Haleon plc(HLN) - 2022 Q4 - Annual Report

Financial Performance - 2022 revenue reached £10.9 billion, representing a 13.8% increase from £9.5 billion in 2021[25] - Organic revenue growth was 9.0%, compared to a decline of 3.5% in 2021[25] - Operating profit margin improved to 16.8%, up from 17.2% in 2021[25] - Haleon reported strong revenue growth of 13.8% and organic revenue growth of 9.0% for 2022, driven by volume and price growth[48] - Adjusted operating profit increased from £2.1 billion in 2020 to £2.5 billion in 2022, reflecting a strong business model[80] - The company maintained a healthy balance of organic growth in 2022 with a 4.3% price increase and a 4.7% volume/mix growth[147] Growth Strategy - The company aims for annual organic revenue growth of 4-6% and sustainable moderate margin expansion[35] - Haleon aims for medium-term guidance of 4-6% annual organic revenue growth, supported by a strong brand portfolio and disciplined execution of strategy[50] - Haleon has identified significant growth opportunities in emerging markets, particularly in China and India[56] - The company is focused on increasing household penetration of its products and expanding its portfolio across channels and geographies[54] - The company aims to continue driving market share gains through brand building and increased investment in A&P and R&D[93] Product Development - A total of 52 product launches were executed, including new products and line extensions[30] - In 2022, Haleon launched 52 new innovations with an Adjusted R&D expenditure of £303 million, progressing over 250 active projects across all categories[141] - Haleon launched natural product variants in 2022, including Theraflu Naturals and Emergen-C Botanicals, targeting younger consumers[144] E-commerce and Sales Channels - E-commerce accounted for 9% of total sales, indicating increased channel penetration[30] - E-commerce sales grew by 16% in 2022, accounting for 9% of total sales, with the US and China seeing growth rates of 7% and 40% respectively[144] - Haleon aims to increase e-commerce sales to the mid-teens percentage by 2025, focusing on improving content and optimizing media[144] Financial Management - The company plans to reduce net debt/Adjusted EBITDA to less than 3x by 2024[35] - Net debt to Adjusted EBITDA ratio was 3.6x as of December 31, 2022, with a target to reduce it to below 3x by 2024[88][90] - The company has repaid £1.5 billion of its term loan since demerger, supported by strong cash flow and disciplined capital allocation[89] Environmental Commitment - The company aims to achieve 100% reduction in net Scope 1 and 2 carbon emissions by 2030, having already achieved 100% renewable electricity across its sites[98][99] - 65% of Haleon's packaging is recycle-ready, with a goal to develop recycle-ready solutions for all product packaging by 2025[103][105] - Haleon aims to achieve net zero carbon emissions from source to sale by 2040, with a 41% reduction in net Scope 1 and 2 carbon emissions reported in 2022[160][162] - The company plans to reduce the use of virgin petroleum-based plastic by 10% by 2025 and by one-third by 2030, based on the 2020 baseline[162] Employee Engagement and Culture - Employee engagement survey indicated that 80% of employees feel Haleon is fulfilling its core index measures, with a focus on improving identified areas[106] - The overall employee engagement index score for 2022 was 80%, with areas for improvement identified in work processes and opportunities for growth[21] - Haleon aims to achieve gender parity in its leadership community globally by 2030, targeting a representation of 48-52%[184] - The Global Parental Leave Policy provides 26 weeks of fully paid leave for all new parents, regardless of gender or family structure[187] Community and Social Responsibility - Haleon empowered 22.4 million people through health inclusivity initiatives in 2022, with a goal to reach 50 million by 2025[155] - Haleon donated over £1.7 million to the British Red Cross Ukraine Crisis Appeal in 2022 and launched the 'Haleon Helps' volunteering program in February 2023[157] Governance and Risk Management - The company is committed to upholding the UN Guiding Principles on Business and Human Rights and conducts annual human rights risk assessments[166] - Haleon has established a Global DEI Council to oversee diversity, equity, and inclusion initiatives, meeting quarterly to set priorities[186] - The company emphasizes the importance of embedding risk management in daily business operations[208]