Haleon PLC (LSE:HLN, NYSE:HLN) has declared an inaugural dividend after its merger from GSK last year as price increases and efficiencies enabled increased profits and cash flow.
However, while guidance remained for 4-6% organic revenue growth, but analysts were disappointed by margin, financing and tax guidance.
The first dividend has been proposed at 2.4p per share, representing roughly 30% of adjusted earnings for the period since listing, with the board saying it intends to maintain the pay-out ratio around that level.
Haleon chief executive Brian McNamara said free cash flow of £1.6bn in the calendar year enabled the first dividend as the company was able to reduce net debt to £9.9bn from £10.7bn at the time of the demerger and “provides increased confidence in reducing debt faster than originally expected”.
Adjusted operating profits grew 14% to £2.5bn, or 5.9% at constant currency rates, despite “significant” inflation in costs, standalone fees and adverse forex transactions.
Revenue rose 14% to £10.86bn, of which organic growth was 9.0%, with 4.3% from price increases and 4.7% from volume and product mix.
For 2023, the FTSE 100-listed company expects organic revenue growth of 4-6%, with adjusted operating profit margin “broadly flat” due to more adverse foreign exchange impact, interest expense of £350mln and a tax rate of 23-24%.
Broker Jefferies said the guidance on margin, financing and tax is likely to inspire mid-single-digit downgrades to the City earnings per share consensus.
Shares fell around 3% in early trading.
*** Update: Adds share price, broker comment ***