terms of Eroxon, as we talked at year-end, this is a new product in a new category and a new consumer behavior for us. So, you know, that was always going to be more challenging. And I think that we've seen that in terms of the performance of Eroxon. The other things to call out is just around kind of lockboxes, which we've seen a rise in lockboxes in the U.S. I mean, when you go, you know, when you go in store, a lot of a lot more products are locked up than historically we've seen.
Speaker Change: As we talk to year end. This is a new product and a new caf two grade on a new consumer behavior.
Speaker Change: For us. So it you know that was always going to be more challenging and I think that we've seen not in terms of the performance of Iraq on the other things to call out is just around kind of lock boxes, which we've seen a rise in lock boxes and in the.
Speaker Change: You asked I mean, when you go you know when you go in store a lot to a lot more products unlock so historically, we've seen and that's impacted the performance of the rocks on the other thing that we still given the nature of this product and given that you know it might not be proud of.
Dawn Allen: And that's impacted the performance of Eroxon. The other thing that we saw, given the nature of this product, and given that, you know, it might not be a product that some people will either want to ask for if it's in a lockbox or, you know, might not want to purchase, you know, in store if they're with other people, we saw, you know, it more weighted towards online. And therefore, the impact of initial reviews online, you know, had a disproportionate impact in terms of Eroxon. So, I think, as I said, this is always, always going to be challenging, you know, and I think that's what we've seen in terms of the position of the product.
Speaker Change: That some people will either want to ask for if it's in a locked box or you know it might not want to purchase you know in store if that were if there were those are all the people. We we saw it more weighted towards online and therefore the impact of initial reviews.
Speaker Change: Online you know had a disproportionate impact in terms of Iraq on so I.
Speaker Change: I think as I said this is always always going to be.
Palin Jing: Palin Jing.
Palin Jing: You know and I think that's that's what we've seen in terms of the position of position of the product.
Unknown Executive: Thank you very much. Thank you.
Palin Jing: Thank you very much.
Jeremy Fialko: We have our next question comes from Jeremy Fialko from HSBC. Hi there, thanks for taking the question. So, first one, just to get a bit more colour on... about likely for the full year you would end up towards the lower part of the 4 to 6 range or is that not something? And then secondly, can you talk about the pricing element? We can see the pricing went a little bit negative in North America in Q1 because of higher promo. to be the case in subsequent courses or was it very specific to the actual...
Palin Jing: Thank you.
Speaker Change: Our next question comes from Jeremy for Alco from HSBC.
Speaker Change: Hi, there. Thanks for taking the question. So first wanted to just get a bit more color on.
Speaker Change: The phasing of the food yet.
Speaker Change: To clarify you're saying Q2 be it about three and a half so that takes the first half to around three of the half that you do understand but expected acceleration in an age too, but just given the fact that the first half you could end up being a bit below your guidance range because it means that it's more likely for the full year.
Speaker Change: You would adopt us towards the lower part.
Speaker Change: Of the four to six range or is that not something that you wouldn't necessarily set the stage.
Speaker Change: Secondly, could you talk about the pricing elements within the U S. So we can see the pricing with it is written negative in North America in Q1, because of higher promo Ah is that something that you would expect to be the case in subsequent quarters or was it very specific to the activity that you had.
Jeremy Fialko: M Yeah, thank you. Yeah, thank you, Jeremy. I think, look, we've been clear in terms of we've reiterated our full year guidance, you know, in the four, in the four to 6%. And we've also talked about how we expect the phasing of that revenue performance to be delivered. We expect it to be second half weighted versus first half weighted. And I've outlined the reasons why we feel confident in terms of And we've also said that we expect Q2 to be broadly similar to Q1 given what we've talked about in terms of, in terms of the US.
Speaker Change: Is this quarter than you would expect the pricing to.
Speaker Change: Positive.
Speaker Change: Subsequent quarters it over the full year. Thanks.
Speaker Change: Yeah, Thanks, Jeremy I think we've.
Speaker Change: We've been clear in terms of we've reiterated our full year guidance.
Speaker Change: You know in the fall in the 4% to 6% and we've also talked about how we expect the phasing of that revenue performance to be delivered we expect it to be second half way to address it first half weighted and I've outlined the reasons why we feel confident.
Speaker Change: In terms in fact in half and we've also said that we expect Q2 to be broadly similar to Q1, given what we've talked about in terms of turns if the U S intend to deal with the staffing question in terms of pricing in the U S. Yes, Q1 was <unk>.
Dawn Allen: In terms of your second question, in terms of pricing in the US, yes, Q1 was impacted by the promotional phasing. We would expect pricing to pick up as we move through the year in, you know, in the US. And as I said, overall on the portfolio, we would expect to see a balance of pricing and volume mix.
Speaker Change: Impacted by the promotional phasing, we would expect pricing to pick up.
Speaker Change: As we move through the year.
Speaker Change: You know in the U S and as I said overall on the portfolio, we would expect to see a balance of pricing and volume mix.
Unknown Executive: Thanks very much. Thank you.
Thanks very much.
Karel Zoete: We have our last question, comes from Karel Zoete from Kepler. Yes, good morning. Thanks for taking the question.
Speaker Change: Our Q.
Speaker Change: We have our last question comes from Colo choice from Pablo.
Pablo: Yes. Good morning, Thanks for taking the question I ask a question with regards to to Greenfield introductions, maybe it's something more tomorrow, but you highlight a couple of successful launches in big markets.
Karel Zoete: I have a question with regards to Greenfield Introductions. Maybe it's something more for tomorrow, but you highlighted a couple of successful launches in big markets. But can you talk a bit about the headroom for the different platforms you have when it comes to Greenfield Introductions? Sorry, can you just repeat the first, were you talking about innovation? Yeah, innovation. So yeah, you called out Paradox in China, I think you called out Brazil in the PAYNE franchise and a couple of others. So what are big, you know, launches for this year, market entries, but also a bit the longer term headroom here.
Pablo: Can you talk a bit about the headroom for two different platforms you have when it comes to Greenfield introductions. Thank you.
Pablo: Sorry can you just repeat the first you're talking about innovation innovation.
Pablo: Old out of bed on trucks in China, I think you called out Brazil, and the pain franchise.
Pablo: A couple of others. So what are the big.
Pablo: Launches for this year, our market entries, but also that the law.
Pablo: Longer term headroom here.
Dawn Allen: Yeah, I think if you take, if you take a step back, and you think about consumer health more broadly, I mean, as a category is underpinned by consumer tailwinds, whether it's more broader macro consumer tailwinds, in terms of rising middle class, in terms of preventative healthcare measures, whether it's around the incidence versus treatment gap across a number of our categories, the number of incidences is a lot higher than is actually treated. So we do see significant headroom coming from that. We also see across a number of geographies, just the of the category. So if I take India, as an example, the penetration on oral health, as a category is high.
Pablo: Yeah, I think if you take if you take a step back and you think about consumer health more broadly I mean as it as a category is underpinned by consumer tailwind, whether it's brought more broader macro consumer towering.
Pablo: In terms of rising middle class in terms of preventative have CAD measures, whether it surrounds the incidents versus treatment gap across a number of our Casa grades. The number of incidents. There's is a lot higher than it is actually.
Pablo: Treated so we do see significant headroom coming from that we also see across a number of Joel Murphy is just the maturity of the category. So if I take India. As an example, the the penetration on overall health as a category, it's high but if I went too.
Dawn Allen: But if I went to therapeutic oral health, as a category that has huge headroom for growth. So I think across incidence versus treatment gap. about future growth potential, and so you'll hear a lot more about that.
Pablo: Sarah few sake or house is a category that has huge headroom for growth. So I think to cross incident this treatment gap.
Pablo: Penetration off.
Pablo: Put unity and do so from a premium Ization point of view, if you think about what we've done with the sense of dine clinical range in terms of premium I think those would be the types of leave us. The other thing I would say is you know, we're really excited about tomorrow and on capital.
Pablo: All kids day, you'll get to hear from the team in terms. All you know I have confidence in terms about future growth potential and so you'll hear a lot more about that.
Pablo: Thank you.
Pablo: Yeah.
Yeah.
Dawn Allen: Okay, so thanks everyone. Thanks for your interest on the call. As I said, we look forward to seeing a number of you tomorrow. And for those of you who can't join, our capital market presentations will be on the webcast, will be webcast on the Haleon website. In the meantime, if you have any further questions. please reach out to our investor relations. Thanks everyone. Bye.
Pablo: Okay.
Pablo: Every walk.
Pablo: Thanks, Thanks for your interest on the call.
Pablo: As I said, we look forward to seeing a number of you tomorrow.
Pablo: So those would be who can't join Kathy two mall presentations will be on the web cast will be webcast I'm on the helium website.
Pablo: In the meantime, if you have any further questions. Please reach out to our Investor relations team.
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