Investors want clarity about the large stakes held by GSK in Haleon and Pfizer at Pfizer in Haleon. These holdings have a negative impact on the share price for the consumer healthcare company.
Brian McNamara was Haleon’s chief executive and spoke alongside its maiden full year results. He said that shareholders are questioning the plans of Haleon’s former Big Pharma joint-vent owners, who together hold almost 39% of its stock.
He said that there are many investors who are asking, “How are GSK or Pfizer going about dealing with their stakes?'”
The Haleon brand, which includes Sensodyne toothpaste, and Panadol painkillers was demerged in July, the largest London stock exchange listing in over a decade. It is the first company to list solely on consumer health. The product portfolio includes products for oral, respiratory, digestive, pain relief, vitamins, minerals, and supplements.
Its shares rose above 330p when they started trading in July but have since fallen to 313 1/2p or 4%.
In November, a post-float lockup that prevented GSK and Pfizer reducing their stakes was lifted.
Concerns about large liabilities from potential exposure to lawsuits in the United States alleging Zantac (an old GSK heartburn medication) caused cancer have further weighed down the stock. Since December, when tens of thousands were dismissed by a Florida federal court, these concerns have subsided.
Haleon, which denies any liability and isn’t a defendant in the case, didn’t issue any updates on Zantac. McNamara stated that he and his fellow executives had met hundreds upon hundreds of investors and that “when we get people focused more on the fundamentals and less on Zantac and leverage, which is now a conversation behind us, we find people are quite excited about this proposition.”
At the end of Haleon’s financial year, its net debt was approximately PS9.8 billion. This gave it an adjusted earnings ratio (3.6x) The issue of bonds in March last year to pay approximately PS10 billion in dividends to GSK, Pfizer and others helped to build its debt.
Haleon plans to reduce its debt ratio to less than three times by 2024. This is a slight change from the initial goal of reducing it to four times. After a recent report by Haleon, McNamara (55) argued that there were no big deals in sight. This was despite the fact that Haleon was still evaluating large transactions over the medium and long-term, including a combination of Sanofi’s consumer business.
Revenue rose 13.8 percent to nearly PS10.9 billion. This organic increase was a result of cold and flu sales, which were “significantly ahead” of 2019. Haleon stated that the growth in sales was 4.3 percent price and 4.7% volume.
McNamara stated that “a lot of consumer businesses took more price [rises] than volume declines. We are less susceptible to commodity-related costs which allows us to be more thoughtful about pricing.
Although profit before tax declined by 1.1% to PS1.6 billion it was adjusted for 4.4%.
Haleon announced that it reached a settlement in order to settle the “vast majority of” lawsuits filed against the group by proton pump inhibitor plaintiffs in America. This included Nexium, a heartburn medication for which Haleon obtained the over-the counter rights through an agreement with AstraZeneca (Britain’s largest pharmaceuticals company). The drugs are accused of causing serious injuries and chronic kidney disease, according to claimants. Haleon stated that the settlement’s financial impact had been included in full-year results. It was not material to the company’s financial position.
It declared an inaugural final dividend at 2.4p per share. It forecast organic revenue growth between 4 and 6 percent this year, as well as a “broadly flat” adjusted operating profit margin.