Good morning, everyone. Welcome to Haleon's Full Year 2024 Q&A call. I'm Jo Russell, Head of Investor Relations. And I'm joined this morning by Brian McNamara, Chief Executive Officer; and Dawn Allen, our Chief Financial Officer. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements including those refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's UK and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed in or implied by such forward-looking statements. We have posted today's presentation on the website this morning with prepared remarks and our video running through the results in detail. So hopefully you all had the chance to see that ahead of this call. And with that, I'll go straight to opening the Q&A. Thank you, and over to Brian and Dawn.

Okay. Let's open it up for Q&A.

Thank you, Brian. [Operator Instructions] We now have a question from Guillaume Delmas from UBS. Please go ahead.

Thank you very much and good morning, Brian and Dawn. A couple of questions for me please. The first one is on your performance being skewed toward the second half of the year in 2025. So, given the strong momentum you're currently seeing in emerging markets, I'm thinking India and China in particular, but also the strong momentum in oral health, I mean, would it be fair to assume that the soft start to the year will be predominantly attributable to mature markets I'm thinking the US here and also mostly your OTC divisions? And then looking at the second half, what underpins your confidence in some reacceleration? I mean, is it mostly down to the current sell-in, sell-out discrepancy that will correct or any other factors you would mention? And then my second question is on Oral Health. How sustainable do you think the current performance of the division is? I mean in particular, how far do you think you are in the Clinical White journey as in many more opportunities of distribution expansion geographical rollout? And maybe a tricky question for you Brian, but do you think you have another Clinical White in your innovation pipeline that could be launched soon? Thank you very much.

Great. Thanks Guillaume. Thanks for the two questions. Let me take those questions. I'll ask Dawn if he has any comments on top. First of all on the performance, I think a couple of things. What we saw the dynamic towards the end of the year is a low cold and flu season. Actually to give perspective in the US, the cold and flu category, the market was down 15%. It was also down 15% in the rest of the world. You may remember also that we're less exposed to the US for cold and flu, which means we're obviously more exposed to the rest of the world. That's been a benefit, but both have been down 15%. So the dynamic that's created is the sell-in happened, the consumption didn't happen to the level we were expecting it to. We assume an average season which would not have been down. So as a result, we have higher inventory levels in the trade. That primarily impacts respiratory health, but it also has a lesser impact on pain release category and also emergency specifically, which is an immunity brand in the US. And that is the -- that's where that impact is. What is the confidence on the full year? We are confident and let me start there with the 4% to 6% growth. I think part of it is Guillaume, listen, the business underlying is performing well, 71% of the business gained and maintained share for the full year. We feel good about that. We feel good about the innovation we have we're launching this year. And we know that Q1 is off to a slow start because of that dynamic and also in the US. So there is a little bit of an inventory dynamic that's broader relating to some of the drug retailers which are really struggling right now. On Oral Health, just to say, Clinical White has been fantastic. We're going to roll it out in about 12 more markets this year. We've also launched clinical repair. So clinical is really a platform for us. We've launched that in Germany and three other markets. We'll launch it in more markets this year. We just launched in the US clinical enamel repair which launched in February in the US. So actually, think about clinical as a platform for us, on innovation. So, I feel great about our Oral Health business, because it's not only Sensodyne we saw paradontax growing healthy double digits, we saw Denture Care growing healthy double digits. It's really underpinned by strong innovation. Q – Guillaume Delmas: Thank you very much.

Yes I think just maybe three things -- three specifics just to build on that, in terms of what gives us confidence, in half 2. Brian talked about innovation. And let's be clear, innovation is working really well across all categories, whether it's Otrivin Nasal Mist, whether it's things like Centrum Silver or the daily sachets that we've launched or Centrum Essentials, Sensodyne Kids as an example. I think innovation continues to drive category growth and results in share gains. So I think that gives us confidence. I think the second piece, is route to market. So as you know, we are investing in India, in terms of our own sales force. We've also obviously, done the joint venture investment in China to enhance our route to market. So building distribution, is also a critical lever. And I think the third lever and you saw this in 2024, we increased A&P investment 10.2% last year, 100 basis points and we continue to invest in expert, both expert coverage and the number of samples. So I think if you look at the fundamental drivers, in terms of the strength of the business and what underpins that confidence, moving forward, I would look to those three things. Q – Guillaume Delmas: Thank you, both.

We now have a question from David Hayes from Jefferies. Please go ahead. Q – David Hayes: Thank you. Good morning, all. So a couple for me, one on FX and one on balance sheet, I guess. So just firstly, on FX. So obviously, you're indicated that there's still this FX headwind coming through in 2025. I think when we were talking to you and you were talking to investors towards the end of last year, beginning of this year, it felt like it might be a tailwind a small tailwind both in terms of top line and margin. So just to understand, what maybe changed over the last month or two, and whether there's some dynamic here that means that the visibility on the FX effects is something that's difficult for you to forecast, until you're kind of right on top of where going into the period. And then in terms of balance sheet, you said £500 million share buyback reloaded. Does that leave you scope for M&A? I mean in a sense, I think with the investors is that, you've been looking for acquisitions on the other side of these divestments to tidy up the portfolio. Is that something that you'd say you are actively prospecting, if you look at deals, still even within that context? And I guess to tie it into Eroxon, you saw Futura saying, a few weeks ago, that they were cutting their 2025 outlook. Can you give us your perspective on that commentary? Has it been a bit disappointing? And/or in terms of M&A, is that a business that you think you could look to actually fully participate in and maybe sort of change the strategy and maybe improve that momentum? Is that something that needs to be done? Thank you so much.

Okay. Thank you, David. Well, I'll start with Eroxon, make a quick comment on balance sheet and then pass it to Dawn to answer the rest. So on Eroxon, we did launch in October. I've always said this is a new OTC category, with a new brand, with a new consumer behavior. So we always expected it to be a bit of a slow startup. There's no question that the early trial and results have been slower than we expected. So, we continue -- we believe this is a big unmet need for consumers. We're continuing to look at it and understand what happens, but there's no question. I want to be clear, it's a bit below our expectations. Now that said, that's all incorporated in our 4% to 6% guidance, going forward. So we're still very confident, on the full year. Just one comment on M&A and balance sheet is, our capital allocations are very clear, invest in growth, bolt-on M&A, return cash to shareholders. Obviously, we're quite confident in our outlook and our cash flow, hence the increase in dividend and the £500 million of stock buyback. But we still have headroom to be able to do bolt-on M&A. And if the right thing comes on, and it strengthens our portfolio, we'll absolutely have the capability and ability to do that. Dawn?

Yeah. Thanks, Brian. So if I just take your -- the currency question first. Just a few things to say on this. So I think the geographical diversification of the group represents a key strength for us and provides attractive growth opportunities. But the flip side of that is that obviously results in currency impact and fluctuations. And obviously from a currency market perspective, that's something that we don't control. And I think if you look in the year what we have -- whilst we don't guide to currency, we've tried to give our best view on the forecast. And we've taken the Bloomberg forward rate, which gives a headwind on the top line and the bottom line minus 1% minus 2.5%. And the reason why we've included that as opposed to spot rates is, because of the emerging market impact. So what you see in emerging markets is a higher level of inflation, but also then that results in more a devaluation or the flip side in terms of currency. And if you just take the spot rate the risk is, you don't factor that into account. Now if we were still forecasting on a spot rate basis, that would be 0.5% impact -- negative 0.5% impact from revenue a 1% impact on the bottom line. The other thing to say for this year, if you remember what happened in 2024, we saw a large negative impact in Q3. So if I look at the weighting of the ForEx impact this year, we expect a bigger drag in the first half versus the second half. Having said all of that look, we recognize the frustration around currency. And as we said, whilst we don't control currency markets, we are looking at what are different options. So how can we reduce this? How can we mitigate this? And this is around strategic choices. So things such as supply chain footprint, supply chain optimization, investment choices in different markets, pricing strategy with inflation and process optimization so that we can match more closely revenues and costs. So that's kind of the currency piece. Probably just one other thing to say on the balance sheet. Obviously, every year, we do an exercise where we look at what's the available capital that we have and what's the most optimal use of that capital. And actually, if you look at the track record over the last few years, we've been really good in terms of capital allocation. We obviously did that exercise this year. We thought the most optimal use of that cash was to return GBP 500 million surplus cash to shareholders. And to Brian's point given that we have strong free cash flow in the business and this remains a key focus for us moving forward, that enables us also -- that gives us optionality should there be an opportunity in terms of bolt-on M&A. Q – David Hayes: That’s great. Thank you.

[Operator Instructions] We now have a question from Rashad Kawan from Morgan Stanley. Please go ahead.

Hey, good morning, Brian. Thanks for taking my questions. Just a couple for me. So first one if I can ask about VMS obviously high single-digit growth in 2024. How do you see the category from here? Do you feel like outside of the emergency volatility, it's back to where you expected it to be a few years ago back at your CMD? And maybe talk a little bit about the innovation pipeline that you have there? And then second question just again on the second half waiting point. I know you flagged inventory revaluation, I think is part of the reason why maybe profit growth will be second half weighted. I mean I don't recall that being discussed last year. So can you remind us of what that relates to and how much of a benefit it was last year and how that impacts the base this year? Thank you.

Great. Thanks, Rashad. I'll take the VMS question I'll pass it to Dawn on inventory reval and the phasing across the year. So yeah, I do believe that the VMS category is back to kind of where we would have expected it to be when we initially had our Capital Markets Day which was three days after Russia invaded Ukraine and the entire world changed and inflation came in. And obviously, there was other spikes in COVID and all that kind of stuff. So I think the category is back. You're right though that emergency is a brand. That's performed well for us. It's a great sub-category, but it does have a bit of a seasonal element to it. And we certainly saw that with the extreme spikes in emergency during COVID and during the different variants and stuff. So outside of that piece of seasonality, we feel good about that business. And as we've always said, we have a very unique asset in Centrum, being really the only global VMS brand in the world, in over 68 countries, fantastic footprint in China with Caltrate and Centrum. So we feel good about that category. And we feel like it's in a more stable place where we would expect it to be, outside of that bit of seasonality. Dawn?

Yeah. So I think in terms of first half, second half weighting two factors on that. One, we've obviously talked about the seasonality impact in terms of cough cold & flu. That's the first impact in terms of first half, second half on the bottom-line. Second impact, as you've said is the inventory valuation. And I think what's important on this, is that we are confident in delivering the full year guidance as we've laid out, for this year. And any lapping impact in terms of inventory valuation is baked into that guidance. So that's the first thing to say. The reason why we're calling it out is because it impacts the phasing, because it was a benefit in the first half of last year. And just to give you some context, we haven't done inventory revaluation since the demerger. So 2024, was the first year that we did it. If you think about where inflation has come from in years; 2022, 2023 inflation was higher. So obviously, it does have an impact in the year. Moving forward, this is something that we will do annually each year. And we have done in 2025 and there's a minimal impact. But as I said, I think what's the most important thing is that we are confident in the guidance this year.

Thank you very much.

We now have a question from Chris Pitcher from Redburn. Please go ahead.

Thanks so much. A general question please. I mean, you're talking about retailer stock levels and things like cold and flu. But could you just give us a sense more broadly across the retail landscape in the U.S.? Because we're hearing from lots of HPC companies that the shipments are perhaps lagging underlying demand. Is there something a bit more, deep seated in terms of your customers looking to save on cash? Have they become a bit more conservative on the consumer? And then a question for Dawn, there's a good performance on working capital. Now that you've been there a bit, how big an opportunity do you see in terms of working capital efficiencies to drive out? I know this is the last year of the operating efficiency program but is there more to go for there? And if there is could you help quantify it? Thanks.

Great. Thanks for the questions, Chris. I'll take the first question on U.S. retail environment. And then I'll pass it over to, Dawn. Listen, I think there are a couple of retailers that are struggling in the U.S. in the drug channel openly. And we do see some more pressure on inventory levels there. They have full year results in -- at the end of February, they're managing their full year results. So I don't think there's anything particularly deeper seated there or a massive shift happening. But I think we just have a couple of retailers that are struggling, a bit more and they're working to manage their cash. The bigger impact for us is a seasonality impact versus that, but that is something that we're not immune to either. But ultimately, it's a seasonality impact which impacts those primarily respiratory, but there's a couple of other categories that I pointed out. Dawn?

Yeah. I think on working capital look, I think we made really good progress in 2024. We improved working capital by 13 days. As you know, a portion of that is driven by reduction in inventory. I think the opportunity on working capital, there's still a large opportunity whether it's around payment terms, with suppliers, whether it's around optimizing, receivable days, in terms of our processes, around cash collection. And I'd say the biggest area is inventory. Whether it's around optimizing our demand planning, our supply chain planning, processes our supply, footprint or whether it's around the number of SKUs and formulations that we have, I think there's actually a big opportunity across the piece and that's something that like we did in 2024, we will continue to focus on to unlock that opportunity.

Thank you.

[Operator Instructions] We now have a question from Tom Sykes from Deutsche Bank. Please go ahead.

Yes. Good morning. Thank you. A couple of questions. One, just firstly, as you've taken over full ownership or increased ownership of the China JV, is there anything in terms of accounting or oversight also that you would pick out as something different to when you had a lower level of ownership at all? And are any of the reval -- inventory reval, can you say anything geographically is any of that in China please? And then just on M&A and perhaps, the innovation cycle that you have. You're obviously doing very well in oral and you're doing well in product, which is more a want rather than a need. And so therefore, when you think about your M&A, is it going to be focused and innovation? Is it focused on sort of health if you like? Or is it focused more on more regular consumer purchases such as oral maybe VMS, functional nutrition, et cetera?

Okay. Thanks for the question, Tom. Maybe a couple of things. Let me comment on the China JV. You had a question related to China JV, I think on inventory revaluation and if there's any impact there. And then I'll just comment, and then I'll ask Dawn to comment on that and then I'll comment on the M&A question. First of all on the China JV. So, we've been -- just for perspective, the China JV was on 40% of our business in China, which was the OTC business. The other 60% of the business we ran. We own completely, I should say. But we ran 100% of that business. The opportunity for us in owning that business, obviously, EPS accretive as you've seen, financially made a lot of sense for us, but also having 100% control of the business, allows us to drive a much more efficient and effective organization. Because of the JV structure, for instance, we had two sales forces that we're frankly calling on the same customers. We needed to keep that separate because it's separate accounting and things like that. So there's efficiencies that we can really -- we can drive in the business. And as you know during these past few years and I continue to be optimistic about China and the opportunity to have with China and our portfolio in China. Maybe just throw it to Dawn. I think, Tom you were asking about the inventory revaluation has that had a specific impact on China or not?

Yes. I think maybe just a couple of things to say. I think you've -- obviously what I talked about in terms of historic impact of inflation. Remember the biggest impact of inflation was in Europe. So when I think about the inventory valuation piece I think about that benefit more weighted to Europe because that's obviously where the biggest inflation was. Clearly from a China perspective it's not that much. The other thing probably just to build on Brian's point from a China perspective and accounting to Brian's point we've been running this business. So I think in terms of knowledge of the business, the control environment we've got a really strong team there. We've got a strong internal audit team. So I think those would be the factors I'd highlight.

Yes. Great. Thanks, Dawn. Back on the M&A question just Tom a chance for me to just talk about -- I know you used Oral Health you used that as an example as a want not a need. I mean what we see is because these products are delivering real benefits. So you talked about Clinical White and we're getting dental recommendations. It really is incredible that we've seen in consumers really leaning into these innovations and new categories and that's why they've been so successful. Listen I probably won't comment specifically on anything we're looking at in M&A. But obviously bolt-on is something we said we're interested in. We'll evaluate things as they come. If they strategically strengthen the business and they financially make sense we would obviously move forward. But we'll share more if there's any -- if there's ever a moment where there's something imminent to talk about.

Okay. Thank you.

Sorry. We currently have no further questions. So I'll hand back to the team.

Okay. Great. Listen thanks so much for joining us. I look forward to catching up on upcoming roadshows and meetings. And please feel free to reach out to our IR team with any questions. And thanks for your continued interest and support in Haleon. Have a good day.