Why Haleon Shares Fell Despite Positive Full-Year 2022 Results

The HALEON PLC (LON: HLN) share price plunged 5.40% after releasing its full-year results for 2022, after being spun off from GSK in July 2022. The British consumer health company generated revenues worth £10.86 billion, marking a 13.8% increase from 2021, while its operating profits surged 11.4% to £1.83 billion.

The adverse investor reaction to the full-year results could be attributed to disappointment regarding the company’s prospects in an industry that many predict will have to consolidate players to remain competitive. The consumer healthcare industry has been struggling with high costs, which have led to price hikes by most companies.

Nevertheless, the global consumer health giant continued generating significant free cash flows worth £1.58 billion. Haleon also announced an inaugural dividend of 2.4p per share, which is quite decent as a newly-listed company. 

However, analysts expressed concern that the company was not presently considering any acquisitions, with many saying that Haleon has to acquire other companies to keep growing, given its single-digit growth forecasts. 

Haleon expects to grow its revenues by 4% to 6% in 2023, primarily through price hikes rather than by growing its customer base and market shares. The company’s growth prospects are a sign that it might be challenging to keep growing its revenues if it does not make an acquisition this year. 

Still, Haleon is not a cheap stock, and as such, most of its shareholders are institutions that will likely continue pressuring the company’s management to consider takeovers. 

Brian McNamara, Haleon’s CEO, said: “2022 was an extraordinary year for Haleon, having successfully demerged from GSK to become the first listed company 100% focused on consumer health… In our first FY results, we delivered a strong performance whilst navigating a highly volatile environment. Our organic revenue growth of 9.0% was well balanced between volume and price, with two-thirds of the business gaining or holding market share. This performance reflected the quality of our portfolio of category-leading brands, successful innovation, and excellent execution in the market.”

The pullback in Haleon shares has erased all of this year’s gains and is now down 3.93% YTD. 

*This is not investment advice. 

Haleon share price. 

The Haloen share price plunged 4.90% to trade at 310.2p, from Wednesday’s closing price of 326.2p.