Good morning, everyone, and welcome to conference call for our first quarter trading statement. I'm Jo Russell, Head of Investor Relations. And with me today is Dawn Allen, our CFO. Just to remind listeners on the call that in the discussion today, the company may make certain forward-looking statements, including those that 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 actual results to differ materially from those expressed in or implied by any such forward-looking statements. Today, we'll focus on organic revenue performance. There is a full reconciliation of organic revenue in the appendix of the company's slide presentation. Following Dawn's remarks, we'll take your questions. [Indiscernible] you can find the detail on Page 3 of the company's presentation. And with that, I'll hand this to Dawn.

Thank you, Jo, and good morning. We had a good start to the year with our first quarter performance in line with our expectations. We delivered organic revenue growth of 3.5%, driven by strong market share gains across our key markets. We saw growth across all our categories and regions, which demonstrates the strength and resilience of our portfolio despite a more challenging market backdrop. Our emerging markets continue to perform particularly well, up 6.5% with marked strength in India and China, which saw double-digit growth in Sensodyne across both markets. Innovation continues at pace. And during the quarter, we had a number of successful launches, including Voltaren 2% strength in China, and expanding the Sensodyne clinical platform range and Otrivin Nasal Mist in a number of markets. Whilst the macroeconomic backdrop continues to be volatile, our full year guidance is unchanged. And we expect to deliver 4% to 6% organic revenue growth with organic profit ahead of this. Now let's look at the first quarter in more detail. Revenue of GBP2.9 billion reflected 3.5% organic growth, 2.4% price and 1.1% volume mix. Reported revenue declined 2.3% in the quarter due to a 2.9% drag from the disposals of Chapstick, and non-U.S. smokers health business, and a 2.9% drag from translational foreign exchange due to sterling strength against a number of currencies. Now let's turn to the categories where we saw broad-based growth. In Oral Health, revenue grew 6.6% ahead of the market, driven by a strong performance in Sensodyne with continued share gains underpinned by successful innovation and in-market execution across the Sensodyne clinical range. Clinical wise continues to attract a younger demographic to the brand and has amongst the strongest repeat rates in the sector. Strong performances were seen in a number of markets, including India, China, Central…

Thank you. [Operator Instructions] We have our first question from Guillame Delmas from UBS.

Thank you very much. And good morning, Dawn. A couple of questions from me, please. First one on Q1 specifically and what may have surprised you either positively or negatively during the month of March? Because if I remember, at the time of the full year '24 results in early March, you sounded probably a little bit more cautious on Respiratory, but you ended up posting like a nice positive number in Q1, thanks to that double-digit development in the U.S. So if U.S. respi was potentially stronger than you anticipated, what were the areas that maybe proved a little bit softer in the Q1 and specifically that month of March? And then my second question is on your outlook for the year. So everything confirmed, reiterated this morning, you're still guiding for 4% to 6% organic sales growth. Maybe, Dawn, can you say if you will be back in that 4% to 6% range as early as Q2 or whether we will have to wait for the third quarter? And on this, again, what underpins your confidence in that material acceleration step-up in organic sales growth in the second half? Is it down to pricing? Is it the current retailers' inventory level that may be a bit low in some categories? And so you would expect some strong sell-in from Q3 onwards? So any color on that would be very helpful. Thank you very much.

Thank you. Yeah, good morning. So I think -- look, I think Q1, we had a good performance in 3.5% growth. And I think that reflects strength and resilience across our global portfolio. In terms of what surprised us, you're right, respiratory in the U.S. towards the end of the quarter picked up in terms of the number of cough, cold and flu incidences. But that was also balanced by softness actually in other parts of the globe. The other probably the other difference was in the U.S. and others have reported in this that the U.S. environment is uncertain. Consumers are cautious and we are seeing retailers or we have seen retailers take action in terms of their inventory levels in line with consumption. But as I said at the beginning, I think what you see from us is a strong balanced performance across all -- across parts of the globe and across our portfolio. In terms of the outlook for the year, we remain confident in our 4% to 6% guidance. As we said at year-end, we are expecting second half to be stronger than first half. And in Q2, we're expecting that to be broadly similar to Q1 given what I talked about in terms of the U.S. performance in terms of the U.S. market. What gives us confidence in the second half is 3 things. Number one is in terms of our innovation. I called it out in the summary, our innovation continues to perform incredibly well. In the second half, we're launching into a number of new markets and we'll also get the benefit of markets that we launched in the first half as we see continued momentum. The second area is in terms of our investment levels. So we continue to invest at healthy levels in A&P and in our route to market. And the third area is in a couple of pieces. So if you remember from Q4 last year, we saw a soft cough, cold and flu season. If we see a normal season this year, we'd expect to get a benefit from that. And when I look at certain geographies, geographies like India, where we expect to see the total market pickup in the second half on the back of government stimulus, we'd also expect to see a benefit from that. So I think that's what underpins our outlook for the year.

Thank you very much.

We'll have our next question from Rashad Kawan from Morgan Stanley.

Hey, good morning. Thanks for taking my questions. A couple for me, please. First, I mean, you talked about the challenging and uncertain environment, no surprise, obviously. But can you talk about just a bit more detail around what you're seeing in terms of change on the ground in consumption habits since your last update at the end of February, particularly in the U.S. I know you've called out multivitamins in particular being weak and you mentioned kind of retailer patterns, but have you seen any weakness or deterioration in other categories in terms of consumption? And then second question, just on tariffs. I know, Dawn, you addressed that in your opening remarks, but I think over 80% of your business in the U.S. is local. But the imported aspect here, can you remind us how much comes from China and what you think the impact could look like as things stand today and what mitigating actions that you are thinking about here? Thank you.

Yeah. Good morning. So a couple of pieces. So in terms of the U.S., I talked about and others have talked about consumer confidence being soft, which we're seeing that. And also from a retailer perspective, I mentioned that retailers have lined up inventory more in line with consumption trends. I think if I look at our categories in particular, I mean, oral health continues to perform well. Our innovations in terms of clinical -- the clinical range is driving strong trial and strong repeat rate, and we feel very confident in that. Yes, we had some phasing of shipments in the first half, but actually the fundamentals on oral health, both globally and in the U.S. remain very strong. In terms of VMS, we have seen a softness in terms of the overall category. I think in the first quarter, the VMS category was broadly flat and that is all of our categories that is a more discretionary category in terms of choice of the consumer. So we're seeing that. I think in terms of the other categories, respiratory, pain and digestive, actually a strong performance from us in the quarter. We are seeing slightly softer consumption trends. But overall, as I said, I think the fundamentals are strong. And if I come back out of that and what I talked about in terms of -- it's not just about the U.S., we have a global portfolio and we're balanced across the categories. And if I look at Europe, Latin America and Asia Pacific, they continue to perform incredibly well. If I move on to your second question in terms of tariff, what we said at year-end is that tariffs we expect tariffs to be in the kind of tens of millions, and that is built into our guidance. Yes, tariffs have changed in terms of the moving from impacts in Canada and Mexico to actually more global piece, as you called out, and also a shift in terms of just finished goods to actually also impacting raw materials. But as I said, the overall impact remains very similar to what we talked about from year-end and actually the impact from China is relatively small. So as I said, the overall impact for us is low tens of millions from what we know today on tariffs that is fully built into our guidance.

Thank you very much.

We have our next question comes from David Hayes from Jefferies.

Good morning, all. I quickly follow up on that last comment, if I can, in terms of the tens of millions, just to clarify, is that a gross number before any kind of mitigation plans that you might have in terms of pricing, et cetera? And then my 2 questions were after that. Just in terms of the puts and takes on the shipments relative levels in terms of oral care, seems to be a bit of a lag into the second quarter, but maybe a little bit of pre-shipment in terms of net pain relief. So just trying to understand whether the net of those 2 is pretty neutral or whether you should get a little bit of a net benefit in the second quarter? And then the last one was just on FX. So you obviously called out that it was the data at the end of March. But I guess the U.S. dollar sterling moved 3% or something in the last few weeks. So is there a spot rate update version of that available to sort of take today's rates running forward? Thank you.

Yeah. I think, look, let me kind of run through your questions, David. So in terms of tariffs, as I said, kind of in the low tens of millions. We're working proactively in terms of mitigation, in terms of leveraging dual sourcing where we can inventory levels. In all of these situations, there's always -- we always look at to balance the risk. But we also look at it from the other side and go where could this be an opportunity for us. It's an opportunity to develop deeper relationships with our retail partners. And it's also an opportunity in terms of it changes some of the competitive dynamics. So when we think about tariffs as well as managing changing tariffs, we also think about how do we look at risk mitigation, but also where are there opportunities, where can it open up opportunities for us. So when we talk about the tens of millions, or low tens of millions, that would be after those mitigation actions. The second thing in terms of the shipment phasing in the U.S. So yes, you're right, we had phasing of shipments lower on oral health in Q1, which we would expect to pick up as we move through the year and the reverse on relief. I would think about those 2 as broadly neutral. As I said, what's important for us is our consumption and share performance. And I think overall in the U.S. we continue to perform well. And then in terms of your third question on FX, so a few things to say on this. So Q1 translational FX impact came in where we expected it to be. We always expect the FX impact to be higher in the first half of the year than the second half of the year. If you remember what we're lapping in terms of Q3 last year, which was a big drag in terms of FX. So we always expected that phasing, it's in line with that. When we update our Bloomberg consensus forward rates at the end of March, we've called that out in the press release. That is broadly similar to what we said at the end of February. And actually, when we look at spot rates at the end of March, that's also very consistent with that as well. You're right to call out April and what we've seen over the last few weeks has been incredibly volatile. If I give you a forecast today, I'd probably have to change it maybe this afternoon or even tomorrow. I'd be updating it every day. So I think we're obviously watching that situation closely. We'll update you again at half year, hopefully, when things have settled down, but I mean, let's see.

We will have our next question comes from Warren Ackerman from Barclays.

Yeah, good morning. Warren here from Barclays. I've got a couple as well. The first one, Dawn, how much visibility do you have on U.S. retail inventory? Just thinking about where do you think inventory days are versus the start of the year? I mean you said that 5 customers are 50%, but what about the other 50%? How does that sort of split? And are you seeing any specific caution by channel? That's the first one. Second one, just on Central U.S. I think you said that the category for VMS was flat. Centrum is down double digits. So it looks like you're losing share in the U.S. Are you responding to the higher promos that you're seeing in the U.S. And is there any difference that you're seeing between Centrum Silver and kind of core Centrum everyday multi-itamins in terms of kind of what's holding up better? And just finally, India, I think you said Dawn, that you expect India category to accelerate on better macro. Can you maybe just spell that out? What kind of acceleration are you expecting in terms of the market growth?

Yes. So I think in terms of your first question. In terms of U.S. retailer inventory what we saw as we came into the quarter is higher inventory levels in terms of Respiratory given soft season in Q4, which has worked through in the quarter given strong performance on respiratory. We do have good visibility actually particularly in terms of our Top 10 retailers in the U.S. that we partner and work really closely with. I think at the end of the quarter, we see them broadly flat. As I referenced, retailers have looked at their inventory levels and balance that with consumption. I think from a channel I mean, very consistent trends in terms of what we've seen. [Indiscernible] continues to be under pressure, which is not new. We've been seeing that for a while now. What we're also seeing from a consumer perspective, given the consumer confidence piece is, consumers are either moving to buying in bulk from the larger retailers, if you think Costco or they're moving to lower initial outlay in terms of some of the dollar stores. So we are seeing some of that dynamic. But actually, if you look at our distribution and our coverage across the U.S., we're well placed. And as I said, we've been dealing with that channel dynamic for a while. So I think we're in a good position there. The other thing I'd say from a channel perspective, when I look at our e-commerce business in the U.S., actually, we're performing really well. So I'd say balanced across there. When I look at Centrum, we are -- I mean, we have the number one multivitamin brand globally with Centrum and it's underpinned by deep science and clinical claims. And if I just look globally Centrum for a minute, I mean, in China, as I mentioned, we launched our daily wellness kits. They're personalized to the consumer, to the Asian consumer. They are performing incredibly well. We've done -- we've also launched Centrum Essentials in Brazil, which again are tailored to the local market. That's a pack more aimed at lower income consumers, and that's driving value and both areas are gaining share. And also if I look at Caltrate and some of our local [Indiscernible] across BMS in Italy, they're also performing incredibly well. I think we need to look at the broad picture first. And then if I think about the U.S. yes, we are lapping in quarter one, a very strong quarter one from the previous year where we had activation on Centrum Silver. It was close to around 30% growth in the first quarter last year. And as we talked about, we've also seen the category slow down in the first quarter 2. But I think when we look at that, we always look at the balance across the categories. And I think Centrum Silver in particular, continues to perform well, not just in the U.S. actually, but more broadly globally.

And India?

Yes, India. Thank you for reminding me that. So I was out in India actually a few weeks ago, and it was great to see the team on the ground. We went out, we visited some of the villages outside of Delhi. It was good to see some of our packs out there. So Sensodyne 20, which continues to perform well. We also talked to consumers, the consumer that I was speaking to, he had a sachet of ENO that he got out of his pocket -- got a few sachets of ENO that he got out of his pocket to talk to us about that. And I think what I'm also seeing in India is just the coverage and the reach since we took the sales force in-house we're continuing to build that team and we're continuing to increase our coverage and reach. So we feel really good about India. The vast majority of our portfolio is gaining share. So I think it's a really strong performance. And as I referenced earlier on, if I think about some of the government stimulus that we expect to come through in the second half of the year, I think that gives us even more confidence in terms of India.

We have our next question comes from Celine Pannuti from JP Morgan.

Thank you, good morning. My first question is on the balance between volume, mix and pricing. I think you had mentioned that for the year, you expect that to be balanced. So with the 1%-plus in Q1, do you still expect around 2%-plus volume mix for the year? Given what you said about Q2 being roughly in line with Q1, that would imply quite an acceleration to around 3% in H2, and I wanted to understand where that would be coming from, since it seems that it will need to see a pickup in the U.S. market where you flagged a lot of uncertainty. My second question is on the division -- well, the region EMEA and LatAm. Could you please give us which now is growing in the mid-single-digit range. Could you please give us the split between LatAm performance and EMEA? And in both some of your peers have been talking about the slowdown in LatAm, but as normalization in the European market with some consumers as well starting to be a bit more cautious. So could you give us a view of what the market is looking like in those 2 regions? Thank you.

So I think -- I think in terms of pricing volume mix, what you've seen in the quarter is a balanced performance in terms of price volume mix, which is a continuation of what we saw in the second half of the year. As we move forward through the year, we'd expect to continue to see that balance. Obviously, it's different across different geographies and across different parts of the portfolio. But I think we would expect to see that balance continue. In terms of Europe and LatAm, we see a very strong performance across both. I think LatAm in particular, is high single digit and Europe is mid-single digit. So I think we feel really good about that. We're gaining share across parts of the portfolio. And I think it's a good performance, and I think we would expect to see that continue as we move through the year.

Just to follow up on the first question. Last year, fiscal year '24, volume mix was 1.3%. Do you expect an improvement this year on that number?

Can you just repeat the question?

Yes. I just trying to understand your point about balance because I thought the balance meant that the volume mix would be at least around 50% of your total like-for-like, so at least 2% volume mix. Do you expect volume mix to be at least 2% this year?

As I said, I think it will be balanced price volume mix is that 60-40, 40-60, it's difficult to say. I think what is important is that we have the balance. And as I said, that varies across different categories, across different geographies.

We have our next question from Tom Sykes from Deutsche Bank.

Thank you. Just on the -- trying to unpick the inventory issue a bit more in the U.S. How different are the ordering patterns of drug store chains versus e-commerce and large retailers, and how different are the inventory to sales that they hold because the channel shift does seem to be deflationary continually on the level of inventory that's held. And I guess, in particular, around cold and flu, I would assume that drug stores would order more earlier than others. So if cold and flu is based more on demand rather than prebuying, would that not make it less profitable over time? And then just finally on A&P, when you step up or you are stepping up A&P, as you said, is that around specific launches? Or is that in general, a step-up in A&P? And how long is normally the lag that you see between an A&P step-up and improved purchases, please?

Yeah. So thanks, Tom. Let me start with your second question first. I think in A&P, so we have a healthy level of A&P, and we feel really good about that. Last year, we were at 19.2% A&P of sales. I think what's important when we look at A&P is that we have the flexibility. So you've seen us dial it up, particularly in areas such as Sensodyne clinical platform where it's performing incredibly well. We're also investing in key markets, in key geographies. I talked about India earlier on. But we also dial it down in areas where we're not seeing the ROI come through, and you've seen us do that I think over time as well as ensuring that we continue at healthy rate, we're also very focused on improving the effectiveness and the ROI. And the other thing that's important in AP actually is expert because expert is a key part of our business model. We have very strong relationships with experts and that is an area that we continue to invest in across the globe. So I think that's in terms of A&P. I think on your inventory question, as I talked about earlier, we have really good relationships with retailers in the U.S. On our Top 10 retailers, we have visibility in terms of inventory levels. And we're very well versed in terms of working with retailers on different ordering patterns across different categories. And I think we'll continue to do that.

We have our next question comes from Edward Lewis from Redburn Atlantic.

Yes, thanks so much. I guess just a couple of questions from me. Just thinking about the whole VMS category, particularly in the U.S. it's been on a pretty good run, I guess, since COVID and coming into a more softening consumer economy over there, how do you think about sort of the category and the kind of feedback from retailers about the category? Any thoughts there [Indiscernible]? Then I guess we haven't really touched on China. It looks as though it was a good quarter. Just sort of initial thoughts on China as you consolidate your JV and you're having success with innovation. Just I guess I got an update on China would be appreciated.

Yeah. Let me take your second question first in terms of China. I mean we feel really good about China. We were up mid-single digit in the quarter. Like India, I was also out in China earlier in the year. And as I referenced in terms of the sales force perspective, we've obviously announced that we're buying out the remaining 12% in the China OTC joint venture. So that will mean that we will have a combined sales force, and we expect to get broad reach and benefit from that. The other thing to call out in China, strong performance across the categories, but also our e-commerce performance, which actually we have real strength in online to offline that we've developed over the last few years. We're also working with key influencers in terms of digital channels, Douyin and WeChat. And I think that continues to perform well. And also our bone off campaign in terms of Caltrate where we're partnering with the government in terms of bone density test, and actually solving for osteoporosis. So I think we have a really strong position in China. We feel really good. As I referenced, we launched Parodontax and that's performing incredibly well. And as you know, in China, gum health is a challenge in terms of population. So I think that brand is well placed actually to help in terms of that health need on China. So we feel good about that. In terms of VMS, I mean, I talked about this earlier in terms of our strength globally on Centrum and in the VMS portfolio. Yes, VMS, particularly in the U.S. is a more discretionary category. We have seen the category slow down in the first quarter. But I think the strength of our products, the strength of our claims underpinned by science. I think as consumer confidence continues to come back in the U.S., then we would expect to see a stronger performance. The other thing I would say in the U.S. is actually our emergency brand performed really well actually, as we saw an uptick in the cough, cold and flu season. Emergency also benefited from that.

Our next question comes from Victoria Petrova from Bank of America.

Thank you very much. My first question is on your expectations through the year. If I understand you correctly, Q2 should be kind of around Q1. And then our previous discussions or understanding was that Q3 is supposed to be better than Q2 and Q4 should also be better than Q2, not necessarily stronger than Q3, suggesting that sell-in into cold and flu season would be absolutely crucial. Are you confident that inventory levels are at the right level everywhere, not just in the U.S.? And what are your assumptions on the flu season in the fourth quarter to meet your expectations? That's probably number one. My second question is balance between disposals and M&A opportunity. You obviously have smaller sales, which is noncore for you in the United States. Do you think the environment for potential M&A changing? And does it also offer some more lucrative opportunity for you on the buy side of this equation? And very last clarification question, is there any update or change in trend on Ericsson? Thank you.

Yes. Okay. So let me kind of talk through those. So I think I outlined the reasons why we have -- earlier why we have confidence in terms of second half versus first half, whether it's around our innovation, our continued investment levels and also a more normalized season and certain geographies where we see stimulus from the government in terms of the geography picking up in terms of India. So I've outlined that. I think from an inventory level, I think we would expect to see there at normal level across the globe, we would expect to see that pick up as we -- our expectations are for a normal season in the last quarter of the year. I think in terms of your second question, what we've seen in terms of the M&A backdrop is obviously softness across all categories in terms of M&A. But I think we've done a really strong job in terms of portfolio optimization, if you think about the disposals that we've done, which has helped to delever the business. We're also very focused on acquisitions in terms of building depth and breadth in the categories that we're in, and we continue to remain focused on that. And in terms of your third question in terms of Eroxon, so as we talked at year-end, this is a new product, in a new category and a new consumer behavior for us. So that was always going to be more challenging. And I think that we've seen that in terms of the performance of Eroxon. The other thing to call out is just around kind of lock boxes, which we've seen a rise in lockboxes in the U.S. I mean when you go in store, a lot more products are locked up than historically we've seen, and that's impacted the performance of Eroxon. The other thing that we saw, given the nature of this product and given that it might not be a product that some people either want to ask for if it's in a lockbox or might not want to purchase in store if they're with other people, we saw it more weighted towards online. And therefore, the impact of initial reviews online had a disproportionate impact in terms of Eroxon. I think, as I said, this is always going to be challenging. And I think that's what we've seen in terms of the position of the product.

We have our next question comes from Jeremy Fialko from HSBC.

So first one, just to get a bit more color on the phasing in the full year. To clarify, you're saying Q2 will be about 3.5%, so that takes the first half to around 3.5%. And then you do understand the expected acceleration in H2. But just given the fact that the first half, you could end up being a bit below your guidance range, does it mean that it's more likely for the full year, you would end up towards the lower part the 4% to 6% range? Or is that not something that you would necessarily say at this stage? And then secondly, could you talk about the pricing element within the U.S. and we can see the pricing went a little bit negative in North America in Q1 because of higher promo. Is that something that you would expect to be the case in subsequent quarters? Or was it very specific to the activity that you had in this quarter and then you'd expect the pricing to be positive in subsequent quarters and over the full year?

Yeah. Thanks, Jeremy. I think, look, we've been clear in terms of we've reiterated our full year guidance in the 4% to 6%. And we've also talked about how we expect the phasing of that revenue performance to be delivered. We expect it to be second half weighted versus first half weighted and I've outlined the reasons why we feel confident in terms of second half. And we've also said that we expect Q2 to be broadly similar to Q1 given what we've talked about in terms of the U.S. In terms of your second question, in terms of pricing in the U.S. yes, Q1 was impacted by the promotional phasing. We would expect pricing to pick up as we move through the year in the U.S. And as I said, overall on the portfolio, we would expect to see a balance of pricing and volume mix.

We have our last question comes from Karel Zoete from Kepler.

Yes, good morning. Thanks for taking questions. I have a question with regards to greenfield introductions. Maybe it's something more for tomorrow, but you highlight a couple of successful launches in big markets. But can you talk a bit about the headroom for the different platforms you have when it comes to greenfield introductions?

Sorry, can you just repeat the first -- are you talking about innovation?

Yes, innovation. You called out Parodontax in China, I think you called out Brazil in the pain franchise, and a couple of others. So what are the big launches for this year, market entries, but also the longer-term headroom here?

Yes. I think if you take a step back and you think about consumer health more broadly, I mean, as a category, it is underpinned by consumer tailwinds, whether it's more broader macro consumer tailwinds in terms of rising middle class, in terms of preventative health care measures, whether it's around the incidence versus treatment gap across a number of our categories, the number of incidences is a lot higher than actually treated. So we do see significant headroom coming from that. We also see across a number of geographies just the maturity of the category. So if I take India as an example, the penetration on oral health as a category is high. But if I went to therapeutic oral health as a category, that has huge headroom for growth. So I think across incident versus treatment gap penetration opportunity and also from a premiumization point of view, if you think about what we've done with the Sensodyne clinical range in terms of premiumizing, those would be the types of levers. The other thing I would say is we're really excited about tomorrow at our Capital Markets Day. You're going to hear from the team in terms of our confidence, in terms of our future growth potential. And so you'll hear a lot more about that. Thanks for your interest on the call. As I said, we look forward to seeing a number of you tomorrow. And for those of you who can't join, our Capital Market presentations will be on the -- will be webcast on the Haleon website. In the meantime, if you have any further questions, please reach out to our Investor Relations team. Thanks, everyone. Bye.