HLN

Good morning. Thank you for attending today's Haleon Half Year 2026 Results. My name is Sarah, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with the opportunity for questions and answers at the end. If you'd like to ask a question, press star one on your telephone keypad.

I'd like to pass the conference over to our host, Jo Russell, Head of Investor Relations. Please go ahead.

Thank you very much. Good morning, everyone. Welcome to Haleon's conference call for our half-year results. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our 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 that refer to our estimates, plans, and expectations. Please refer to this morning's announcement and the company's U.K. 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, along with a video running through the results in detail. Hopefully you've all had the chance to see that ahead of this call.

With that, I'll hand back to the operator, and we can open for Q&A.

Thank you. Again, if you would like to ask a question, please press star followed by one on your telephone keypad. To remove a question, press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We will pause here briefly as questions are registered. Our first question is from Cédric Besnard with Citi. You may ask your question.

Yes, good morning, everyone. Hi, Jo. Hi, Brian. Hi, Dawn. Just a couple of questions, please. One on top line and one on margin. The one on top line will be about North America. Could you just shed some light on the progress you've made there, especially maybe quantify the shelf reset benefits and also how we should think about the organic growth sequence for the rest of the year with the various building blocks? On margin, I guess another profit beat, but how would you assess whether the business actually remains invested enough, and what are the KPIs you would have internally to make sure no category and no market starts overearning? Thank you.

Great. Thanks, Cédric. Listen, I'll take the first question. I'll probably kick off the second, pass to Dawn. First of all, I feel good about the progress in North America. Maybe I just start with a bigger step back, Cédric. As you all saw, 3.1% organic sales growth in the quarter. That's a sequential improvement from Q1, which was 2.2%, we definitely saw a better balance of price and volume mix, with volume mix at 1.4%. A few other maybe highlights. Emerging markets, obviously another sequential improvement at 6.3%, we do look to see that strengthen in the back half. One of the drags to the emerging markets was Middle East, where we have a disproportionately kind of large market share versus the balance of our business there, we've just seen significant market declines in places like Dubai and Pakistan.

We believe that will get better in the back half based on our plans, not counting on the market to do anything different or the war to end. I would say those are two key building blocks. Europe. Europe has been more challenging. What I'd say is we ended the quarter where we expected, in line, probably a bit stronger in North America, a bit weaker in Europe. We've definitely seen a Europe market which is declining, we were relatively flat, up, I think, 0.4% or so in the quarter. Getting to North America, 3.1% growth with 2% volume. I'd maybe put it in three buckets of what we're seeing. One is the stronger execution, we've talked about that. That's the shelf resets, the self-placements across key categories and key customers.

The second I say innovation is delivering. We've launched the third pillar of our clinical range and clinical repair in the U.S., that's doing extremely well. It's beyond that. We've launched things like Centrum Age Defy, Excedrin Rapid Relief, innovation is performing well. Maybe the third pillar is around e-commerce. We're seeing good momentum in e-commerce, strong double-digit growth twice the market rate. For me, listen, good progress in the U.S. I feel good about that. Still more work to do. Very encouraged by the progress. Certainly, we're going to have a stronger second half than first half, we're confident in that's obviously embedded in our guidance of holding our guidance of 3%-5%.

Moving to your margin question, I'm going to pass it to Dawn to maybe talk a bit of the margin and the building blocks. I'd start with a bit of your own question on investment, just my perspective. I think we are investing in the business. A&P in the first half grew 3.2%, broadly in line with sales, slightly ahead, but broadly in line with sales. Our A&P is roughly just below about 21% as a percentage of A&P. I think it's strong investment and growth. There's specific areas where we've increased investment, and we're constantly doing resource allocation just to ensure that we're investing behind the key growth areas that we believe we have one running room and key innovations. I feel like we're invested well in the business.

That said, our priority is growth. We don't want to invest in the business just for the sake of investing. We want to invest where we see growth opportunities. Listen, in the second half, we expect a step-up of investment and growth, and that will show up in A&P. It'll also show up in different areas, like we're investing in China and on Douyin because we have a good business on Douyin. Our portfolio is a bit less exposed to that channel, but we're growing 100%, and we see more opportunities there. We're going to invest more there, and we're going to invest some more in activations in the U.S. Where we see opportunity, we're going to drive things.

Let me leave it there. The only other thing I'd say before I pass it to Dawn is what the gross margin and productivity has enabled us to do is have the P&L flexibility to invest where we need to, but also drive strong EPS growth if it makes sense. To be clear, we're not holding back on investing in the business. We feel like we're investing where we need to be, and we see opportunities, we'll invest more. Dawn, maybe a bit on the margin.

Good morning everyone. I think what's important to say on the margin is we have delivered the margin through efficiency. We are driving long-term sustainable improvements in our supply chain. To Brian's point, the margin has not come from cutting investment. It's not come from taking too much price. When you look at our pricing, our pricing is in line with inflation, and this is a really important point, that it is coming from efficiency. The 120 basis points improvement in margin, in operating margin at constant currency, is coming from gross margin up 140 basis points. We also have a 40 basis points benefit coming through FX, which if you think about, it's quite nice to have a tailwind from FX for a change.

To Brian's point, that is pulling through and driving strong EPS in the business, and it is giving us flexibility and agility. Why that's important is when you look at the second half, we will start to see costs come through from the Middle East impact as we roll off fixed price contracts and our hedging positions. It means that given that we've got the strength in the supply chain productivity program, it means we won't have to take exceptional pricing to cover it. We will be able to absorb that cost. From a margin perspective, we also expect in half two that we will deliver high single-digit operating margin growth as we have operating profit growth as we have in half one.

Let me take your second part of the question, which was about A&P and the KPIs and how we think about A&P. People buy our brands because they are superior, meaningful, differentiated, and salient, which means that people are aware of them. Therefore, continued strong investment in A&P at 20.9% as it is today, is really important for our brands. The way that we think about that, there's probably three main areas in how we think about it. The first question is, are we buying efficiently? If you look at the first half, we have mitigated the majority of our inflation in terms of how we are buying that media.

The second piece is, are we spending effectively? We have quite a sophisticated market mix modeling tool where we look at the incremental retail sales growth and ROI around that spend, both of those are up in the first half. The third question is, are we driving growth through reach and relevance? When we think about this, we're trying to match our spend with where consumers are consuming that media or where they're getting their media from. 60% of our spend is allocated to digital, and we continue to increase that spend behind social and expert, which are both up in the first half.

When we think about A&P, we keep it quite dynamic. In areas where we're performing really well, like oral health, China, India, we increase our investment. In areas where it needs less investment, for example, when cough, cold, and flu season was weak in Q1, obviously that's an area where we would shift investment to other areas that all the time it's very dynamic, that we're ensuring that we're making our money work harder and we continue to look for opportunities to invest.

Good. Thanks, Dawn. Next question.

Thank you.

Thank you. Our next question is from Guillaume Delmas with UBS. You may ask your question.

Thank you very much. Good morning, Brian, Dawn, and Jo. Couple of questions for me. The first one on respiratory health. We had another weak quarter in Q2. I think it shaved off 150 basis points of your organic sales growth. My question is, of the three buckets of cough and cold, allergy, smokers health, which are the ones where you would expect an improvement materializing relatively quickly? Is your confidence in OSG organic sales growth accelerating in the back half largely underpinned by expected sequential pickup in respy? Do you think the acceleration should be more broad-based than that in the back half?

Second question, just China, high single-digit growth in the second quarter, despite low incidents of cough and cold and some negative pricing. Maybe can you touch on what is driving what seems to be, I guess, double-digit volume growth in China, and how should we think about this pricing pressures? Is it more of a one-off? Is it the cost of competing in that hospital channel? Does this have any negative implications for your margins in the region? Thank you very much.

Great. Thanks, Guillaume. Listen, I'll take the first question on respiratory, I'll pass the China question to Dawn. Listen, on respiratory health, you're right, three buckets in respiratory health, cough and cold, allergy, and the smallest piece being smoker's health. First of all, on cold and flu, cold and flu is about half the size in Q2 than it is in Q1. It's off-season, so it tends not to be as volatile. You are right that Contac, which is a very big cold and flu brand in China, just saw very little, if any, pickup in the quarter. We believe that's just an extension of what was a very difficult cold and flu season. I'll get back to cold and flu in the back half in a second.

You have allergy, which did well in Q1. It was down a little bit in Q2, just a phasing of the season piece, and you just expect that. That's normal. You tend to see some seasonal swings in allergy, but it's never to the degree of cold and flu in the impact. Third is smoker's health. Listen, smoker's health still declined in the quarter, but it's declined at a lower rate than it did in Q1. We're starting to see a stabilization of that business as we go forward, and we have plans in place where we're, like most things, like in the U.S. in general, we're seeing better execution, and we're seeing improvement as they go.

Now, on cold and flu, as we look at the back half in cold and flu, we know that we've had two years of decline in cold and flu. I think I've said in the past, been associated with the category for over 20 years, it's not necessarily common that that happens, but it's not unheard of. We've obviously done all the work to understand, is that a cyclical or a structural thing? We believe it's cyclical. What we're assuming in the back half is we see growth off of this two years of decline. We still don't expect it to be at the level it was from two years ago. Obviously, in cold and flu, that's more Q4 weighted because that's when the cold and flu season is. That's a bit of the frame around respiratory and what we're seeing.

Dawn, you want to talk a bit about China?

Yeah. Let me take the question in three parts. Let me talk about Asia-Pac, then I'll talk about China, and then I'll come onto your specific question around hospital channel and price. When we look at Asia-Pac, when you look at the growth profile of Asia-Pac, over the last few years, more than 80% of that growth is coming from volume. That's a really good growth profile for that region. I think obviously, and you see that also coming through in the year to date, and actually even stronger growth in Q2. China is a really important driver of that. China was up high single digit in Q2. Main drivers, we increased investment in Douyin. Douyin grew more than 100% in the quarter. Key brands that underpin that were in Centrum, Caltrate, really strong in terms of driving growth in Douyin.

We have actually doubled the amount of content creation in that channel. That's a really strong driver of performance. The other strong driver of performance was actually on Voltaren, where we increased our presence. Voltaren, 2%. Innovation continues to do really well. We have actually put that now through the hospital channel. Hospital channel is a channel that we have always been in in China. That's not new. What's new is now Voltaren is in that channel, which is a real positive. You're right, pricing was negative in Asia-Pac in Q2. I'm not worried about that. It was driven by going into hospital channel where we have a volume-based procurement pricing model, as well as investment in Douyin.

When you look at the gross profit growth in Asia-Pac, that's strong. When you look at the margin improvement in Asia-Pac at constant currency, that's also strong. For me, it's a real positive. It shows that the investment that we're putting in to drive growth in China and in Asia-Pac is actually coming through. As I said, we're still seeing margin improvement overall in that region.

Thank you very much.

Thanks, Dawn. Let's go to the next question.

Thank you. Our next question is from Nicolas Ceron with Bank of America. You may ask your question.

Hi, Brian. Hi, Dawn. Hi, Jo. Just two questions from me, please. The first one is on your VMS business. Do you think there's any consumer need that your current portfolio is not really able to address? Do you think that you need to do M&A to do that? It's a bit of a thorny question. The second one is going back to the pain relief, big acceleration in Q2 versus Q1. Maybe if you could just explain to us the key drivers behind the acceleration and whether you think mid-single digit is the growth for that business going forward. Thank you.

Great. Thanks, Nicolas. First, on the VMS business. Listen, I think, first of all, we like our portfolio. We have seen, by the way, if we look at Centrum in the U.S. specifically, we've seen improvement in the first half of the year, so mid-single-digit growth. Actually, if I look at latest consumption data, so now we're into July, you're starting to see double-digit consumption behind the activations and the shelving resets and everything we're doing on that business. We do like the portfolio we have. Listen, there are higher growth spaces within VMS we don't participate in. We're looking at that also organically. How can we introduce new products under Centrum? How can we drive that?

One example I would give you is our GLP-1 variant on Centrum, which we launched in the U.S. as part of our broader GLP-1 effort to support consumers on that journey and activate in retail. I've always said every portfolio can benefit potentially from a bit of bolt-on M&A, a bit of divestment as we go. I feel good about the portfolio we have, and I'm confident that while the VMS has been a bit of an up-and-down business for us over the last few years to acknowledge that we have plans in place where we feel like we're going to get that to a place where it can deliver the growth that we would like. On pain relief, it was a stronger quarter in pain relief. I think that links to a few things.

First, I'd say we saw strength in Voltaren, that linked to a launch in China, by the way, of a Voltaren 12-hour variant that's doing very well. Also in the U.S., we're seeing some strength in Voltaren behind some of those changes we've talked about across shelving, because we also saw benefits from shelving across Voltaren. Panadol has grown healthy growth and ahead of our global number, that's behind good activations, but also the rollout of Panadol Dual Action, which is the combination of acetaminophen and ibuprofen. We market that under Advil Dual Action in the U.S., but outside the U.S., we market that and we've launched that under Panadol.

Overall, I'd say a stabilization and slight growth of share in Advil. We're starting to see share growth in Advil, which we'd expect, although the category is still a bit muted, we're ahead of the category. Overall, I feel there's some fundamental things that are happening in pain relief that helped drive those numbers.

Thank you.

Okay. Thank you. Next question.

Thank you. Our next question is from Warren Ackerman with Barclays. Please go ahead.

Good morning, Brian, Dawn, Jo. It's Warren here at Barclays. Apologies if this question's been asked before because I just jumped on late, multiple results today. I just want to just dive a little bit deeper on a couple of places. Latin America, Brian, looks like it's accelerated from low singles to high singles. Can you talk a little bit about the new team that you've got in LATAM and kind of what you're doing differently in terms of price-pack architecture and understanding local consumers better? Do you think this kind of step-up in Latin America is sustainable? Is it a one-timer, or do you see kind of real legs for the improvement in that region?

The other region I just wanted to touch on was, again, Europe. Sorry if this has been asked already, it did seem a little bit softer in the quarter sequentially in Q2 versus Q1. Just wondering whether you can sort of outline, is there anything weird happening in the pharma channel? Is it Germany? What are you seeing in terms of kind of consumer dynamics in that region? That would be super helpful. Thank you.

Thanks, Warren. I don't think either of those questions were asked, I'll take them both. Listen, on Latin America, you're right. What we saw was kind of flattish in Q1, and we're seeing high single-digit growth in Q2. I would say, is that sustainable in the back half? I'd expect to see similar results to that high single digits, albeit maybe a bit of phasing Q3, Q4, just because of some base effects and stuff. To take a step back, on January 8th, when we announced the new operating model, we also announced a new leader in Latin America, Andrés, who has spent many years at a Colombian-based company called Quala in Latin America, and then spent some time at Unilever once that company was acquired. Clearly, deep understanding of the Latin American markets, and the consumer.

I think he has come in and has done a very robust assessment of what is happening and has taken actions. One of the actions we've talked, Warren, that I believe I've mentioned in the past, is very quickly identified a bit of an opportunity in Brazil and a few other markets on our price gaps on Sensodyne. Very quickly did a pilot test and saw that would drive double-digit volume growth. We've executed against that. We've taken pricing down. Again, it wasn't broad-based pricing on Sensodyne. It was a particular SKU on Sensodyne and the price gap versus one of our competitors that got a little out of whack. We've made that change, and we moved.

I'd say just purely on execution across the region, understanding moves we need to make, and looking as we go forward of better capitalizing on the low-income consumer, where obviously we have a tremendous case study in India on the low-income consumer that's driven now over 20% growth on Sensodyne and also huge opportunities we're seeing in Centrum in EMEA. I think he's making good progress again on all this stuff. Encouraged with the progress. You never want to declare victory. We're not complacent. I feel like the back half, what we're seeing in Q2 is sustainable in the back half. On Europe, there's no question what I said earlier, Warren, you may not have been on, is that if I look at where we ended up in the quarter, it was in line with our expectations of what we thought we would deliver in the quarter.

It was a bit better in the U.S. It was a bit tougher in Europe. There's no question that we're seeing a tougher market in Europe, and we're seeing low single-digit declines in the categories. Now that said, as you saw, we delivered roughly flat results, up 0.4% or so. We are growing market share in Europe. Sensodyne continues to perform well and broadly, we're performing. I feel like, listen, as we look at the balance of the year, we're not counting on anything changing in the Europe dynamic. Obviously, we're just very focused on driving our execution, driving our innovation, delivering the growth that we think we can get in that market. We certainly have seen a tougher backdrop in Europe than we had seen as the year has gone on.

Super, Brian. Thank you.

Okay, next question.

Thank you. Our next question is from Mikheil Omanadze with BNP Paribas. You may ask your question.

Thanks. Morning, all. One question on cold and flu, please. Can you please remind us what the timeline for the sell-in for the season? Also, one of your competitors speaks a lot about a major innovation in cold and flu coming. Do you see this as a bit of a challenge for you? The second question would be on price volume split for H2. You did say that you're not intending to take any material pricing, should we think about H2 being a bit balanced between price and volume? Last question would be on one-offs. Were there any notable one-offs benefiting your Q2 delivery? Thank you.

Good. What I'll do is let me take the cold and flu question, and then I'll pass Dawn to the second part of that question, and then the one-off question. Listen, on cold and flu, the sell-in happens as we speak. July and August typically is when sell-in happens in cold and flu. It's as expected. Typically, in cold and flu, the big potential for any seasonality effect happens later in the year in Q4. As far as competitive activity, listen, nothing we were unaware of. We feel like we have good plans in the U.S., and combined with all the executional improvements that we are seeing and then the plans we have behind our cold and flu portfolio.

Again, never complacent, never take anything for granted. We're aware of launches of multiple competitors. We feel good about our cold and flu plans in the back half. Dawn?

If we think about the price volume mix, we have been working hard to improve that balance, the price volume mix. You've seen in the quarter the step-up in volume performance. With volume mix at 1.4%, where is that coming from? We have obviously talked about Asia-Pac and significant volume growth in Asia-Pac in the quarter. We also saw a big step-up in North America to 2% in terms of volume mix on the back of all of the execution activities, innovation that Brian has talked about. Those two step-ups in the quarter were offset by EMEA, where volume mix was down on the back of a very tough macro picture in Europe and obviously softness in the Middle East, given what's happening there. If we look to the second half, we continue to focus on a balanced price volume mix.

We would expect to see a step-up in volume mix half two versus half one, particularly given that we have cough, cold, and flu in Q4. As I said, from a pricing perspective, I would expect pricing to be broadly similar second half versus first half. To come to the third part of your question, I guess there have been activities, whether it's Amazon Prime Day, whether it's World Cup, where we've had activities in terms of U.S. soccer. What I would say is obviously they've both been successful for us. If I think about phasing Q2, Q3 or sell in, sell out, there's nothing significant to call out in that respect.

Thank you.

Okay, thanks, Dawn. Next question.

Our next question is from David Hayes with Jefferies. Please go ahead.

Thank you very much. Good morning, all. Two from us. Just came back to the growth profile in the second quarter, obviously doing a 3%, but still that 4%+ ambition midterm remains aloof in what is a relatively benign cold and flu season. I guess the question is, there's lots of moving parts as you talked about, Brian, Asia cold and flu doesn't affect Middle East, U.S. momentum's building, Brazil execution improvement. Just that gap, can you quantify what broadly that the big ones are that leaves that gap there? I guess where that leads me is would you expect to do 4%+ through the second half as those gaps are resolved, as you're alluding to?

The second question, just on the margin, obviously very impressive margin delivery. You talked again about some of the drivers of that. The question is, A, is the supply chain delivery a little bit lumpy? You've got a lot of savings in the first half, might be a bit less in the second. On the COGS inflation, I guess some of the contract manufacturing rolls off in terms of the agreements. Can you just give us a sense of cost of goods sold inflation in the first half versus what you might expect in the second half? Thank you so much.

Thanks, David. Listen, I'll take the first one, and then I'll pass the questions on margin and supply chain over to Dawn. Listen, on the growth profile, by the way, you are right that we are below our 4%-6% medium-term ambition, and we are very focused on getting back to there. If you take a step back, David, on what we need to be to get to that 4%-6% ambition, and then maybe what is the difference between that and Q3, I think in one area is emerging market growth, which we saw sequential improvement at 6.4% in the quarter. We do expect that that can get to high single digits, and we would expect that to get there in the second half. What is driving that? Certainly, we've seen mid-teens growth in India. We're confident that will continue.

We talked about Latin America and the improvement we've seen in Q3. We've talked a bit about China in high single digits in Q2. The other piece that's been a drag to that high single-digit growth has been Middle East. Our Middle East/Africa business was flat. In Middle East, we are disproportionately big in the Middle East. If I look at my market shares in the Middle East, in many cases, they're double where they are in the market. Brands like Panadol in Pakistan is an 80+ kind of share. What we've seen is we've seen declines in the market in both Dubai and Pakistan. That said, versus Q2, we expect that to improve in the back half and not expecting wars to stop or anything like that based on our plans and what we're going to do and the activations we're going to drive.

We'd expect to see an improvement on that as we go into the back half. The other piece is we've said, listen, U.S., for us to get to that growth number, needs to be in that 3%-4% range. I'm very encouraged by the progress we're seeing in the U.S. Again, not complacent, not declaring victory, but really feel good about the progress that they're making, and we think it's very encouraging. Europe, you would expect Europe to be in a low single digit, 2%-3% growth. Obviously, it's a bit lower than that as we look at the back half. That's the algorithm to get us into that 4%-6% range in a confident way.

On the back half, listen, I'm not going to guide beyond what we've already said, which is confidence in the 3%-5%, and the building blocks that I've laid out, which is you see the progress in North America. We expect to have less of that drag from the Middle East going forward. Then obviously cold and flu, which will be more Q4 focus. What we're expecting to see is growth versus a year ago, versus two years of decline. Not expecting to see it as high as it was in 2024, just as a benchmark.

Dawn, maybe I pass it over to you to the margin question.

Yeah. As I said earlier, in terms of the margin progression, this is coming from the productivity savings in supply chain. Just as a reminder, there's three parts to that. The first one is around complexity reduction, so harmonizing packaging, formulations, optimizing the number of SKUs. The second one is operational efficiency. This is all about debottlenecking in the plants, process improvement, equipment optimization. The third one is about optimizing our broader network in terms of what we do in-house, what we co-manufacture. When I think about that holistic program, it continues to deliver incredibly well. I don't see it as lumpy. We track the pipeline of potential future savings. We track that into the future. When I look at half two versus half one, that's looking good.

In terms of the COGS piece and increasing costs, we have seen a small increase from Middle East in the first half, particularly in freight. As I said earlier, I would expect that to increase in the second half as we come off some of the contracts. When I look at the gross margin, we've had 140 basis points improvement in the first half. I would still expect us to deliver improvement in the second half. Will it be to the same extent given that we'll be absorbing some of the Middle East costs? I think that depends on how much those costs are. As I said, we would expect to absorb that. I think some growth in gross margin. I think the other things to talk about, we will continue to invest in the business.

You saw us in the first half, A&P, we increased ahead of revenue. Second half, we'll continue to invest. The other thing that we will have in the second half is the benefit from the operating model changes. We said at full year that we expected that in total to be in the range of GBP 175 million-GBP 200 million, of which 1/3, broadly 1/3, we expect to be in this year. A bit similar to the supply chain productivity savings, we'll decide how much of that do we reinvest in terms of future capabilities and how much do we drop through. When you look at that overall, as I've said, I would expect half two operating profit to also be high single digit, but different moving parts in the P&L.

When you look from an EPS perspective, 12% growth in EPS in the first half is very strong. I would also expect strong EPS growth in the second half.

Thank you.

Thanks, Dawn. Next question.

Our next question is from Callum Elliott from Bernstein. Please go ahead.

Hi, good morning. Thank you. I wanted to start with Oral Care, please. The 6.2% is obviously objectively a fantastic growth number. But at the same time, I think it is also the slowest quarterly growth for nearly four years. One of your biggest Oral Care competitors reported yesterday a mid-single digit decline in organic sales for their Oral Care business. I guess you are probably benefiting from their struggles, as I think you have been for the past several quarters. But they are not a bad company, I don't think, and I don't think anybody would say that they are. I think it would be dangerous to assume that they will continue to be such a big share donor over the longer term.

I guess what I am getting at here is, can you talk a bit about the moving pieces, the drivers of longer term, what the sustainable growth rate for that Oral Care business should be? My second question, I was really interested in your comments around what Andrés is doing to fix LatAm, Brian. Without meaning to be too pejorative, it strikes me that fixing price gaps really should be bread and butter for a company of your size. I guess I am surprised that you need to be poaching senior leaders from Unilever to do that. I guess my question is, can you speak a little bit to the infrastructure in your business around this kind of competitive intelligence?

Do you think this Brazil Sensodyne pricing example is just an isolated incident? Or do you systematically need to be doing more to improve this kind of infrastructure across the company? Thank you.

Okay. Thank you, Callum. I'll take these questions. On Oral Care, 6.2%, still feel very good about that. I expect that that will improve in the back half. Nothing really to see from the 7.3% on half year to the 6.2% in Q2. Within that, Sensodyne continues to be very strong, parodontax continues to be very strong, and mid-single digit kind of growth on Denture Care, which is what we expect. Listen, this is a business that has grown at this level for years in the past. If I think about our competitors, our competitors in Oral Care are both fantastic companies and fantastic competitors. Have a ton of respect for both of them. A lot of times what you see is what we are driving is incremental category growth and incremental consumers into the more premium segment of the category via the innovation we have.

If I look at Clinical White, then Clinical Enamel, and then Clinical Repair this year, in all three cases, they were the largest innovations in the U.S. market in that given year in the toothpaste category. There's more to come. I look forward, and I see more innovation coming that we already have in the can. Post the Clinical range, we already have a very clear view of what that pipeline looks like, and I really feel good about that. A lot of times when you see our competitors moving around on stuff, it tends to be because they're fighting each other. Do not take any of them lightly. We've been consistently driving that growth through new users, new penetration, and it's the very simple thing, which is now half the people in the world have sensitive teeth.

A bit more than a third of those people use a sensitivity toothpaste, we continue to drive that growth. By the way, well beyond the U.S., by the way. I mentioned earlier India, our second largest market, second only to the U.S., over 20% growth. Two years ago, we introduced a low-income consumer SKU in India at INR 20. It took a bit of time for that to gain critical mass. In the last quarter, it was over 40% of our volume was driven by that low-income SKU, and half our growth is coming from that. I think we have a very broad-based program. Also there's parodontax, by the way, which grows consistently in the mid-teens.

Overall, do not complacent, the ups and downs of our competitors in any given quarter tend to be less relevant to us than just our agenda and what we're driving on that. The other piece is we're also a much less promotion-driven business, to be clear. We invest quite heavily in advertising and promotion and dental detailing. We don't necessarily get into the fray on fighting the promotion game. That's what I say. Listen, in Latin America As I said, when we created the new operating model, I was aware that we needed to make a change in Latin America, I want to be very clear.

Also made the decision that having Latin America, Middle East, Africa, and India, given the growth profiles and the opportunities, and having the right talent in those businesses, was a decision I made, and I think it's going to pay dividends for the longer term. Understand your comment and agree with your comment, like anything else, Callum, when people are trying to run the business and drive the business and taking different pricings, every now and then you have a misstep. Would we have caught that if Andrés didn't go in? I would expect we would've. It happened at some point in the back half of last year. He happened to be put in place and do it. Listen, he's a great talent. I'm really happy to have him.

I'm happy to have him and Kedar and Özlem, which are our new leaders across our three regions, on my leadership team and reporting directly to me. It's all part of this operating model change we've made, which was all about driving growth and agility. Happens to be providing also some efficiencies that Dawn mentioned, which will help us in the back half. It's all about streamlining and simplifying what we do. Okay?

Thank you very much.

Next question. Next question.

Thank you. Our last question is from Edward Lewis with Rothschild & Co Redburn. Please go ahead.

Yes, thanks very much. A couple from me, more bigger picture. I guess first one, Brian, if I think about the Investor Day last May, you talked about wanting to reach a billion more consumers. You've made investments in India, you made investments in China this year, the world's got a bit more volatile. Just an update on how you're thinking about that longer-term view. Dawn, when I think about Investor Day, things like AI were obviously mentioned, it's just made so much more impact on our lives now. I presume all of us are using it so much more. When I think about your outlook in terms of how you're thinking about driving margins, how much more of a benefit are you seeing from deploying these kind of capabilities than you would've thought before?

Thanks for the question, Ed, I'll pass it to Dawn on that AI question. Listen, we set out a strategy that had two ambitions, a billion more consumers, and delivering industry-leading shareholder returns. I think both of those were really important. What that did in the organization is opened up the opportunity and strategically for us to go after the low-income consumer, where we see opportunities that haven't been addressed before. Now, some of this low-income consumer stuff does take time to build momentum. If I talk about India and the INR 20 pack, you have to sell a lot of INR 20 packs to start having an impact on that business. That is having an impact on that business. 20% growth, half that growth is coming. It's so much more than just offering packs, by the way.

It's the route to market, it's the communication, it's the education, it's the dental detailing. That strategic shift for us is really important because that's something that we see as a medium-term, long-term growth opportunity in emerging markets. We have some really good proof points of where it's working, we are in the process of making that broader in other areas. We've done much more than India, I've talked about India because it's the one that started, now we're two years in. Listen, the volatility in emerging markets is always there. I don't think that will change the consumer need that we see in the low-income consumer, it's about providing, by the way, it is about providing really great products at accessible price points in a way that helps meet their needs.

We still believe that opportunity is there. Dawn, on AI?

Yes. I think you're right. Look, AI is obviously a fast-moving space, and we are investing in AI, and we are seeing the benefits. Let me give you just a sense of that, and I'll give you an example across supply chain, across our demand space in terms of growth, and then maybe just broader productivity. In terms of supply chain, we have built quite a connected chain of AI interventions, from consumption-based forecasting to production scheduling, preventative maintenance, and inventory deployment. Examples of that would be on our consumption-based forecasting. This has improved our forecast accuracy by 5%-6%. It's also reduced our stock cycle times as well, which is obviously important in terms of our levels of inventory.

If I look at our AI scheduling and digital twins, for example, at our Nyon site, that's our digitally enabled work process solution has delivered a 5 percentage point in operational effectiveness. Similarly, in terms of preventing unplanned shutdowns, for example, at our Dungarvan site, that's also delivered a similar level of operational improvement. From a supply chain, that is definitely embedded, as I said, in terms of a holistic space. If we look from a demand perspective, we have embedded AI across insight, innovation, marketing, and commercial execution, so all of the steps along that path. From an insights perspective, we have a great tool that is enabling us faster and deeper access to actionable insights.

From an innovation perspective, we're leveraging AI in terms of faster claims generation, and in terms of marketing, we're actually leveraging AI in terms of reducing the cost of our content production. Then in commercial execution, in terms of AI around tools such as Next Best Action that we talked about Capital Markets Day, that's also driving sales growth. Actually quite an end-to-end demand space AI capability that we're embedding. Then the third area, just more broadly across the organization, obviously tools like Copilot, language translation with our tools like Lingo. Even if I think about finance in terms of some of our core finance processes like optical recognition in terms of invoices are also driving process improvements and savings.

Look, I guess like everybody else, we're on a journey with AI. It is changing quite quickly. I think all of the things I talked about earlier, what that is enabling us to do in terms of supply chain productivity, the benefits that we're getting from the operating model changes, that's enabling us to test and learn in this space and build capabilities for the future.

Great. Thanks, Dawn. Well, that was the last question. Thanks everyone for joining us today. I look forward to catching up with you at upcoming roadshows and meetings. As always, feel free to reach out to the IR team with any further questions. Thanks for your interest and continued support. Enjoy the rest of your day.

Thank you. That concludes Haleon half year's 2026 results. Thank you for your participation. You may now disconnect your lines.

Good morning. Welcome to today's Haleon's Q1 trading update. My name is Sarah, and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for question and answers at the end. If you'd like to ask a question, press star one on your telephone keypad. I'd like to pass the conference over to our host, Joanne Russell, Head of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Haleon's conference call for our Q1 trading statement. I'm Joanne Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our Chief Executive Officer, and Dawn Allen, our Chief Financial Officer. 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 U.K. and SEC filings for more details, including factors that could lead 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's a full reconciliation of organic revenue in the appendix of the company's slide presentation. Following Brian and Dawn's remarks, we will take your questions.

For those listening to our webcast who would like to ask a question, you can find the details on page three of today's press release. With that, I'll hand over to Brian.

Thanks, Jo, welcome to our Q1 2026 results call. We've navigated a challenging market in the Q1 where consumer confidence continued to weaken and delivered 2.2% organic revenue growth. The continued weakness in cold and flu that we highlighted at full year impacted group organic growth by 130 basis points. Once again, oral health performed strongly with innovation-led premiumization and geographic expansion, driving continued success in Sensodyne and parodontax. In VMS, Centrum saw an improved performance underpinned by innovation. We continue to make progress against our strategic priorities. Our productivity initiatives continue to drive strong gross margin improvement, consistent with our strategy to build more competitive consumer-focused supply chains. In March, we announced GBP 65 million investment in a new oral health facility in Shanghai. That's due to open in early 2028.

On culture, we are moving forward on the operating model changes we set out in January, which are designed to drive growth and agility. Coming back to growth, Dawn will take you through the numbers, first I'd like to look at North America, which is a good example of how our growth initiatives are progressing well. Over the past quarters, we've been very deliberate in strengthening both our marketing effectiveness and our in-market execution. While we have reorganized the team to follow our category-led approach, we have also created a cross-category platform team to capture opportunities that sit across the portfolio. A good example of this is GLP-1. We're taking a holistic view of consumer needs. This is not a single category opportunity. It spans VMS, digestive health, pain relief, and oral health, and we're aligning our brands to play across that full consumer journey.

In parallel, we are accelerating innovation and sharpening how we segment our brands to address consumer needs. The recent launch of Centrum Age Defy is a good example, allowing us to reach a younger consumer with a more tailored proposition. Alongside innovations such as Excedrin Rapid Relief, bringing faster-acting solutions to the market in a category where speed of relief matters. Taken together, these actions are starting to translate into performance. In Q1, North America returned to growth, up 1% overall. Let's look at our emerging markets, where we delivered organic revenue growth of 4.3%. That was largely due to weak cold and flu season in Central and Eastern Europe and Asia Pacific. Latin America, and particularly Brazil, also continued to be impacted by challenging consumer backdrop and performance challenges with higher promotional activity.

We've put in place a number of programs to support growth in Latin America, which we expect to positively impact performance from Q2 onwards. Examples include the launch of accessibility offerings across Sensodyne and Denture Care, along with activations we are planning around the FIFA World Cup for Eno. Despite the near-term headwinds, we remain confident in our emerging markets. We have strong brands. Our innovation pipeline, along with the actions we're taking to strengthen distribution, will allow us to reach more consumers. Turning now to the outlook. As we talked in February, outside of respiratory, we are not assuming a material improvement in global category growth. Despite the macroeconomic and consumer backdrop becoming more uncertain in recent weeks, we are maintaining our outlook for the year. Much will depend on the duration of the current conflict and any potential impact on the wider economies of our key markets.

We expect organic revenue growth to be between 3% and 5% for the full year. We will deliver improving growth momentum through the improved performance in North America that I've talked about, increased investment in our eCom channel in China, particularly Douyin, and an improvement in Latin America from some of the actions I outlined earlier. On profitability, our plans are on track, and we remain confident in strong gross margin expansion. That improvement we'll support by ongoing productivity initiatives, delivering high single-digit operating growth while allowing for continued healthy investment in the business. I'll now hand over to Dawn to take you through the numbers in more detail.

Thank you, Brian. Good morning, everyone. As expected, it has been a challenging start to the year. Category softness has continued, where consumer confidence remains under pressure, with our results also impacted by weak cold and flu season. From a consumer perspective, penetration levels across our categories continue to be resilient, but consumers are becoming more value-orientated and seeking more convenience. Against this backdrop, we delivered 2.2% organic revenue growth in the quarter, 2.4% from price and a decline of 0.2% in volume mix. Looking at the results in more detail, starting with our global categories. Oral health continued its strong momentum, delivering 8.3% growth, 2x ahead of the market. Key highlights were: in the U.S., growth was driven by the innovation rollout of Sensodyne Clinical Repair, along with parodontax Gum Strengthen & Protect.

This resulted in double-digit consumption growth, with Haleon growing four times the market. In India, our INR 20 Sensodyne pack performed well, with 70% of units being purchased by new consumers to the brand. Overall, our growth was balanced across price and volume mix. For VMS, we saw an improving trend at 1.7% organic revenue growth. This was largely driven by Centrum, and in particular, North America grew mid-single digit. This was due to the launch of Centrum Nutrient Replenish, targeting GLP-1 users, alongside continued strength in Centrum Silver, helped by the activation of biological aging claims. In Asia Pacific, the upgraded daily kits in China also performed well. On Caltrate, whilst consumption remained healthy, organic revenue growth was impacted by a tough comparative in the prior year.

In OTC, we saw a mixed performance, with strength on brands such as Panadol, Benefiber, and Tums offset by weak cold and flu season, as well as declines across Smoker's Health and Nexium. Within the pain category, revenue was broadly flat. Key highlights were Panadol maintaining strong momentum, driven by our new campaign, "That's One for Panadol," and an improving trend in Voltaren, driven by the rollout of our 2% formulation in India and Saudi Arabia following the success in China. Continued share gains in Advil in the U.S., driven by the no pain, more gain activation against a weak category. Within respiratory, organic revenue declined 3.4%. Around 60% of our portfolio is positioned against the cold and flu category, which was down in Central Eastern Europe and showed double-digit decline in North America and Asia-Pac.

In addition, Smoker's Health continued to be a drag, declining double-digit in the quarter. These factors more than offset strong performances from improved in-store execution and expert endorsement in Flonase, as well as continued strong performance and expansion on Otrivin nasal mist. For Digestive Health, strong innovation and activations on Benefiber and Tums was offset by weakness in Nexium and Eno to deliver 0.4% organic revenue decline. Finally, Therapeutic Skin Health and other grew 3% with continued strength in Bactroban, partly offset by a decline in Fenistil. Turning now to the regions. As Brian mentioned, North America returned to growth of 1%, 3.7% from price and 2.7% decline in volume mix.

In the quarter, we saw double-digit growth in oral health, alongside an improved performance on Centrum and continued strong performance across Tums, Benefiber, and Flonase, offset by double-digit decline in cold and flu. Moving forward, we are confident that growth in North America will accelerate as we move through the year. This will be underpinned by shelf resets, strong activations, including the partnership with U.S. Soccer for the 2026 FIFA World Cup, as well as further innovation. In EMEIA and LATAM, we delivered 2.1% organic revenue growth with 2.6% from price and 0.5% decline in volume mix. We saw a very different picture across the three operating units. In Europe, we continue to see resilient performance with modest revenue growth underpinned by outperformance in pharmacy and mass market channels.

This is against a backdrop of weaker consumption and lower consumer confidence. Strength in oral health, along with good growth in Panadol and an improving trend in Voltaren, was partly offset by weak cold and flu season in Central and Eastern Europe. In Middle East and Africa, we delivered high single-digit revenue growth with a good balance across price and volume mix, driven by innovation launches, including Panadol Dual Action and Voltaren 2%. Whilst performance in the quarter was not impacted by the Middle East conflict, we are monitoring the situation closely. In Latin America, revenue was slightly up. The macro picture has been more challenging, and we have seen performance issues in Brazil. In Asia Pacific, we delivered 4% growth with a higher-than-expected significant impact from the weak cold and flu season.

In China, we continue to outperform and grew mid-single digit with double-digit growth in the eCom channel, which now makes up around 40% of our revenues. Our innovation agenda also continued to deliver with our upgraded Centrum daily kits with benefits for metabolism, liver, and cardio performing well. We expect growth in China to accelerate as we build out further capabilities in Douyin through tripling the number of content pieces on the platform and doubling the number of key opinion leaders across VMS. In India, we grew double digit with excellent in-market execution, particularly for Sensodyne Pronamel. As a result, Sensodyne grew at five times the rate of the category with significant market share gains. In fact, Sensodyne has now reached double-digit market share in India.

Turning now to the remainder of the year, our guidance remains unchanged at 3%-5% organic revenue growth and high single-digit operating profit. We are watching carefully the potential impact from the conflict in the Middle East. Whilst we didn't see any significant impact in the quarter, we are mindful of potential changes in future consumer spending patterns and are monitoring costs in our supply chain closely. In summary, for Q1, oral health continued to outperform. North America returned to growth, and we saw continued resilience of our portfolio against a backdrop of softer consumer markets. Our productivity agenda continues to make excellent progress. This provides us with the flexibility and agility to continue to invest and navigate the macro uncertainty. With that, I'll hand back to the operator for the Q&A.

Thank you. Our first question is from Guillaume Delmas with UBS. Please go ahead.

Thank you very much. Good morning, Brian, Dawn, and Joanne. Two questions from me, please. First one, Brian, on your 2026 guidance, because you had a relatively soft start to the year, I think largely expected, maybe LatAm, China a little bit weaker than you anticipated. More importantly, there is now far more macro uncertainty versus a couple of months ago. My question here is, iterated the 2026 outlook, but have some of the key moving parts changed? You know, do you see now clear additional sources of downside or maybe conversely upside, particularly when it comes to savings?

Any color on how you look at the guidance now versus at the time of the full-year results, what maybe you're baking in at this stage for the Middle East, and I guess what underpins your confidence in meeting your guidance? My second question is on North America. I mean, it does seem category growth, even when we adjust for the weak cold and flu, not only is not improving, it seems category growth is getting worse, particularly in the OTC in the region. Can you maybe talk about the reasons for this for this kind of unusually negative category growth? Do you see any structural reasons for that, or is it just a bit cyclical and you would expect a pick-up?

Very lastly, in the meantime, how do you ensure you keep outperforming category growth and that the gap between you and category growth keeps on widening? Thank you very much.

Thanks, Guillaume. Let me start with full-year guidance. Taking a step back, as you said, Q1.

Slightly lower than expected, but not material, honestly. Broadly in line. Little more downside in cold and flu in Asia Pac, specifically China. From that perspective, nothing's changed since we guided. As you mentioned, what has changed is the uncertain macro environment, given the war. Hard to predict what's gonna happen, and we're monitoring it closely. To be clear, there was no impact in Q1. Dawn mentioned that. Middle East, by the way, just for perspective, is about 5% of our overall business. We do remain confident in the 3%-5% guidance and in, you know, accelerating growth through the balance of the year. That confidence comes from, first, North America. You know, benefiting from the shelf resets, which are happening at our largest customers.

They're happening as we speak, they're going into place now and into early May. Our partnership with the U.S. Soccer and the activation that's going to happen across category initiatives on things like GLP-1. Frankly, just overall improved execution behind a very strong and new team in North America. You know, secondly, we mentioned Latin America and Brazil. I mean, we did see a tough macroeconomic environment in Brazil. Our results were much softer there than they were in Q4. Now, we've made a leadership change in Brazil. We've also made a structure change where that now sits on my executive team, reporting directly to me. I was actually in Brazil three weeks ago with Andrés, our new leader there. He's got fantastic, by the way, Latin American consumer experience.

I'm really confident in the plans we've already put in place, the actions we've taken to see improvement in Q2 and an acceleration in the back half. Then obviously we're lapping softer comps in the back half in respiratory, and after two years of decline, we'd expect to see some growth off of that lower base. You mentioned it, Guillaume, I think on the profit side, productivity continues to progress ahead of our expectations, honestly. The strength of the gross margin improvement gives us the flexibility we need to invest in growth, which underpins the confidence of being able to deliver the guidance on the top line despite a very difficult macro environment, also the confidence in delivering the high single-digit operating profit growth with those uncertainties.

I mentioned a little bit, your second question was really on North America. You know, again, was in North America a couple weeks ago also. Really, really happy with the progress we've made there. The changes in distribution and shelving across oral health and pain relief and VMS are gonna have a real impact on the business, so I'm confident we can continue to outperform and perform in the market. Cold and flu was down pretty significantly in Q1 in North America. It has a little bit of a halo effect on some other categories, pain relief and immunity and VMS and things like that. Overall, again, I don't think that's a structural thing. I think it's a cyclical thing, and that we would expect that to kind of bounce back.

Where I am very confident is obviously in our ability to outperform and outperform more in the U.S. as we look at the balance of the year.

Thank you very much.

Thank you. Our next question is from Warren Ackerman from Barclays.

Morning, Brian, Dawn, Joe. It's, Warren here at Barclays. Two from me as well. Can you maybe, sort of drill in a little bit more on what you're seeing in Asia? I mean, you mentioned China, you expect acceleration with the Douyin, rollout. I guess cough, cold, flu was quite weak in China. Maybe if you can maybe outline what the underlying picture is in China and then what you kind of see on the go forward. Similar thing on India. Southeast Asia, are you seeing any kind of sort of weakness in some of the smaller sort of Southeast Asian markets given, the Middle East, conflict? Yeah, just any color on what you're seeing in those three big, buckets of Asia. Secondly, just back on cough, cold, flu.

I don't know whether, Dawn, you're able to just break it out for us in terms of what the impact was specifically in the U.S., in EMEA, LatAm and in Asia Pac, just so that we can sort of see what the underlying numbers are. Thank you.

Great. Thanks, Warren. Let me take the first one, and then I'll pass it to Dawn on cold and flu and impact in the U.S. First of all, in China, mid-single-digit growth in China. We have a brand in China called Contac, which is quite a big cold and flu brand, and we did not see a season at all, so that was a drag. We have a good business on Douyin in China, but we see a bigger opportunity there. You know, that business for us, by the way, grew 100% in Q1. Remember, we have over a billion-pound business in China.

The other thing about Douyin is it is in a channel where you can do OTC products based on regulatory, so it's really focused on our non-OTC portfolio, and we're quite confident in the acceleration that we're seeing and the capabilities we're building there. We feel good about China. India continues to be our star in, you know, seeing double-digit growth and frankly, oral health in China is doing incredibly well. The low-income consumer strategy we have there, the launch of Pronamel is driving very, very strong double-digit consumption growth. On Southeast Asian markets, I mean, we're monitoring it closely. We haven't seen a big impact to date.

It hasn't impacted Q1, but we're monitoring it closely because obviously we're seeing others in other categories seeing an impact in Southeast Asia. Overall, we're, you know, it seems to be fairly stable and continuing as is. Dawn, do you wanna talk?

Yeah.

... cough and flu?

Yeah. Thanks, Warren. Look, in terms of cough, cold, and flu, 130 basis points in the quarter. The way I think about that, I mean, you know, if you think about the majority of that is volume. If I compare it to Q4, where we had 150 basis points impact, so kind of broadly similar overall, but actually the spread, the split across the three regions is quite different. A much bigger impact in terms of North America and Asia-Pac, both of those down double digit. As I said, the way to think about that is from a volume perspective. North America, if you think about volume down overall 2.7%, actually most of that, cough, cold, and flu, and I think the same in Asia-Pac.

The reason why Asia-Pac, you know, is at 4%, as I said, big drag from cough, cold, and flu. I think in EMEA, LATAM, whilst we saw an impact in Central Europe, we didn't see really a large impact from cough, cold, and flu in LATAM. The other two things to talk about, if you look at overall respiratory, remember in respiratory, we have three parts. We have cough, cold, and flu, we have allergy in terms of Otrivin and Flonase, which were both very strong in the quarter, and we also obviously in the U.S. have smokers health. I think when you think about respiratory, you need to break it down into the three parts.

The last thing I would say, I mean, look, over the last two years, we've seen two weak seasons on cough, cold, and flu, particularly in North, you know, particularly overall in North America. If I think, you know, cough, cold, and flu volumes are down over that time, mid to high single-digit, it's not unheard of to have two weak seasons, but it is, you know, it is quite rare. All, you know, everything else being equal, if we look forward, you know, we are expecting to see improvement in cough, cold, and flu, you know, in terms of volume growth, particularly in the back half of the year.

Super. Thank you.

Thank you. Our next question is from Olivier Nicolai, from Goldman Sachs. You may ask your question.

Hi, good morning, Brian, Dawn, and Joe. Two questions, please. First of all, Q1, you saw double-digit decline in smoker health. Nexium also continued to decline. What is the strategy to get these brands back to growth? Would you also consider some portfolio adjustments, which would probably help you to reach your 4-6 midterm targets more easily without those drags? Secondly, just more for follow-up on previous comment from you, Brian, if you look at the Q1 growth, it was 3.5% once you adjust for the cold and flu impact of 130 basis points. Do you expect an acceleration from that level? Could you remind us where this acceleration will come from in terms of regions and categories in the coming quarters? Thank you.

Great. Let me take the first question, Olivier, and then I'll pass it to Dawn for the second question. Listen, no question, smoking category has been a challenge. As we said, it was down double digits in Q1. Overall, the category is down mid to high single digits, so actually there's a category issue there, but there also, as I said in the past, there's a share challenge with private label. Remember, these products are in the $30-$40 range, and with the U.S. consumer being under pressure. That said, we are very focused on stabilizing this business, and we're taking actions, increasing promotions to close price gaps to private label, incremental A&P investment. We're putting all those things in place. There are some green shoots.

To be clear, we're seeing very good growth on in Walmart and Amazon on the gum variant. We're doubling down in those areas to make sure that we can drive more success where we're having success. Obviously, it's a priority for us to stabilize as we move forward, and we have plans in place to do that. Your question on portfolio adjustment, of course, if there's an opportunity for us to strengthen the portfolio by bringing in higher growth assets and potentially divesting assets which aren't as core or strategic, we're absolutely open to that, and we're actively looking at opportunities there. Why don't I pass it over to Dawn?

Yeah. Thanks for the question. I mean, if, you know, when I, when I think about the building blocks for the year, you know, I would expect sequential improvement in growth as we move through the year. You will have seen we've held our guidance full year between 3%-5% organic revenue growth. The way I see the moving parts, obviously Brian's talked about North America. It's great that North America is back in growth, 1% growth. We feel really confident in terms of, you know, continued improvement in that growth rate, whether it's from shelf resets, strong activation, and the rollout of innovation. We have put more investment in North America as well. If I look at Asia-Pac, Brian also talked about, you know, China in particular. India continued double-digit growth.

I talked on the call about the strength in oral health, you know, and excellent execution, we expect that to continue, and mid-single digit growth on China. We're also increasing investment, a very strong performance on e-commerce and further investment going in Douyin. Also even if I look at markets like Australia, very strong activation in terms of our Panadol campaign. That's One for Panadol. I think Asia-Pac, you know, obviously Q1 impacted by cough, cold, and flu, I think the underlying performance and the key drivers remain intact in terms of, you know, strong performance moving forward. If I look at Europe, Middle East, Africa, and Latin America, let me break it down into the three parts because Europe actually it's a challenging backdrop in terms of category and consumer.

Within that, our performance remains resilient, actually, particularly given our strength in pharmacy channel, and I would expect that to continue. If I look at LATAM, a soft, you know, softer macro backdrop, stronger promotions in Q1. So I would expect that to improve as we move through the year. Brian talked about, you know, Andre, you know, new leadership in there. We feel good about that improvement. In terms of Middle East and Africa, actually, you know, a big shout-out to our commercial and supply teams, you know, that we did not see an impact in Q1. Actually, Q1 at high single-digit growth in Middle East and Africa is very strong. I would say in Q2, we have started to see an impact, particularly in terms of consumption, and we are watching that closely.

You know, Middle East probably is the area that remains uncertain. I think the other thing to talk about in that, whilst we haven't seen an impact in Southeast Asia, obviously it is an area that we are also monitoring closely, particularly given higher fuel prices, work from home, et cetera. As I said, you know, holding guidance, 3%-5% growth, organic revenue growth for the year, and sequential improvement in growth as we move through the year, you know, based on the moving, you know, the different moving parts that I've talked about.

Thank you very much, Victoria.

Thank you. Our next question is from Sarah Simon with Morgan Stanley. Please go ahead.

Yes, thanks. Most of my questions have been answered, but just one. Can you give us the weighting of cold and flu revenue through the quarters? That'd be helpful. Thank you.

Yeah, I could take that very quickly. It's roughly a third in Q1, about 15% in Q2, and then about split almost evenly Q3, Q4, about 30% each. Rough numbers.

Great. Thank you.

Thank you. Our next question is from Celine Pannuti with JPMorgan. Please go ahead.

Thank you very much. Good morning. My question on North America. Clearly a pleasing start, 1% growth. Pricing was very strong. Is that kind of level to be sustained or was there maybe less promo because of the weak cold and flu, and what kind of pricing are we expecting for the year? I mean, Q2 is your easiest comparative in North America. Are we expecting a strong bounce back, given what you said on the shelf reset? Are you still comfortable with the 2%, for North America for the year, or you think, maybe it could be higher? I don't know. Pricing, to me seems to be, quite a tailwind then. If you could comment on that.

My second one is on Europe, which clearly seems to have a bit more challenges in terms of the different moving parts that you mentioned, including the Middle East. You flagged that for Q2. Does that, obviously we can't predict what could happen maybe, you know, on the second half. You know, like, how comfortable are you that Europe is picking up in the second half of the year? I presume maybe just to finalize on the point you mentioned on outlook, you said sequential acceleration. Are we expecting Q2 to be within the 3%-5%? Thank you.

Okay, thank you, Celine. I'll take the second one on Europe, and I think you're probably talking Europe, Middle East, Africa, Latin America, in that context, it sounded like. I'll pass it to Dawn for the North America question and maybe the guidance phasing guidance question. Overall, in Middle East, it's 5% of our business. It's not a massive piece of our business. It's 5%. We are seeing consumption softness in a few countries there, no question. We don't know how long the conflict is gonna last or what the ultimate impact is gonna be on that side of it.

As we said earlier, as we're looking at all the input costs and the potential impact of a longer, a oil price perspective, obviously we feel very good about the productivity programs we have in place. Again, they're exceeding our expectations, and gross margin continues to show really strong progress. We feel like we have a lot of flexibility to deal with that. Frankly, we're better positioned than most just because we have high gross margins and lower exposure to those input costs. I think that's the Middle East piece. On Europe, I think Dawn mentioned it earlier too, which is, you know, we're a pharmacy-driven market there, so we're seeing probably less of the impact that maybe others have seen in a, in a more mass market driven.

Our toothpaste business is primarily mass market, but I have to say it continues to perform extremely well in Europe behind all the innovation and everything we've been driving there. Dawn, do you wanna address the North America one?

I think in North America, look, as we move through the year, we'd expect to see a more balanced price volume mix split. I think in Q1, I talked about the drag on volume from cough, cold, and flu. You know, obviously that will, you know, come out as we move through the year. I think from a pricing perspective, I mean, the price at 3.7%, that includes some carryover, particularly in Canada, I wouldn't expect that level of pricing moving forward to the future quarters. As I said, I think for North America, more balanced price volume mix. We've always talked in North America about the two main factors. One is our speed of improvement in terms of execution, and the other one is in terms of the category.

I think what, you know, I think from an execution point of view on what we're seeing in the Q1, actually we're seeing real positive momentum, and we're really pleased actually with the progress in North America. Obviously, you know, as what's also come up on the call is the category. The category remains still challenging, but actually our performance versus the category is improving in North America. When I look at the kind of phasing in terms of quarters, obviously we're not gonna guide to specific quarters. As I said, we expect, you know, sequential improvement in growth as we move through the year.

Thank you.

Thank you. Our next question is from Nicholas Turon with Bank of America. Please go ahead.

Hi, Brian. Hi, Dawn. Dawn, coming back on your comment on the cold and flu season. If we have a normal cold and flu season this year, what kind of growth rate you would expect in H2? That some sort of mid-single digit or double digit? The second question on LatAm, if I may. You expect an acceleration in Q2. Do you think you'll have some selling benefit in that, or is that all consumer driven? Thank you.

Yeah. I think, look, on cough, cold, and flu, I mean, I've already talked about this. You know, if you look, you know, over the last two years where we've had two weak seasons, cough, cold, and flu volumes have been down mid, you know, to high single digit. We would expect, therefore, to see volume growth in the back half of the year. I think in, you know, I think in terms of LatAm, it is a challenging macro environment, but we feel really good about the activations that we've got in place, both in terms of oral health and in terms of Eno. We are expecting, you know, improvement in the LatAm performance as we move through the year.

No, no selling benefit in LatAm? All consumer driven?

Yeah. All consumer driven.

Okay. Thank you very much.

Thank you. Our next question is from David Hayes with Jefferies. Please go ahead.

Thank you. Good morning, all. I'm going to be cheeky and do a follow-on, then two questions if I can. Just on the follow-up on the Middle East, you talked about some indications in the last few weeks of impact. Some companies have called out sort of 50% down in March. We're just trying to get a sense of, is it that kind of quantum that is the risk, or is it much less pronounced than that in terms of what you've seen at the moment? My two questions are just on the sort of price led growth versus the volume performance still coming through.

Is there a need, do you think, to review the price points across all markets, particularly maybe LatAm, to your points early on the competitiveness, and to apply some more competitiveness in pricing into the second half, maybe take SAD down and reinvest even more of the ongoing cost saving that you're achieving? And then the second one on input cost outlook for the second half. Some of your peers have sort of said if.

If oil, et cetera, stay as they are, they kinda give it a bit of indication or additional headwind. Is there anything you can give us on that in terms of the dynamics for the second half on cost? Thanks.

Thanks, David. Let me address a couple of things and pass it to Dawn, and you can talk the input costs and the headwind and stuff. First of all, Middle East Africa, we are seeing consumption down, like double-digit, but like, below teens, so to give you a range. We're not seeing 50% for sure, but we're seeing softness in the business, and that's why we wanted to call that out. Listen, on pricing and price gaps, we are focused on driving growth. If there are opportunities exist for us to tweak pricing, to tweak price gaps, we're gonna do that, and we're gonna make that happen.

Just a bit of a case study, I was in Brazil a few weeks back, and we have adjusted some of our price gaps for some key competitors and markets where maybe they got a little out of whack, and we saw almost an instantaneous kind of volume growth. We're on top of that. I don't see major pricing reset or anything like that, but where there's opportunities to tweak and make sure we're doing it. Because the gross margin savings improvement is so strong, we have the flexibility to do what we need to do to get the business where we want it from a growth perspective. Dawn, do you wanna talk.

Yeah.

I think, look, in terms of input costs, I mean, we are really well-placed because we've got a strong supply chain productivity program that is progressing really well. In terms of our exposure, so if you think about our cost base that's exposed to crude, it's about 3% of our revenue. If I look across total commodities, you know, including gums, vitamins, that's around 10%. We have fixed price contracts and hedging in most areas until the end of the year. What we have seen in the Q1, we've started to see the impact. We started to see surcharges on freight, quite small, but I would expect that to increase in the Q2 and also in the second half of the year.

As I said, I think, you know, we're really well-placed in terms of the strength of our productivity program, and that's why we've maintained our guidance full year for high single digit operating profit growth.

Thank you.

Thank you. There are no questions waiting at this time. I'll turn the conference back over to Brian McNamara for any further remarks.

Thanks, everyone. I appreciate you all, joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. Please feel free, as you always do, to reach out to the IR team if you have any further questions. Thanks for the continued interest and support in Haleon. Have a good day.

Thank you. That concludes Haleon's Q1 trading update. Thank you for your participation. You may now disconnect your line.

Good morning. Thank you for attending today's Haleon's Fiscal Year 2025 Results question-and-answer. My name is Sarah, and I'll be your moderator today. [Operator Instructions] I would like to pass the conference over to our host, Jo Russell. Please go ahead.

Good morning, everyone, and welcome to Haleon's Full Year 2025 Results Q&A Conference Call. I'm Jo Russell, Head of Investor Relations, and I'm joined this morning by Brian McNamara, our 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 that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's U.K. and SEC filings for more details, including factors that could lead to actual results to differ materially from those expressed or implied by such forward-looking statements. We have posted today's presentation on the website this morning, along with a video running through the results in detail. So hopefully, you've all had a chance to see that ahead of this call. And with that, let's open the call for Q&A, and I'll hand back to the operator.

[Operator Instructions] Our first question is from Guillaume Delmas with UBS.

So one question. So my one question is on your organic sales growth guidance of 3% to 5% for 2026. I mean it does seem to signal some sequential acceleration relative to the 3% you posted last year. So wondering what will be the main drivers behind this sequential improvement? I mean, is it predicated on category growth accelerating and/or your level of outperformance gaining further momentum? And then related to this, Brian, you reiterated your medium-term ambition of 4% to 6%. I guess what underpins your confidence in the 4% to 6% when you may be delivering an organic sales growth below the bottom end of that range for now 2 consecutive years?

Thanks, Guillaume. I appreciate the question. So maybe let me take the 3% to 5% guidance, and I'll go to medium-term view. So if you take a step back and let's look at 2025, we grew 3%. That clearly was below what we were expecting when we were at Q3 based on the cold and flu season. But the U.S. was down about 0.5%. APAC and EMEA, LatAm grew mid-single digits. Now we did experience a market slowdown. A vast majority of that was obviously what we've talked about in the U.S. market and then the cold and flu category, which I mentioned. Now remember, 70% of our cold and flu business is also outside the U.S. So in that context, we did deliver competitive performance. We outgrew the market overall and 60% of the business gained and maintained share. Looking at 2026, we're not planning on material improvement in the market. Consumers are likely to stay cautious. We're absolutely focused on driving category growth. I'm confident we will continue and improve on our competitiveness. And that's through investment in A&P, strong innovation plan, sharper commercial execution behind our new operating model. And listen, the U.S. will return to growth in 2026. And that's based on the progress we've had to date. We ended the year where we expected to with inventories at the right place. And that's -- part of that is we did have softer cold and flu, but we had stronger Oral Health business, which helped offset that. And we also have plans in place that we know is going to help us improve through the year. So for instance, in Q2, we have a lot of key customers doing shelving resets. We're gaining distribution. We're gaining shelf placement. On the profit side, the productivity program continues to deliver. You saw the 220 basis points of gross margin improvement. We feel great about that. That, combined with the efficiencies coming from the operating model, will allow us to deliver high single-digit operating growth at constant currency and still invest in growth, still invest in A&P, R&D and some key capabilities that we're continuing to build on. So now if we step back and think the medium-term guidance. I mean you said it, the guidance doesn't necessarily mean we're going to be outside the range. But obviously, part of the guidance is outside our medium-term range. I think it's an acknowledgment of the uncertain market we're dealing with. Based on what we know today, we'd expect to be in the middle of that range, based on what we know today. You also asked about the phasing. What we do know today is that Q1 cold and flu season is going to be below a year ago. We're now almost 2 months into the quarter. And the results, we saw a spike towards the end of the year, and then we saw it come down after that. So we're going to be below a year ago, and that's not only in the U.S., it's outside the U.S. My confidence, listen, these are still attractive categories. I still believe there's huge potential. Everything we've talked about in the past, closing the instant treatment gap, success of our premiumization continuing, the low-income consumer opportunity, which we're still only at the beginning at. And as we progress through 2026, I expect to see stronger performance in North America, as I said and continued strength in emerging markets. We feel good about China, and I expect an acceleration in India. Actually, India for us is performing extremely well. And then as we continue to drive that productivity agenda, again, we will be able to continue to invest in the business, which again underpins my confidence in getting back to that 4% to 6% growth.

Our next question is from Warren Ackerman from Barclays.

It's Warren Ackerman here at Barclays. Outside of the numbers, Brian, could you talk about the new reorganization? You've got a new Chief Growth Officer, Chief Transformation Officer, new reporting structure, new hires in the U.S. other than Natalie I've seen. Can you maybe sort of walk us through how that's going to be a growth unlock and how you'll drive more volume growth in the U.S., more innovation? Anything you can say on sort of shelf resets and how the things are shaping up in the U.S. in what is clearly a tougher operating environment?

Thanks, Warren. And I think you captured it. This is first and foremost about unlocking growth and agility. And I think about the journey we've been on as a company, we're now 3.5 years in as a company. The strategy we laid out is very clear. And there was still an opportunity for us to streamline and simplify the way we work and drive strategy to execution. So as you said, we created this Chief Growth Officer role that combines our category structure, our marketing effectiveness and capabilities, our business insights and analytics strategy and a new commercial excellence function. And then 6 operating units replacing our 3 regions. As you're aware, Latin America, India and Middle East, Africa will now have a seat around the leadership team table. So I think a couple of things. It's one on the commercial execution function that we've created. Centrally, we're driving AI-driven tools behind net revenue management, next best action. We're going to be able to drive this quicker and faster through the organization. This structure of CGO, the 6 operating units, is going to allow us to really, really much quicker drive our category strategies through to execution, better leverage scale, better be able to move resources around, react to, what I would say, as you said, a very uncertain environment. And then as a result of it, we're taking a layer out of the organization. So we're talking about a flatter, leaner organization, and that leads to the $175 million to $200 million in gross savings we talked about, which gives us incredible flexibility, frankly, to invest in those growth opportunities and to invest in innovation and drive the capabilities. Now your question on the U.S. -- specifically on the U.S., yes, well, first of all, overall in the team, we did, as part of those changes, bring new members of the team. We got a fantastic leader in India, a fantastic leader in Latin America that came from outside the company who know these markets extremely well. Our Middle East, Africa leader is now sitting on the leadership team, and she's an incredible talent. In the U.S., as part of all this, Natalie made a number of changes in our category heads or category general managers. So we have one of our top talents now on the OTC business. We brought external talent in Oral Health and in the Wellness category, which is a combination of VMS and Digestive Health. I mentioned it a bit earlier, Warren, but we know that in Q2, we will see across a number of key customers, some wins on distribution and shelving across Oral Health, VMS and Pain Relief, and that's locked. That's going to happen in Q2, and we feel good about that commercial execution. We also feel good about the innovation. The one thing I will say, it's broadly across the business, specifically in the U.S., Oral Health is doing incredibly well. And it really did better in Q4 than we expected, which again helped us offset, land the U.S. where we wanted to despite the tough cold and flu season.

Our next question is from David Hayes with Jefferies.

So just on emerging markets, there was a sequential slowdown in the fourth quarter. So just trying to dig a little bit deeper into whether the emerging is performing as you would expect it to be, like it to be at the moment. And then which areas specifically maybe are not doing as well? And I guess in that context, Oral Care continues to be amazing and impressive, obviously, still in this difficult consumer environment. So is there something different about Oral Care and the dynamics there versus some of the other categories ex Respiratory because of the cold and flu? But it feels like Oral Care could ride the consumer dynamic whereas the other brands can't. Is there something you point to that says that this is what's going to change as the consumer maybe picks up in the other areas?

Yes. Thanks, David. So listen, I will take the Oral Care question linking to other categories, and I'll pass it to Dawn to talk about what we're seeing more broadly in emerging markets. So first of all, we do feel really good, as you pointed about around Oral Care. And as we've been talking about now for a while, the clinical range in Sensodyne has really resonated well with consumers. And it's beyond clinical white, it's clinical repair, it's clinical enamel strength. Beyond that, we're seeing great progress in places like India with low-income consumer on Oral Health. And Parodontax is an amazing brand in gum health. We don't talk about it as much as Sensodyne. It's obviously not as big, but it's growing in the strong double digit in the mid-teens. We launched in China this past year. It's still quite early in our ramp-up for distribution, but we couldn't be happier with the progress that we're seeing there. So we feel great about Oral Health. And the Oral Health model is very, very clear. It's linked to the dental recommendation. It's linked to the innovation. And obviously, we compete on the therapeutic side of the business. Listen, in the other categories, quite -- listen, when we talk about the impact of cold and flu, to be clear, we talk about our cold and flu portfolio specifically, which are brands like Theraflu and Robitussin and Otrivin, which sit in that category. There is also impacts across other areas like Pain Relief and some VMS and things like that tend not to be as much but there does tend to be a little bit of that impact that happens, too. Fundamentally, I believe these are real strong categories that as we move forward, we can move ahead. I think we're just radically differentiated versus the competition in Oral Health in a way that's very, very unique. We're talking about now over 10 years of kind of high single-digit to double-digit growth in Sensodyne, and we continue to see that continuing to hum. And we're seeing good competitiveness in the other categories, but we're continuing to focus on innovation, things like our 12-hour patch launch on Voltaren in a number of European countries. Otrivin Nasal Mist continues to do well. We're growing aggressive share there. Our OptiSorb technology on Panadol, we're rolling out to another [indiscernible] market. So we feel like we have a good innovation plan that should underpin our -- certainly our medium-term guidance. Dawn?

Yes. Good morning, David. Hi, everyone. So let me talk a bit about emerging markets because we feel really excited about our emerging markets business. If I look at Asia Pac, first of all, I mean, we continue to deliver strong performance in Asia Pac. We expected an acceleration in half 2 versus half 1, and that has come through. And when I look at the growth drivers in Asia Pac, 80% of our growth is coming from volume mix. And that is a factor of us driving penetration and expanding reach across lower-income consumer groups. If I look within Asia Pac, let me talk about India. I mean, an incredible performance in India, double-digit growth in the year, an acceleration in quarter 4 on the back of the macro changes around GST, but also on the fact of our activations. If I look at our INR 20 pack and Sensodyne is performing incredibly well. We continue to expand our reach across rural areas, across villages based on our investment in terms of bringing our sales force in-house. And actually, I was out in India the first week of this year, and it was great to be on the ground with the team, visiting stores and really seeing our brands come to life. So that was India. If I look at China, we're also really excited about China, mid-single-digit growth in the year. And just some pockets to talk about. If I look at our e-com business, it's around 40% of our business in China. And Douyin, we're growing more than 100%. And our online to offline business is also growing double digits. So actually, we feel really good about China. If I move on then to EMEA, LatAm. EMEA, LatAm, actually, we've seen a good performance, particularly across LatAm and EMEA, Middle East and Africa as well as Central Europe. But it is fair to say that whilst we've seen a good performance, particularly in LatAm and specifically Brazil, we are seeing a much more challenging macro backdrop, both in terms of the consumer behavior, but also in terms of retailer behavior as well. So we did see a slowdown in LatAm, particularly in quarter 4. And if I talk about kind of Middle East, Africa continues to perform well. Central Europe also has seen a good performance. But again, based on the soft cough, cold and flu season in quarter 4, we saw a slowdown in Central Europe because of that. But overall, as I said, we're really excited about emerging markets. It's a huge growth opportunity for us. When I look at our A&P investment, half of our increase in A&P investment in the year actually went to emerging markets, and you can see that coming through in the performance.

Our next question is from Celine Pannuti with JPMorgan.

My question comes back on the overall guidance and how you manage top line performance versus margin improvement. Clearly, strong delivery in margin and your cost savings initiative augurs well for the years to come. At the same time, your top line has disappointed. And if I look at the past 3 years, volume has been 1%, which is quite low compared to the overall European staples, best-in-class are trying to achieve at least 2% and above. So in order to grow 4% to 6%, what kind of volume level do you think you need to have? And how do you -- like the discrepancy between margin progression and volume performance, does it mean that you may need to reinvest more or maybe look at your price positioning in order to grow volume faster?

No, thanks for the question, Celine. So let me kick that off, and then I'll pass it to Dawn to give a bit more perspective. I think if you take a step back, I do think we're investing in the right places on the business. If you look at our A&P investment in the last year, we were over 7% ahead of a year ago, and R&D was over 7% ahead of a year ago. That is the absolute benefit of the gross margin improvement and the improvements we've seen in our supply chain and structure, giving us 220 basis points of operating -- of gross margin improvement, which is allowing us to invest in the business. We continue to focus on where is the best of that investment. By the way, a lot of that incremental investment this year went against Oral Health, and you see the results that have come out. And we understand that in a lower cold and flu season, also while we can gain share, we're going to have a very difficult time driving volume overall. But maybe, Dawn, you can talk a little bit about how we see the algorithm going forward and where we see the role of volume growth, which we're very focused on volume growth. So Dawn?

Yes. Thanks for the question, Celine. And you're right, and Brian mentioned it, we are very focused on driving volume growth in 2026 and moving forward. We've always said that the right price volume mix split for this business is around 60-40, 40-60. I already talked about Asia Pac in terms of 80% of that growth is coming from volume on Asia Pac, and we feel really good about that. When I look at EMEA, LatAm, if I take out the two shoulders of the year, so if I take out Q1 and Q4 for 2025, where we had a soft cough, cold and flu season, actually, in Q2 and Q3, we did see a more balanced price volume mix profile. And that obviously should give us confidence moving forward that we can deliver that. And then if I look at North America, look, it's been a really challenging market in North America in 2025. But as Brian has talked about, we have put in place the key actions to drive volume growth in 2026, whether it's about us no longer doing destocking, whether it's about reducing the drag from smokers health, the distribution builds that we expect to get from shelf resets as well as the strong activations. These are all important drivers in terms of driving the volume growth. So whilst for '26, I'm not going to guide to specific volumes, I would expect us to be improving the split of price volume mix in '26.

Our next question is from Olivier Nicolai with Goldman Sachs.

I got one question first. Could you go back to the change you have implemented in the U.S. over the last 12 months and specifically also the incentive structure you put in place for the new management there? And just following up on the press release on Page 5 regarding the overall equipment effectiveness. It has improved by 7 points in 2025. It's a bit lower than what you expected at H1. Should we assume a stronger improvement in '26 compared to '25 on these metrics?

Yes. So thanks for the question. Let me talk a bit about the U.S. As you know, we announced a new leader in the U.S. in May. As we looked at our operating model structure broadly, we worked very closely as an executive team to define that. I talked a little bit earlier when Warren asked the question about that and we worked that very closely with the U.S. So one of the things we've done is we've created [indiscernible] category General Manager role, which obviously report directly up to our President of the U.S. and also are connected to our global category heads, which is going to help us really drive kind of this strategy to execution even faster. We're making a number of changes around net revenue management and the tools that we're providing. We've made a number of changes in our sales force and our sales leadership and structure. And all of that was really pretty much done on January 8 when we announced the broader stuff in the U.S., you obviously move much faster on those kind of changes. So I feel really good about those changes and how they're going to drive growth. And as I said, we've seen progress to date. There's no question about it. We ended up again where we expected to. Inventories are kind of where we expected to. Oral Health has been extremely strong. Advil grew share in Q4. So that was a really important element. We're seeing -- we see these opportunities on the distribution and stuff that I talked about in Q2. So I feel like we're in a very good place to really drive those changes in the U.S.

Yes. And I think, look, in terms of the productivity program, Brian talked about it, we're really pleased with our supply chain productivity program. It was even better than we expected. I mean, 220 basis points improvement in gross margin is incredible in the year, and it is a collective effort across the whole organization. And that's important because it helps to drive flexibility and agility in the P&L to be able to invest for growth. And if you remember, we talked about 3 drivers of how are we going to deliver that gross margin improvement and productivity benefit. The first one we talked about was immediate accelerators. So this was reducing complexity in our supply chain, whether it's around number of languages on pack, harmonizing packaging, formulations. And let me give you an example. So in Europe, in 2025, on our Aquafresh brand, we had 44 single language packs. And we've now reduced to 18 multi-language packs in the year. And that is a huge optimization piece in terms of supply chain. The second area that you referenced in your question was around operational efficiency. And this is all about debottlenecking upfront, process improvements, equipment optimization. And let me give you an example of that. In our Levice factory in Europe, we reduced formulations by 30%. So if you think about the impact of that, that reduces change over time, but it also increases the capacity, the available capacity on that line, which is really important. So I think, as I said, it's an incredible effort that is helping us to continue to invest in the business to drive growth. Moving forward, I wouldn't expect to see, it would be great if we had that level of improvement each year. But moving forward, 50 to 80 basis points is what we've built into our guidance. That will be a strong performance on supply chain productivity.

Our next question is from Jeremy Fialko with HSBC.

So the one for me is more on the U.S. market more generally. So the first element is just the pharma channel within the U.S. Do you see that continuing to be under pressure in 2026? Or do you think with some of the ownership changes there, there's the possibility that the channel could become a little bit better in some of the broader drops there, which have, I guess, led to pressure on inventories and overall sell-through could abate? And then maybe if you look at the U.S. more broadly, is it just a case of waiting for the consumer to get a bit better before the market growth can improve? Or are there some other elements that you think are kind of specific to the market getting a bit better, let's say, putting aside any cold and flu impacts?

Thanks, Jeremy. Thanks for the question. Let me take that. I think as you talk pharmacy channel, really, what we've talked about is the 2 big retailers in the U.S., which is Walgreens and CVS. What I can say is we see the channel shift that we've seen for many years, which is drug channel and obviously, e-com. E-com growing quite aggressively and that's walmart.com or that's amazon.com, that will continue. The dynamic we saw in 2025 was lower inventory levels in those retailers as they were dealing with their own challenges. We believe we're where we need to be, and now we're just managing normal channel shift as we can. And by the way, that channel shift is not a bad thing for us. If we look at our Amazon shares, 18 brands on Amazon account for 90% of our business on Amazon and 16 of those 18 brands have higher share online than offline. So as that channel shift moves, it's something we can take advantage of. We have good capabilities there. So we feel good about that channel shift. Yet to be seen what happens under new ownership at Walgreens, if that's a positive or not a positive. But again, I don't feel like this is a situation that if gets worse, we baked it in. We proactively managed our inventory levels to try to be at a place where we felt good about so we can stop talking about it as we move forward. In the overall market, you said ex seasonality, so I will take that out because there's certainly a seasonality impact that we're kind of seeing. Listen, what we see in the dynamic is we see club channel doing a bit better, dollar channel doing a bit better as consumers are looking for more value. Some consumers looking for lower price points, some consumers looking for -- different consumer want value, higher price point, lower price per use. We're very focused on those 2 channels and increasing our offering to make sure that we're meeting the affordability issues of consumers in the U.S. And we believe we can also play a role, and we do play a role certainly in Oral Health in driving that category growth. So we're not sitting back and waiting for the categories to change. We're just acknowledging that we -- there are some things we can't control. We're focused on competitiveness, growing market share. We feel confident in that, and we're focused on driving that category growth where we can.

Our next question is coming from Sarah Simon with Morgan Stanley.

Just one question from me. How important is it in terms of securing shelf space and sort of with your retailer negotiations to have that cold and flu business? Because I think in your bit to become a sort of steady compounder with predictable top line, this is obviously the kind of bit that's causing the biggest issue. So I'm just wondering how much do you need to own that business?

Okay. Sarah, thanks for the question. Let me take that. Listen, I think cold and flu plays an incredibly enormous role in consumer health and for consumers. And if you look over the history, I've been involved in the -- in consumer health now for over 20 years. So I've seen quite a few cold and flu seasons. This year, we're seeing kind of two seasons in a row that are down because if you remember last year, we were down. We know that Q1 is also going to be down. It doesn't happen that often, but it has happened in the past. We've experienced that in the past. I believe if you look over time, you're going to see growth in this category going forward. It's a bit exasperated this year because we are dealing with multiple headwinds in the U.S. environment, which this has compounded on. But I think it's a very important category. We feel good about our positions in the category and our portfolio. I think it's going to -- it plays a very important role for our customers, too, as you were saying, this is category management around pain and cold and flu. And frankly, cold and flu and pain have some common brands, Panadol Cold and Flu, Advil Cold and Flu. So we think it's an important part of the portfolio as we move forward.

Our next question is come from Karel Zoete with Kepler.

I'd like to go a bit deeper into 2 categories. The first one is the Digestive Health business. Historically, a good business for you, not so seasonal, but we've seen a slowdown in '25. What should we anticipate for '26? Why should things get better? And then coming back to pain, I know there's a bit of cold and flu impact in there. But if you zoom out, 2024, '25 have not been great years for pain despite of some of your strongest franchises such as Panadol in Asia are there. So what is needed for the pain franchise to start performing more in line with the anticipated growth rates?

Okay. Thanks very much, Karel. I appreciate the questions. So let me start with Digestive Health. If you think about our Digestive Health business, just to get us grounded, it is -- over 80% of that business is focused in 3 countries: U.S., India and Brazil. In India and Brazil, it's ENO, which is a fantastic brand and does very well in both cases and is part of our strategy and our growth strategy, certainly in both those countries and certainly in India. So now you get to the U.S. where we have Tums, we have Nexium, brands like Gasx and XLax, Benefiber, which is a fantastic brand. We have seen a drag on Nexium in the U.S. There's no question that is one brand in one category, and we're not alone in this that has been impacted by private label. If I zoom out and look at the U.S. overall, we've gained share versus private label. But Nexium has been a bit of a challenge there. One of the opportunities we see in Digestive Health, and we feel really good about and we're now working is supporting consumers on GLP-1s because there's multiple side effects on GLP-1s that brands like Tums and brands like Benefiber address. There's also side effects like dry mouth, which we have a mouthwash brand. We don't talk about much in the U.S., Biotene, which is actually quite effective in dry mouth. And there's nutritional supplementation, and we've actually created the Centrum variant that's specifically focused to GLP-1 consumers. So we see an opportunity across our categories to drive that. Tums is a tremendously performing brand and so is Benefiber. We have dealt with a little bit of a drag from the Nexium side of the business. Listen, on Pain Relief, it's a great portfolio. I mean, Voltaren is #1 topical analgesic in the world. By the way, we talk about -- a lot about the topical. We also have a very strong patch business. I mentioned earlier, we're launching 24-hour patch in a number of markets around the world, and we're seeing quite a successful pickup of that. Panadol has done quite well in Asia. We don't have quite the same strength of a systemic pain relief business through Europe, and we're addressing that. We're launching there. And the big thing is on Advil. Like I said, we're growing Advil share in Q4. We're really confident that now with the new structure, with the new focus, our ability to invest and everything else that will get Advil back to a more consistent performer. That's going to be important for us. So that's one of the things we need to make sure that we drive and deliver on the business. But overall, listen, we've always said the OTC categories in general would be 2% to 3% growth categories, and we could outgrow that. They've seen a little bit of headwinds here and in the U.S. as all categories have been a bit muted, again, not super declines, but a bit muted. So we're addressing that, but we feel very good about that franchise and the global nature of that franchise.

Our next question is from Edward Lewis with Rothschild & Co Redburn.

Brian, just returning to the medium-term guidance. Should we think that getting back to that range is all about the U.S.? Or do you think you can deliver against that with a structurally slower U.S. market but greater contribution from the rest of the world, given the confidence you're obviously expressing about India and China?

Yes. So listen, as I think about the medium-term guidance, I do expect that the U.S. will perform better. There's two things. We've outperformed the market, to be clear, in 2025. But do I feel like the performance is -- we're hitting it on all cylinders? We have not. We can do better. Just outperforming the market isn't enough, and I am confident we can do better. So we do expect an improvement in that U.S. environment. And I believe over the next couple of years, we'll get that U.S. environment, if not too close to the bottom end of our algorithm growth. Outside of that, we also expect that, again, over time, emerging markets will continue to be a strong contributor and the low-income consumer strategy we have, which is taking hold in certain places, and we're learning a lot, to be very clear. And that takes a bit of time to kind of build up to be significant, and we see those opportunities. So overall, I do feel the medium term of 4% to 6% that nothing has fundamentally changed versus what we have said and what we've said in the past about our strategy and our opportunities. What you're hearing from us this year is 3% to 5% because the market is still quite uncertain, and we want to make sure we're providing the proper context for everyone on where we see things are at. And again, where we sit now, knowing Q1 is going to be softer due to cold and flu, middle of the range is kind of where we're at on that, and we'll update as the year goes on.

Our next question is from Tom Sykes with Deutsche Bank.

One quick follow-up and one on A&P, please. Are you able to quantify the shelf space stocking benefit that you'll get in either Q1 or Q2 in North America, please? And then just on the A&P spend, I mean, there can't be many consumer companies that have increased A&P by almost 8% to 20% of sales and still running at negative volumes. So where is the A&P ineffective? And where is it effective? And does it make much of a difference in your non-oral care businesses at the moment? And can you talk about whether you're allocating more of that A&P increase to oral care or to non-oral care, please?

Thanks, Tom. Thanks for the question. Let me take the U.S. stocking, and I'll pass it to Dawn on the A&P question. Listen, we're not going to guide to specific improvements on the shelving increases. But let's just say it's part of the thing that gives us the confidence as we progress through the year that we'll see stronger results because it's real. Consumers will see more of our brands. We will have a bigger shelf space and in a number of cases, we'll be at a better visibility point in some key resellers. Dawn, do you want to talk about A&P?

Yes. Look, thanks for the question. And I think it also builds on one of the comments that Celine talked about in terms of the margin profile as well. So let me say a few words about that. I think, look, it's often easy for companies to cut A&P when the market is more challenging. We have not done that, and we haven't done that because we're really focused on ensuring the long-term sustainable growth for this business. So we -- you're right, we've increased A&P 7.5%. We've increased R&D 7.7% in the year. And we invest in our brands at a healthy and the right level to drive that sustainable growth. So if I kind of give a bit more color behind that. So what -- where has that increase in A&P, where has it gone? We've already talked about it. Half of that increase went to Oral Health. You've seen the growth momentum on that this year in terms of high single digit and acceleration in Q4 and the ROI on that Oral Health is incredibly strong. The other half, I referenced it earlier, went to emerging markets. So India, D-com in China, and that's really important. And the third area actually is around experts. So expert is a critical part of our business model in terms of the work that we're doing around the Haleon Health portal, where registrations have increased 27% in the year and on our field force engagement, which has also increased 16% in the year. So that's where the spend has gone. The other thing that we are particularly focused on as well as ensuring it's the right level is also around the return, the efficiency and the effectiveness. So in the year, we've improved our working, nonworking split, so 12% growth in working media. We've also increased our overall ROI mid-single digit, and we've increased the coverage, the global coverage to around 3/4 of our business. The other thing that we're focused on is also the mix. So 60% of our working media is allocated to digital. And that's an important balance for us as we think about the shift in the broader economy. So I would say, overall, look, it's an important focus area for us. We invest at a healthy level, 20.5%. I feel really good about that. And we also continue to focus on improving the efficiency and effectiveness of our spend as well as ensuring that we are shifting and having the right mix around digital versus legacy.

Okay. Super. Thanks, Dawn. Listen, I think we are going to close the call now. So thanks, everyone. I appreciate you joining us today. Look forward to catching up with all of you in upcoming meetings and roadshows. And please feel free to reach out to the IR team if you have any further questions. Really appreciate your continued interest and support in Haleon. Thanks, everybody.

Thank you. That concludes Haleon Fiscal Year 2025 Results Q&A. Thank you for your participation. You may now disconnect your lines.