ii view: Haleon shares crash in response to Q3 update

Third-quarter trading update to 30 September  

• Organic sales up 2.6% (volumes up 0.5% - product prices up 2.1%)

Guidance:

• Now expects full-year 2026 organic revenue growth of 2.5%, down from a previous 3-5%
• Continues to expect high single digit annual adjusted operating profit growth

ii round-up:

Haleon (LSE:HLN) today detailed quarterly sales that missed City forecasts, with the maker of products including 
Sensodyne toothpaste and Panadol painkillers downgrading annual sales guidance.

A combination of a soft cold and flu season in North America and changes in Chinese import rules, reducing supply for Centrum vitamins, left third-quarter organic sales up 2.6% from a year ago to £2.89 billion. Analysts had forecast a gain of 3.2%. 

Shares in the FTSE 100 company fell 15% in UK trading having come into this latest news little changed so far in 2026. Rival Reckitt Benckiser Group (LSE:RKT) and maker of flu product Mucinex have fallen by around a tenth during that time. The FTSE 100 index is up 8% year-to-date.

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Haleon's product portfolio spans the six categories of Oral Health, Pain Relief, Respiratory Health, Digestive Health, Vitamins, Minerals and Supplements (VMS), as well as Skincare and Other.

The Weybridge headquartered company now expects full-year organic sales growth of around 2.5%, down from a previous 3% to 5% estimate. The downgrade is also hindered by changes to near-term Brazilian supply, but which are expected to prove long-term beneficial.  

In product category terms, an 8.8% sales gain for Oral products such as toothpaste contrasted with 2% and 0.5% falls for Respiratory or flu remedies and Vitamin sales.

Geographically, a 0.6% sales decline in Europe, including a high single digit fall in vitamin demand, sat against a 6.9% gain for international sales including strong sales of Sensodyne toothpaste in India.

Haleon maintained hopes for high single digit adjusted operating profit growth over the current 2026 financial year, launching a new £500 million share buyback programme.  

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares, flagging Haleon as a ‘top pick and highlighting a target price of 460p per share. Full-year results are likely to be announced mid-to-late February.

ii view:

Previously part of GSK, Haleon today employs around 24,000 people, operating across more than 170 markets. Sales of Oral Health products generated most sales during 2025 at 31%. That was followed by Pain Relief at 23%, Respiratory Health 17%, VMS 15%, Digestive or treatments for heartburn at 9%, and Skin and other areas the balance of 5%.

Geographically, North America generated most sales during this latest period at 34%. That was followed by Europe at 28%, Asia-Pacific 21%, and the rest of the world or international the balance of 17%.  

For investors, variations in the cold and flu season can and have regularly impacted customer demand. Own-brand and often lower priced product competition from retailers such as supermarkets persists. Vitamins may also potentially be viewed by consumers as a luxury which could be cut, while changing rules in places such as China can influence performance.  

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More favourably, annual profit hopes were maintained, with management previously flagging up to £200 million of targeted cost savings in 2026. A diversity of product categories and geographical regions allows positives in one area to counter challenges in another. Strong cashflows support a new £500 million share buyback as well a dividend yield of around 2%, while a current ratio of adjusted profits (EBITDA)-to-net debt of 2.5 times is in line with management’s existing target.  

On balance, it is likely that bargain hunters will be interested at these levels, believing the selling may have been overdone. And the company does boast defensive qualities given the sale of health products and strong cashflows. But a reaction like this to quarterly numbers will likely keep other investors on the sidelines until the outlook becomes clearer. 

Positives:

• Diversity of product and geographical region
• Targeting cost savings

Negatives:

• Own brand competition from the supermarkets
• Exposure to currency movements

The average rating of stock market analysts:

Buy