Good morning, everyone. Thanks very much for joining us for our Full Year Results Q&A. Hopefully, by now, you've had time to look at our presentation as well as the press release and watch the video in the Investors section of our Haleon website. As usual, I'm joined by Brian McNamara, our CEO; and Tobias Hestler, CFO. So, with that, we'd like to get started with Q&A and hand over to the first question. Thanks.

Hey guys, good morning and thanks for taking my question. Congrats on the results. Two for me please. The first one in terms of absolute margin developments, you're calling out 3% transactional FX impact and another 3% from M&A. So that's about a £150 million headwind. I think you likely get about £100 million from cost savings to partly offset that, some more from kind of operating leverage. So, you've taken some pricing obviously in the back half of last year. Can you just talk about how you expect gross margin to develop over the year? How much of the £100 million in savings you plan on reinvesting, etc.? Just trying to get a sense for the margin evolution over the year? And then my second question just on the shape of the P&L for this year. You've given guidance on Q1. But how should we think about the different moving parts over the year in terms of price mix and volume? Again you're still benefiting from some carryover pricing, so do you expect growth to be price-led again? Do you plan on taking more pricing? Any color there is helpful. Thank you very much.

Okay. Thanks Rashad. Tobias, I'll pass that to you.

Great. So, on your margin question for 2024. I think we've given you, as you say, the building blocks with translational FX down by about 20 bps. That's largely driven by the dollar and the euro. That's a big currency impact. Of course, we'll update you as we go through the year and our ad memo each quarter on how that evolves. We've given you the M&A building blocks, which is down 1% and 3%, so that gives you another 40 bps of negative margin. As you said, we're very confident in our guidance. One, we're very confident in the 4% to 6% sales growth guidance, but we're also very confident in being able to grow organic profit ahead of the rate of sales growth. If you look at what we delivered in 2023, we delivered 60 bps of margin improvement. So, operating profit grew nearly three points ahead of the rate of sales growth. On your question about how to see this going through the P&L line: we expect gross margin to grow ahead of the rate of sales growth. You've seen that come through in Q4, where gross margin was up 70 bps, given easing of inflationary pressures and the pricing coming through a little bit of help, as we didn't have the recall we had in the prior year. So, overall, I think the algorithm will start working for us. As we mentioned, the productivity program we said about a third of the £300 million is expected to come through, but it's not going to drop to the bottom line because we want to have the flexibility to invest in the business. Investing in the business for us means: one, systems tools processes, because we need to make the business more agile and faster, and we really need to reinvest in the business. Secondly, investing in R&D and clinical trials - we saw great results last year on VMS trials, Centrum, and other things we have done. There’s a significant opportunity for investment there. Lastly, investing in advertising and promotion, because we want to grow that more than we did in 2023. All of this, combined with the productivity program and gross margin going up, gives us confidence that we'll have operating leverage in 2024. On your second question about pricing and volume: first of all, we've grown volume throughout the year, not just last year but also throughout the prior year. So, we've delivered a very resilient business and have been very mindful of how much pricing we took. Last year, 85% of the growth came from price, and 15% came from volume. In the longer run, we want to be back to about a 50-50 split between the two. 2024 will be a stepping stone in that direction but won’t be back to 50-50 yet.

Thank you very much.

Thank you. Good morning to Brian and Sonya. So, I've got two questions. The first one is on your respiratory health division, which had a very strong finish to the year, quite in sharp contrast to most of your listed competitors. So could you maybe shed some light on this surprisingly strong performance in Q4? Also, were there any one-offs or particular sell-in, sell-out discrepancies that could explain this good Q4? My second question is on your VMS operation, as there's been clear improvement toward the end of the year led by Caltrate in China, Centrum, and some stabilization for emergency. So with additional marketing support put behind this business and against the backdrop of improved category growth, would it be fair to assume that VMS should return to its medium-term ambition of mid to high single-digit growth as early as 2024? Thank you.

Thanks, Guillaume. I'll take those questions. Let me start with respiratory performance. I think you're right. We did see good growth in Q4 of our respiratory portfolio, just under 11%. It was 7.5% in the back half. One of the reasons those results differ from some of our competitors has to do with our portfolio and geographic footprint. For example, the US is about 32% of our respiratory business. In the US, our business was basically flat in respiratory, while the market was down kind of mid to high single-digits. So, 68% of our businesses are outside the US, and we saw much higher instances in some other geographies, specifically places like Central Eastern Europe, Japan, and Turkey, where we performed quite well. Looking ahead, we're expecting a more normal season, which is always a debatable question. We shared some slides in the presentation that showed you that the US environment is getting back to pre-COVID levels. We expect this business to fluctuate plus or minus a half to a percent on a very extreme good or high season or low season. Regarding VMS, we continue to see normalization in that category. Tobias shared some market share slides in the presentation showing that Caltrate and Centrum have both done quite well. We also have seen growth in Emergen-C, which maintains its market share. While Emergen-C is in a declining market, we're seeing stabilization as we head toward the end of the year. Overall, we're feeling optimistic about this category. I'm not giving any specific guidance for next year, but we believe the category will return to pre-COVID growth levels, driven partially by strong performance on Centrum, particularly supported by our clinical study that shows Centrum Silver increases cognitive function by 60% among the population of individuals over 60 years old. This has been a differentiator in the marketplace, so we're excited about these developments in VMS.

And let me add one thing regarding the cold and flu topic. Another differentiator for us is in our product portfolio. We have TheraFlu and NeoCitran, which are hot drinks marketed in Europe and Canada that tend to perform better in seasons with more flu-like symptoms. I believe the types of bugs that were prevalent, especially in Europe in Q4, were of a heavier nature. So, that also helped us. I think it demonstrates the strength of our geographic portfolio and the diversity of our product lines, which contributes to the resilience of this business.

Very clear. Thank you.

Thank you very much. A couple of questions from me if I may. Firstly just to go through that margin point again to make sure I understood you correctly. So you've quantified the headwind from portfolio and FX effects. That's the 60, 70 basis points headwind. You've got some cost saves, but I assume that a lot of those will be reinvested to further drive growth. So effectively, in order to get margins flat for this year, we probably have to assume that organic margin expansion would be, let’s say, 50 bps plus. Which I guess is possible, but it might be a bit of a stretch. So perhaps as we think about reported margin this year versus 2023, we should be thinking about it as maybe flat to small down. Would that be a fair characterization just to make sure I understood you? Secondly, on the capital return that £500 million buyback, very welcome. Is that something that you will be doing through the year as a kind of everyday buyback program? Or is that £500 million buyback headroom something that you will hold in your back pocket to potentially allow you to participate in any future placings? Thank you so much.

Thanks, Iain. So on the margin, I think first of all, you should knock on to guide on the reported margin. There are two pieces in the reported margin. One is the translational FX that will be moving up and down throughout the year. The numbers I've provided are reflective of the dollar and the euro impacts as mentioned earlier. M&A is also fluid; we might have acquisitions or divestments, and the timing of those will fluctuate. Again, we'll keep you updated. In terms of organic profit growth, I think you should take some comfort from us being able to deliver 10.8% organic profit growth against organic sales growth of 8%. That was in a year where gross margin was down as a percentage of sales. In 2024, I think we have more room to reinvest. We expect gross margin to grow ahead of the rate of sales growth, which should provide some buoyancy in your margin considerations. Yes, we'll continue to experience inflation pressures, but they are lower than before. My view overall indicates that this growth model is working and delivering results. As for the share buyback, because our growth model is effective and our strong cash conversion is leading us to this decision, we’re able to execute our new capital allocation priorities about a year earlier than previously committed. Thus, we announced both an increase in the dividend and the commitment that the dividend will grow at least in line with earnings. Regarding the £500 million buyback, we plan to execute this throughout 2024, either in the open market or buying it back from GSK or Pfizer, depending on their listing decisions. Clearly, engaging in placings would be preferable for discounts that come with that but ultimately, that decision rests with Pfizer and GSK. If placings happen, that’s where we believe the highest shareholder value will be created. However, if placements don’t materialize, we will conduct them on the open market. This flexibility is crucial for us.

Very clear on the margin, and congratulations on cranking the cash machine. Thanks.

Hi. Good morning, everyone. A couple of questions from me. Following up on the cash question, clearly, you've done some divestments; you're under no pressure to do divestments, but you're talking in the statement about sort of active portfolio management. On the acquisition side, there hasn't been much on that front. Are you now in a position? Do you have greater capacity to pursue deals? Was it just an issue of availability and price that has perhaps limited activity on that side? Regarding India, could we just have a bit more detail on that? I mean, India sales were up high single-digit, but Sensodyne was up double-digit, implying the rest of the portfolio was quite a bit slower. Can you give us a share of how the business now splits between Sensodyne, Centrum, etc., for the launch? And was there any disruption from the transition from Hindustan Unilever that may have affected some of those brands? I see you're going to ramp up marketing, and we should expect an acceleration in India; I wanted to check that was right. Thanks.

Thanks, Chris. Let me take the first question. On active portfolio management, we mentioned we want to do that in a year ago; we said we’d focus on divesting and bolt-on acquisitions—expecting divestments first. We're pleased with the two divestments we’ve made; in both cases, we received fantastic brand value. Those divestments create significant shareholder value. We’ll continue looking for opportunities to simplify and strengthen the portfolio. We're under no pressure to do that; we only proceed when it makes sense and creates value. We do have the capacity for bolt-on mergers and acquisitions if we find something attractive and strategically aligned that brings value. I might refrain from further comments beyond that. Tobias, do you want to discuss India?

Yes. So, regarding India, first of all, the transition from the distribution deal with Unilever to building our own sales force worked very well. This is a significant undertaking and although there might be minor hiccups, the team executed very well. Consequently, the shifting of sales may have caused some growth and sales growth to be somewhat lower in Q4 than we'd typically expect. But from the sell-out perspective, the business is performing quite well and has seen close to double-digit growth for the entire year. Moving forward, we believe we can achieve double-digit growth in that market, and we are heavily investing into that market. In 2023 and continuing into 2024, we're supporting that market not just through sales forces but also through increased advertising and promotions, along with launching additional brands like Centrum into brick-and-mortar and other channels. The transition has been executed successfully, and we are excited about this growth driver moving forward.

Thanks very much.

Good morning all. I have one follow-up and two questions if I can. Just to follow up and maybe appreciate a bit more on the net cost savings versus the gross cost savings. So I'm interpreting it as €100 million of gross savings, none of it falling through to the bottom line this year, really. And then looking to next year €200 million gross. Is there any way you can give us an indication of what the net benefit might be budgeted for in 2025 as you phase in those savings? Then on the two other questions: A&P spend, I think done 80 basis points potential sales in 2023. Could you just talk us through the drivers of that? I'm assuming there's a bit of Russia suspension of A&P, maybe some agency continued rationalization post-filing out of GSK, but just a bit of dynamics on that 80 basis points would be helpful? Lastly, on the first quarter guidance that you're giving—close to 4% OSG—could you commit to the volumes you think will be positive within that number in the first quarter? Just to push on that as well. Thank you.

Great. Thank you. Listen, I'll answer the A&P question and then pass to Tobias for your follow-up on Q1 guidance. First of all, regarding A&P, I want to be clear that we're absolutely committed to investing in our brands. Investing in A&P is critical, as is investing in R&D. We're starting with A&P at a relatively healthy place at 17.9% of sales. This year, we grew A&P by 3%. Throughout the year, we're quite active in how we manage A&P to ensure optimal returns. For example, in 2023, our A&P investment in oral health performed strongly, and this is reflected in our results. We continued to invest in VMS and captured share in a declining market with products such as Emergen-C. Conversely, in the US respiratory sector, we pulled back from our A&P spending due to lower market returns. We actively manage our spend to ensure we're investing for growth in the right areas, while seeking efficiencies in our non-working A&P. We are confident in our approach and will continue to invest in A&P as we drive growth in 2024.

Good. To follow up on the productivity question, we won't be disclosing how much of the productivity program drops to the bottom line. However, let's return to why we initiated this program. We did it to drive agility in the business and enable us to be faster. We also did it to ensure we can adequately invest in R&D and A&P. In 2023, we didn't have the productivity program’s tailwind; however, moving into 2024, it will support our reinvestment capabilities. This allows us to stay competitive despite some market challenges, where volume growth is declining and we’re facing tough competition. This gives us confidence in our ability to maintain a growth rate of 4% to 6% in 2024 and grow our operating profit ahead of sales, even while facing inflation pressures. As for Q1, we will not split out specific quarterly guidance on price and volume. However, in the backup of my deck, you can see considerations for sales growth. Oral care, VMS, digestive health, and others are performing well. Pain relief and respiratory health will have some impact. Take comfort in the 6.5% sales growth we delivered in Q4, cycling over tough comparisons, which also included some volume growth based on the strength of our product mix geographically.

Thank you.

Hi. Good morning. My first question is on innovation and R&D. If I read the slides correctly, R&D is down as a percentage of sales. I wanted to understand if that is linked to our activities, possibly switching timelines or maybe products being further delayed. Additionally, if you could comment on the sexual health product license gained a while ago, when would that start impacting organic growth for the business? My second question relates to hyperinflation. I am clear about how hyperinflation capping will impact pricing and organic growth, but how will this impact your margin bridges? You described operating leverage at plus 50 basis points to 60 basis points this year and mentioned negative effects. A significant part of the operating leverage impact could be the Argentina and other scenarios. Will your new approach to hyperinflation reduce the amount of operating leverage you've quoted for 2023 and affect how you project EBIT margin bridges?

Thanks, Bruno. I’ll pass it to Tobias for specifics. On innovation and R&D, we believe in investing heavily in that area. The numbers you've seen reflect efficiencies and effectiveness across our business operations. There were also some transitions regarding some transactional service agreements (TSAs) that may have impacted our accounting structure slightly, with some items moving to G&A. However, we successfully launched 67 new products this year, which shows our commitment to innovation. Our oral health innovations, such as Sensodyne Active Pronamel Shield and Sensodyne Sensitivity & Gum, are notable performers. As for the sexual health product, we expect to launch this within the next 12 months and will update the market as we gain more clarity.

There is one small accounting change related to R&D as some G&A costs were reclassified to avoid inconsistencies. On hyperinflation, you are right, given we opted not to enforce hyperinflation accounting in 2023, this has provided a tailwind impact on our sales and operating profit numbers. However, keep in mind there are transactional costs since some of these markets still need to import goods. Overall, I'm confident in our ability to maintain our operating margins despite implementing hyperinflation accounting in the future.

Thank you. Any updates on the RX-OTC switches and innovation?

No, no significant updates. We expect two switches to launch potentially in 2025 and 2026, which have been delayed based on discussions with the FDA. The deal concerning sexual health represents a direct move to OTC from Rx, and we are excited about that opportunity.

Thank you. Good morning, everyone. My first question is on the balance sheet or the leverage. You mentioned you're at a leverage of three times. Do you still have a goal of 2.5 times given the share buyback, and the announcement of the dividend? Could you update us on that? My second question is about pricing. Can you talk about your ability to price and what kind of regions or quantum of pricing we should be looking forward to as additional pricing in 2024, if any? Lastly, could you talk about the volume performance in EMEA and LatAm, which was as negative as Q3? In Q3, there were some one-off issues. Could you shed light on that?

Great. Thanks, Celine. First off, regarding pricing: as we look at next year, we anticipate seeing continued pricing growth along with volume growth. Our approach to pricing remains conscious, as we want to maintain volume growth after the positive results of 2022 and 2023. The pricing environment in mass markets, especially in the U.S. and across Europe, is challenging, yet we believe we can still take prices. In Europe, particularly in pharmacies, it’s more decision-driven based on pricing elasticity because there’s typically no retailer between us and consumers. As for volume declines in EMEA and LatAm, these are differentiated geographically. For instance, while Latin America saw some decline, this is linked to hyperinflation scenarios in Argentina. In contrast, regions like Asia experienced low inflation and strong volume growth. Overall, we feel positive about our business performance, and I’ll hand over to Tobias for more on leverage.

Regarding leverage, our medium-term target is around 2.5. This isn't a sharp number, but rather a range we believe makes sense for longer-term stability, considering interest rates and our capital allocation priorities. We have aimed to move from slightly above four down to three in 18 months, indicating a solid deleveraging path, supported by strong cash generation. The recent share buyback decision is based on excess cash available from our divestments. Conclusively, the business retains a strong cash position, allowing us to manage and pay down bonds as needed and fund dividends.

Hi. Good morning, Brian, Tobias, and Sonya. I've got two questions please. First, about oral health. Could you provide a bit more detail on the strong growth acceleration you've seen throughout the year? How much of this growth can be attributed to the distribution gain that you’re still getting from parodontax or Polident? Will that continue to boost 2024? On the subject of marketing spend, which grew 3% constant currency but declined as a percentage of sales to 17.9%, did the reduction particularly relate to respiratory spend? Overall, is 18% roughly the proportion of sales we should look at for planning going forward?

Thanks for the question, Olivier. Let me start on oral health. We've seen strong growth across our three power brands. Sensodyne continues to do well—with pricing and volume growth driven by significant innovations. For example, we've had great successes with Sensodyne Active Pronamel Shield and Sensodyne Sensitivity & Gum. Additionally, we're optimistic about the recent launch of Sensodyne Clinical White, which aims to cater to the significant whitening trend among consumers with sensitive teeth. Parodontax's sustained growth correlates with increased activation and resource allocation. In the denture care segment, we're bouncing back thanks to recovery from social limitations imposed during COVID, leading to increased usage. Even though we don't anticipate reaching these high levels of growth continuously, the base effect will level out in time. Overall, we are optimistic about the oral health segment.

On the topic of marketing spend, as we've mentioned, we are adamant about investing in A&P and R&D for growth. The reduction relates partly to our focus on efficiency in our operational spending. We've had a stated target at ensuring the returns on our A&P investments remain sound, and we’re continually assessing investments to drive growth. The message is clear—we are committed to sustaining our competitive edge, and our increasing A&P investment will reflect that in 2024.

Hi, thank you. One question and one follow-up for me, please. Can you comment on the consumer environment in your categories? Are you observing any down trading at all in your key markets? For the follow-up, just to clarify, you mentioned that longer term you're targeting organic growth to be roughly evenly split between volume and price. Does that mean you expect pricing to still be a higher contributor to growth in 2024? I just wanted to confirm that perspective. Thanks.

Great. Thanks for your question. In key markets, the consumer environment does change by geography. In Asia, we see robust and low inflation, which supports good volume growth. The U.S. environment has its challenges; we've noticed declines in particular categories. However, these trends vary by product category. For example, immunity categories experienced declines because of a correction from COVID-driven spikes in demand. The respiratory segment showed growth in early 2023 but saw some declines based on seasonal factors though oral health remains strong. We aren't broadly seeing material down trading or private label impacts across our portfolio, and in fact, we noted that we've gained share overall. Specifically with private labels, they've only marginally impacted categories like smoking cessation. As for your follow-up, you correctly understood our expectations—becoming more balanced with pricing in 2024, while still more skewed toward price than volume this year.

Thank you. Morning, everybody. Firstly, on China OTC and the renewal of the China route JV in September, is there anything you can state about that, and will any terms change? What phasing of China OTC affects the overall group ability? Regarding North American growth, are you seeing impacts from increased OTC allowances from insurance companies? Is there a flushing of FSA-eligible accounts for FSA-eligible products in Q4 that may accentuate OTC seasonality?

Great. Let me address the OTC in China, and I’ll touch your U.S. questions. Regarding OTC in China, remember, when COVID lockdowns were lifted last year, we experienced a surge in sales for products like ibuprofen and other cold/flu remedies that was partially driven by those restrictions and resultant COVID cases. We reacted effectively to immediate supply chain challenges as demand surged. We're optimistic about Q1 and Q2 as these conditions will further enhance our outlook. Now, regarding North American growth and FSA allowances, we haven’t experienced any material impacts to report. We consider the allowances beneficial, enabling consumers to purchase OTC products tax-free, but there's no substantial evidence showing a significant impact on our operations.

With respect to the joint venture, we are in discussions with our partner and expect continued success with the joint venture. It has proven beneficial for both parties. Both sides find the performance encouraging, and no major concerns exist. If any material change occurs, we will communicate that promptly. The sales growth won't solely rely on Fenbid, as growth in other categories also supports our performance, particularly with brands like Caltrate and Sensodyne gaining momentum.

Hello, sorry to come back. Just to clarify the share buyback: you indicated that the £500 million might be dependent on GSK and Pfizer's choices. For example, you could do £500 million in the first six months and potentially nothing in the second half if their dynamics prove more attractive. If further divestments occurred, could that £500 million change? This isn't locked with the board—there’s flexibility like considering other options as they arise for the second half; is that agreed?

Yes, we’ve allocated £500 million for share buybacks, and we will pursue this. However, how we execute is based on getting the best possible value for shareholders, preferably through placings. We are aiming for this in 2024. We’re flexible in how we operate this to ensure we have the cash needed to fund share buybacks effectively. This logic would apply if any future cash excess arises.

Great. Thanks very much, everyone. I always appreciate your time and engagement throughout these discussions. This year has been another successful one for Haleon, showcasing our capability as a standalone company. I feel confident about the year ahead and firmly believe we are poised to meet our 2024 and medium-term objectives. Have a great rest of your day, and if you have further questions, feel free to reach out to Sonya and the Investor Relations team. Thanks again.