Haleon gains clarity from Pfizer stake sale

Pfizer, the world’s largest standalone consumer health company, welcomed the prospect of a “slow-and-methodical” reduction of its stake in Haleon on Wednesday. The company revealed that it had seen a rise of revenue in the first quarter of this year but a disappointing profit.

Haleon, the American drug group, spun off from GSK, its London listed peer, in July last year. The stock has since been affected by the “overhang”, which is the large stakes that both former owners still hold. Investors wanted clarity on what Pfizer intended to do with Haleon’s 32 percent stake and the plans of GSK for its 12 percent stake.

This week Pfizer announced it would reduce its share within months. Tobias Hestler (51), Haleon’s Chief Financial Officer, said yesterday that it was logical for Pfizer sell its stake “in pieces” because the market cannot digest a 10% or 30% stake at one time. It’s up to them when they decide. . . But I would like to receive a call from you the night before.”

Haleon owns Sensodyne and Panadol painkillers. It is based in Weybridge (Surrey) and employs over 22,000 people around the world. This company was the first to focus solely on consumer health. The company’s portfolio includes products for oral and respiratory care, digestive health and pain relief, as well as vitamins, minerals, and supplements. Sir Dave Lewis is its chairman, and he’s 58 years old. He was the former CEO of Tesco.

The IPO was the biggest listing in London for more than 10 years. The post-float lockup that prevented GSK and Pfizer reducing their stakes ended in November. Haleon received approval from its shareholders last month at its annual general meeting to purchase its shares off-market from these two companies.

Stocks of the company have also been held back due to the overhang in stock and concerns about possible liabilities arising from lawsuits filed in the United States alleging Zantac (an old GSK heartburn medication) caused cancer. GSK denies the claims. Haleon denies any responsibility and is not a party to the lawsuit.

The share price of the company has recovered to 330p from where it began trading this July. Yesterday’s loss, however, put a halt to the recovery, with the shares falling by 3.4 percent, or 12p to 341p.

Haleon’s first-quarter trading report showed that the company had exceeded its own expectations in generating revenue. The company reported a profit of almost PS3bn in the first quarter of the year. This was up almost 9.9% on a organic basis. All categories saw sales rise, except for vitamins, minerals and supplements. Sales of respiratory products were up by 33 percent during a busy flu and cold season. Sales of pain relief products increased by 11 percent, thanks to “very strong growth” across the Asia Pacific region following China’s decision to abandon its “zero-Covid policy” late last year.

Haleon CEO Brian McNamara (57) said, “The year started well, and I’m particularly happy that we achieved a positive balance between volume mix and pricing in the first three months.”

The adjusted operating profit increased to PS691million at constant currency levels by 3.3%. The price increases and cost reductions were offset by “additional standalone costs and adverse foreign exchange”, resulting in a slightly lower profit margin of 23,1%. Haleon reiterated its forecast for revenue growth in this year at the upper end of their 4 to 6 percent range.