Haleon plc American Depositary Shares (Each representing two Ordinary Shares) 2026 Q3 Earnings Call

Please go ahead. Good morning, everyone.

Welcome to Haleon's conference call for our Q3 trading statement. I am Jo Russell, Head of Investor Relations, and I am joined this morning by Brian McNamara, our Chief Executive Officer, and Dawn Allen, our Chief Financial Officer. Just to remind listeners on the call that in the discussions 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 U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements. We have posted today's presentation on the website this morning, along with a video running through the results in detail. Hopefully, you have all had the chance to see that ahead of this call.

With that, I hand back to the operator and we can open for Q&A.

Thank you. All right. Listen, thanks, Guillaume.

Listen, I'm going to start with the full-year outlook, and then I'll come back to Q3. I may ask Dawn to also make some comments. First of all, let me say I get it and understand that the full-year guidance is a disappointment. Let me first talk through the moving pieces in Q4, and then I want to give a little bit of bigger picture perspective on the business and where I think things are at, and then I can come back through Q3, Guillaume. Listen, on Q4, fundamentally, we believe the interventions we're making in North America are having an impact. We see that in oral health, we see that in Centrum, we see it in places across the business. But there's a couple areas. Well, there's one area that's taken longer than expected, and that's in pain relief.

We have competitive launches in Q4. We do expect we're going to have an impact in Q4. We want to be transparent about that. We have our own innovation launching at the end of the quarter that we believe is going to set us up for much stronger performance in 2027, but it's going to be a drag in Q4. Also, if you look at North America, in Q3, we had double-digit growth on oral health, on Sensodyne. Listen, the business is doing incredibly well in North America. We don't expect continued double-digit growth on Sensodyne. Wouldn't expect it, don't need it going forward. We also are lapping a price increase in Q4 last year. Then if I look across the businesses, India continues to drive mid to high teens growth. That will continue. Middle East, Africa, mid-single digit growth. Europe continued to be challenging.

Now, we mentioned the two factors, the classification change for Centrum OTC in China. That will have an impact on Q4, and the change to the go-to-market model in Brazil, in Latin America in Q4. I want to be clear. This is something we had planned in doing in 2027. Given the tax change that is happening towards the end of the year, we decided to pull that forward. It is going to have an impact on the full year. It will set us up for high single digit, double-digit growth in Latin America in 2027 in a sustainable way. Now let me touch base on cold and flu. So clearly, cold and flu the past 4 weeks are up in the high teens from a category perspective. We are slightly ahead of that. So we fully expect that the category will grow in Q4, but we are 4 weeks in.

I have been associated with this category a long time, and it is very hard to predict what is going to happen. So we do not know what is going to happen going forward, but we do know that we will grow versus a year ago in North America. Now, perspective, it is 30% of our business in the U.S. So 70% of our cold and flu business is outside the U.S. And frankly, to date, we have not seen the season start. It has been slightly down. It varies market to market, to be honest with you, but it has been slightly down. So we are expecting at least flat versus a year ago and potentially some growth, but we have not seen anything to indicate the season is here yet as we look at the guidance. So we are calling it as we see it, where we are standing today on the full year.

Now maybe just taking a step back for a second. If I think about all the changes that we are making on the business, I fundamentally believe we are doing the right thing and they are the right changes. Now they need to translate to growth, and I am very clear of that. The operating model changes we are making are right, and I am seeing proof points and benefits. We started in North America, and we have seen the changes in North America help really strengthen our performance there. Not declaring victory, still have work to do. But if I am honest, it is probably taken a little longer and it has been a bit more disruptive than I would have expected. And for perspective, we are rewiring the company. We are changing innovation, the way we are doing innovation. I believe that is going to have a positive impact on 2027.

How we are doing commercial execution, our marketing model, we have significantly improved how we are engaging with consumers, how we are driving commercial execution with the latest tools and technology we put in place, how we are doing resource allocation. So I believe all those things as we go into 2027 is going to help us change the trajectory of the business and strengthen the growth of the business, but they have not yet played out yet in full force. But everything we are doing is in train, and will get embedded as we go forward. And we are acting with extreme urgency and pace to make sure we get those things in place. Maybe we step back to your question on Q3. Listen, you have seen the couple one-offs. Obviously, we do not like the one-off Centrum OTC classification issue, and the cold and flu category down versus a year ago.