Haleon plc(HLN) - 2023 Q4 - Annual Report

Financial Performance - Haleon achieved organic revenue growth of 8.0% in 2023, with reported revenue growth of 4.1%, surpassing medium-term guidance [26]. - Total revenue for 2023 reached £11.3 billion, up from £10.9 billion in 2022, reflecting a growth of 4.1% [15]. - Adjusted operating profit was £2.5 billion, with an operating profit margin of 22.6%, showing a growth of 10.8% compared to the previous year [15]. - In 2023, Haleon achieved organic revenue growth of 8.0% and adjusted operating profit growth of 10.4% at constant currency, with free cash flow of £1.6 billion [39]. - Haleon expects organic revenue growth of 4-6% and organic profit growth to outpace revenue growth in 2024 [47]. - The company targets annual organic revenue growth of 4-6% [77]. Dividends and Shareholder Returns - The Board proposed a total dividend of 6.0p per ordinary share, representing a payout ratio of approximately 35% of adjusted earnings [28]. - The Board has proposed a final dividend of 4.2p, bringing the total 2023 dividend to 6.0p, which represents approximately 35% of 2023 adjusted earnings, up from 30% in 2022 [77]. - The company plans to allocate £500m to share buybacks during 2024 [77]. - Recent divestments, including Lamisil and ChapStick, are aimed at reducing complexity and focusing on higher growth brands, with £500 million allocated for share buybacks in 2024 [45]. Market Position and Growth Strategy - Haleon's brands maintained or grew market share, with 58% of brands showing positive performance, particularly Sensodyne and Panadol [40]. - Haleon holds approximately 11% market share in the Oral Health market and is the number one player in Therapeutic Oral Health with around 50% market share in that sub-category [52]. - The global consumer healthcare market reached £190 billion, with the US representing over 25% of this market [50][51]. - The company aims to increase household penetration of its brands and expand its portfolio through new consumer trends and Rx-to-OTC switches [89][93]. - Haleon expanded its Centrum portfolio in India and entered new markets including Sweden, Libya, and Iraq [110]. Innovation and Product Development - Haleon launched 68 new innovations in 2023, including top products in the US toothpaste market [19]. - Pronamel contributed 22% of all US toothpaste market growth during its launch period [103]. - Launched Tums + Sleep targeting 63% of US adults with occasional heartburn and sleep issues, combining melatonin for sleep assistance [132]. - Introduced ENO Chewy Bites in Tangy Lemon and Zesty Orange flavors, designed for fast relief from acidity with natural ingredients [132]. - Haleon launched Centrum products in the US with bottle packaging utilizing up to 100% post-consumer recycled plastic [106]. Sustainability and Environmental Initiatives - Haleon achieved a 48% reduction in net Scope 1 and 2 carbon emissions compared to a 2020 baseline, up from a 44% reduction in 2022 [180]. - The company aims for net zero carbon emissions from source to sale by 2040, aligned with the IPCC pathway to 1.5°C [176]. - Haleon is committed to ensuring 91% of palm oil derivatives are sustainably sourced, maintaining a similar level from 2022 [180]. - The company successfully produced one billion recycle-ready toothpaste tubes, two years ahead of the 2025 target [181]. - 70% of Haleon's packaging is now recycle-ready, an increase from 65% in 2022 [180]. Employee Engagement and Corporate Culture - Employee engagement survey results showed 78% of employees felt Haleon fulfills its core engagement values [148]. - Opened new offices in London and Bengaluru, enhancing workplace environment with sensory rooms and green spaces [146]. - Established a global leadership development program to build capabilities and leadership behaviors, with expansion planned for 2024 [144]. - Conducted 10 flagship events with approximately 2,000 participants through Employee Resource Groups (ERGs) to promote an inclusive culture [155]. Risk Management and Governance - The Environmental & Social Sustainability Committee reviews progress against key environmental and net zero priorities, meeting at least twice a year [191]. - The Audit & Risk Committee oversees principal risks, including those related to ESG and climate change, meeting at least four times a year [191]. - Governance structures include the Board and various subcommittees responsible for climate strategy and risk management [189]. - The process for managing climate-related risks is integrated into the company's four-step enterprise risk management framework [196].