By Raechel Thankam Job
Oct 29 (Reuters) – Haleon cut its sales outlook to below market forecasts on Thursday, hurt by weak demand for flu and cold medicines and a regulatory setback in China, sparking the biggest-ever one-day fall in the British consumer health group’s shares.
The stock, spun off from drugmaker GSK in July 2022, was down nearly 15% by 1300 GMT, making it the worst performer in European and British benchmark indexes.
Haleon, which makes Advil painkiller and Theraflu and Flonase cold medicines, forecast 2026 organic or self-generated revenue growth of around 2.5%, below the bottom end of its previous forecast of 3% to 5% and analyst predictions of 3.2% in a company-compiled poll.
CEO Brian McNamara warned staff in a memo seen by Reuters that the company faced tough decisions. “We’ll need to make some difficult choices in the months ahead about where we focus our investment,” McNamara wrote. “Not all decisions will be easy, but they will be necessary to build a stronger, more sustainable business.”
Haleon has sought to revive its biggest market, in North America, by improving visibility on retail shelves and launching new products. Those efforts began to pay off, but the effects of the Iran war have worsened consumer sentiment and a delayed flu season has exacerbated challenges for the industry.
RBC analyst James Edwards-Jones said Haleon reaching the top end of its medium-term 4%-6% annual growth target now “looks like a stretch”.
‘DIFFICULT CHOICES’ AHEAD
“We are clear on where we need to improve and we are taking action to deliver stronger performance despite challenging markets,” CEO Brian McNamara said in a statement after third-quarter revenue also missed expectations.
Orders in North America were hit, and sales of over-the-counter Centrum multivitamins in China took a beating from raw material classification changes.
That move forced Haleon to suspend imports of those products to China and make portfolio changes.
“What became clear towards the end of the quarter is that there is not going to be a short-term solution for this. And frankly, we don’t see, as we sit here now, necessarily a solution in 2027,” McNamara told investors.
DELAYED FLU SEASON
McNamara cautioned that around 70% of Haleon’s cold and flu business comes from outside the United States, in areas such as Europe, where the season has yet to arrive.
Finance chief Dawn Allen said the continent was a particular drag with consumers there also seeking more value, hurting categories like vitamins, minerals and supplements.
Rival Reckitt, which also sells seasonal cold and flu brands such as Mucinex and Strepsils, cut its forecast this week on manufacturing struggles in North America.
($1 = £0.7503)
(Reporting by Simone Lobo and Raechel Thankam Job in Bengaluru; Editing by Rashmi Aich, Subhranshu Sahu and David Holmes)
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