Title

Presentation

Operator: Good morning, all. Thank you for joining us for the Haleon 2024 Half Year Results Q&A. My name is Carly, and I’ll be coordinating the call today. [Operator Instructions] I will now hand over to our host, Sonya Ghobrial, to begin.

Sonya Ghobrial: Thanks very much. Good morning, everyone, and welcome to Haleon’s half year 2024 Q&A conference call. I’m Sonya Ghobrial, Head of Investor Relations, and I’m joined this morning by Brian McNamara, our Chief Executive Officer; and Tobias Hestler, 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’ve posted today’s presentation on the website this morning with prepared remarks in a video running through the results in detail. So hopefully, you’ve all had the chance to see that ahead of this call. With that, we’ll go straight to opening the call with Q&A for my last time. Thank you. Operator, if you want to give us the first question, please?

Operator: Of course. Our first question comes from Guillaume Delmas of UBS. Your line is now open.

Guillaume Delmas: Thank you very much. Thank you. Good morning, Brian, Tobias and Sonya. I’ve got two questions, please. The first one is on North America. I’m wondering if you could talk a bit about the trading conditions there. Because it seems your pricing is very quickly normalizing between the first and the second quarter, and we’ve also heard some of your large competitors clearly not shying away from raising the promotional intensity. And on top of that, I mean, it’s been several quarters now in the U.S. that we’ve seen a significant gap between your sell-in and your sell-out. So wondering if with the reversal, the end of retailer’s destocking, the discrepancy between sell-in and sell-out should correct from Q3, and therefore, what I’m getting to is some meaningful acceleration for North America from an excellent growth standpoint.

And then my second question, it’s on your organic sales growth outlook for the second half. Because here, when I exclude Pain Relief and Respi from your Q2 or first half organic sales growth, I basically get 60% of your turnover growing in excess of 8% in the first 6 months of the year. So my question here is you’ve got a more favorable basis of comparison for both pain and respi in the second half. So, a, do you expect both units to be back into positive organic sales growth territory from Q3? And assuming continued momentum for the remaining 60% of this, I mean, would it be fair to assume an organic sales growth in the second half towards the top end of your 4% to 6% range? So any help on that would be great. Thank you.

Brian McNamara: Thanks for the question, Guillaume. So I’ll take the first question, and then, I’ll pass it to Tobias for the second question. So in North America, as we – just to get us grounded, we are down a little over 1% in the first half, 1% growth in Q2. We saw the inventory reductions in Q1 that we had shared with everybody. And then obviously, in Q2, we made the decision to proactively take down inventory of our phenylephrine products ahead of the FDA decision. And just as a reminder, that is about efficacy, not safety for phenylephrine, but we took that proactive approach. So that’s impacting, obviously, the volume and the growth in the U.S. You’re right, consumption has continued to be strong at mid-single digits ahead of the market, so we feel good about the underlying business and the fact that we’re growing market share.

So I would fully expect that in the back half, we’ll see some of that net sales growth now coming through on the business as we have a lot of those changes kind of in the base with the inventory reductions and things like that. So overall, I think I’ll leave it there. Tobias, on the second question?

Tobias Hestler: Yes. So for Half 2 organic sales growth, I mean, first of all – I mean, if you just look at the 4% to 6% guidance, I mean, it really implies 5% to 9% in the second half. So I think, yes, it’s clearly at the upper end of the range as a minimum. And I think – look, we’re not going to guide to individual categories for the second half of the year. But – They mean, we’d expect that oral health and VMS continue to go strong. And of course, in Oral Care, we’re still in a situation that all brands have been doing extremely well. That is not something you expect to have in the very long run. Also, Denture Care has done very, very well in Half 1. So – and also VMS has come back strongly, but they are also being a bit off base effect from last year as well. And yes, absolutely, the big drainers on Pain Relief and on – mainly on Pain Relief are behind us plus a bit of the destocking as well that has happened in Half 1.

Guillaume Delmas: Thank you. And just to follow up on North America, Brian, on the competitor’s environment and promotional intensity and how you’re reacting to this.

Brian McNamara: Yes. No, thanks, Guillaume, I did not answer your question on promotional intensity, so I apologize. Listen, we’re a bit of a less promotionally sensitive business in OTC. And in Oral Health, our strategy has always been lower promotion on our brands, but we invest heavily in A&P and heavily in the dental detailing piece. So we’re not seeing anything in the categories we compete with, but it’s radically different. Of course, every year, there’s ups and downs in promotional intensity and stuff, but there’s nothing systemic happening in our categories worth noting.

Guillaume Delmas: Thank you very much.

Operator: Our next question comes from Iain Simpson of Barclays. Iain, your line is now open.

Iain Simpson: Thank you – Thank you very much. A couple of questions for me, if I can. Firstly, just to make sure we’ve got the magnitude of that phenylephrine swing right. Am I right in thinking that it was a 40 bps volume destock at group level in your Q2 and that, that all should reverse into Q3, so that sequentially you were down 40 bps Q2, you were up 40 bps Q3, so it’s a sequential 80 bps volume swing at group? Just want to make sure I’ve got the moving part on that right. And then secondly, you not just sort of marginal profit guidance given the strong H1 and given that you’ll have, I presume, a ton more volume leverage in the second half implies, I guess, that A&P spending is going up quite a lot in the second half. I guess part of that is probably the Eroxon launch, but anything else that we should kind of have an eye on in terms of where you might be spending money in the H2? Thanks very much.

Tobias Hestler: Thanks, Iain. So I’ll take both of those. So yes, on PE, you got it right, so we said it’s about a 0.5 point impact for the group. It’s about a 2 point impact on PE, and that is a swing. So I think that is – you got that correct. And then on Half 1 and Half 2, so – I mean absolutely. I mean, first of all, look, I want to say, really pleased with the performance, really positive that the model is delivering. And then also, I mean, as a result, we’re really confident on our full-year guidance. And – I mean, ultimately, the profit guidance we’ve upgraded is almost 2x the midpoint of the organic revenue guidance that we have given now. So now why is it lower in Half 2, which is correct? So maybe one step back.

So when you look at last year, last year Half 1 was 9 and Half 2 was 12, so we’re cycling over a much stronger Half 2 from prior year. And then there’s really 4 reasons why organic profit growth is going to be lower than the 11% we’ve seen in Half 1. And I think you already mentioned 2 of – or one of them in your question, Iain. So I think the biggest one really, and I’m going to do the order of sort of sizing and magnitude. The first reason it’s going to be lower is the phasing of the cost inflation. Cost inflation was really at its highest point in Half 1 of last year, and then, we saw costs starting to come down in Half 2 of last year. And you saw that come through in our Q4 margin last year when gross margin started to grow than – ahead of the rate of sales growth.

So Half 1 was really a low prior gross profit comparator. So as we get into Half 2 this year, we’re going to start lapping the benefit of those lower costs. And usually, you have this normal time lag when the costs come in until they run through inventory to come up. So that won’t repeat in Half 2 of this year. Then the second reason is the one you mentioned, Iain. So yes, A&P growth will be higher in Half 2 than it was in Half 1. And also here, a reminder, last year, A&P in Half 2 was only up 1%. So – and then in addition, we’re going to fully support the launch of Eroxon in addition to continue investing in the brands that deliver the growth, so continued high and strong investment into the launches we made, especially clinical wide on Sensodyne and on the high-growth drivers like Centrum, plus all the geographic expansion that is running.

The third is a bit of phasing, mainly R&D. You’ve seen R&D spend was only up low single-digits in Half 1 that is largely driven by project phasing, which is different. So that’s going to reverse out and significantly accelerate in the second half of the year. And then, look, much smaller, but some other factors in Half 2 that won’t repeat. For example, we had an employee tax credit in the U.S. in Q3 last year, so that won’t repeat. So those are the drivers. But look, overall, very pleased with the high single-digit guidance for the year and very confident in that one.

Iain Simpson: Brilliant. Thanks very much.

Operator: Our next question comes from Bruno Monteyne of Bernstein. Bruno, your line is now open.

Bruno Monteyne: Thank you. So the first question is coming back on the organic growth. If I understood you correctly, Tobias, I think you just said on the first question that the organic growth should be at least at a minimum at the upper end of the 4% to 6% range. Just making sure I understood that correctly. But then my real question is about the launch of the erectile dysfunction cream at the end of this year. If you remember from when you sort of IPOed, you always said sort of launches, switches are above and beyond organic growth. But this launch should be actually launching in quarter four. You’ll be filling the channel with that. Am I right that the kind of growth from that launch will, therefore, be above and beyond the usual guidance?

And wouldn’t that flip you at the top end or actually over the 4% to 6% range? And the second one is just a question on behalf of Tom Sykes. On the China JV, I did notice that you are delaying, as you’re sort of getting 1 year of extension before you do the new agreement. Is that because you can’t really agree that should we see that as bad news, at least sort of there’s a bit of an issue and you weren’t able to finish the discussions in time? Thank you.

Brian McNamara: Great. Thanks, Bruno. Listen, I’ll take the Eroxon question and pass to Tobias on the Chinese JV. So first of all, we are excited about the first erectile dysfunction OTC launch in the U.S. So we’re excited about the opportunity there. We said we would launch at some point before the end of this year. So I wouldn’t expect it to have a big impact potentially on this year’s results. And as we – and we’ll give guidance for next year when we get to next year, but if we think about that category, we think it has very strong potential. But it is a new to OTC category. It is a topical product versus systemic product. And obviously, it’s a direct to OTC, not an OTC switch, so Eroxon doesn’t have any brand awareness.

So I think it’s got great potential. It will be a bit of a slower burn potentially because of some of those factors, but we’re really happy to be at a point where we can announce that we’ll launch before the end of the year and excited about the future potential. Tobias, you want to touch on China?

Tobias Hestler: Yes. So on your first question, Bruno, on the second half growth. I mean, the full year guidance of 4% to 6% for full year is 5% to 9% in half 2. So I think the 5% to 9% puts you really into – squarely into the upper half of that, at the lower end in the upper half of our full year range and then, of course, above that, depending on where you put us in this 5% to 9% for the second half of the year with our full year guidance. Then on the China JV, so we’ve extended it by 9 months. So it was supposed to expire in September of this year. So we’ve extended it to 2, and that’s a 9-month extension. I would call this more of a technical extension and maybe give you the background as well. So the joint venture is really the over-the-counter medicines part of the business in China, which is about 40% of our Chinese business.

And as a result of Oral Health and VMS, it’s fully outside that joint venture. It’s a complex joint venture with a number of partners. I mean, we own 55% in it, 25% are owned by a publicly listed entity, 20% are owned by an entity that is owned by a private shareholder and two of the provincial governments. The listed entity, the other entity is the majority shareholder of, so as a result, we have a number of parties involved in that. And on top of that, in the Chinese environment, including, of course, government partners as well, so it takes a bit of time. The relationship is really good. And we mentioned in the release, we’re in active discussions with the partners on how to continue and run this business going forward and to enable the conclusion of those.

We’ve just agreed now to extend it. So we’re not up against a very hard deadline. The discussions are really positive. I think all the targets are aligned on the value of the joint venture, and on the collaboration, so they’re all pulling in one direction. And as you would expect, we will update you then as soon as we have news on what the future is. Yes.

Bruno Monteyne: Thank you.

Operator: Our next question comes from Chris Pitcher of Redburn Atlantic. Chris, your line is now open.

Chris Pitcher: Thanks very much. And in advance, apologies, I had technical issues. I haven’t listened to the presentation. I’ve read through the pages, so apologies if I’ve covered stuff that’s already been said. In terms of the general consumer environment, across your brands, are you seeing any evidence of some soft demand across perhaps some of your more discretionary brands? I mean one brand performance that really set out for me in this environment is the strong growth in Centrum, double-digit growth. Are you able to give us a bit more detail on where the Centrum growth is coming from? You’ve launched in a lot of new markets. How much of that is sort of new market-driven growth? How much is sort of like-for-like growth across your existing sales base? Thanks so much.

Brian McNamara: Thanks for the question, Chris. Listen, on – so specifically on Centrum, we feel really good about the performance there. And it’s a combination of two things. As you said, we announced – we launched in a few new markets like India, Egypt and some other markets. At this point, it’s still early in those markets. It’s doing well, those launches, but probably not having a significant material impact on the overall growth of the business yet. We’re quite optimistic it will down the road. I think the big driver of the Centrum growth is something we’ve talked about, which is this COSMOS study that we completed in that now had – just had the third readout of the study in partnership with Harvard Business School that showed that Centrum Silver with, for instance, in the U.S. is about 50% of our business targeted towards older men and women, improves cognitive function by 60% if Centrum Silver is taken daily.

So as a result of that, we really see a strong take-up behind that claim. And we think this is a big opportunity – it’s a big opportunity for us to continue to drive those kind of scientific claims behind the category that does have – tend to have less science. So I’d say that’s the big driver between – behind our VMS and Centrum growth.

Chris Pitcher: Can I just confirm, did you say 5-0 of the U.S. businesses or 1-5 percent?

Brian McNamara: 5-0. I’m sorry, Chris, I didn’t hear you. You broke up. Yes, Centrum Silver in the U.S., it’s 50% of our business. Yes.

Chris Pitcher: Thanks so much.

Brian McNamara: Thank you.

Operator: Our next question comes from David Hayes of Jefferies. David, your line is now open.

David Hayes: Thank you. Good morning. Also, two from me. Just on the Oral Care, obviously, impressive growth continuing, but we assume some of that is driven by the rollout of the whitening range, the new whitening range. I just wonder where there’s any kind of way of quantifying that at all? I guess, we’re thinking more about thinking the comping effect next year just to get a sense of the benefit in terms of channel pipe fill. And then secondly, on the share buyback shift to going into the market, just to kind of check, that we assume is completely independent of any Pfizer plans. You’re kind of indicating that you don’t think they’re going to sell down again this year. But I guess if they did sell down again this year, is it still within the options that you would then participate in that rather than continuing to buy through the rest of the year? Thank you so much.

Tobias Hestler: Thanks, David. Let me take the share buyback question, and Brian will come on the Oral Care one. So look, on the share buyback, it’s not a shift, right? I think it’s ultimately what you would expect the company to have that has a share buyback program is a program that buys it back on an open line. This is a muscle we still need to build. We have never done that, right? So I think we now put the machine in place, and we need to learn that muscle how to operate and run that. And I think it’s something that’s totally normal, and that opens up just avenues to do it across all the three avenues that are available to us to do share buybacks. One is on the open market; secondly, buying it back directly from Pfizer at a given discount; and then thirdly, of course, participating in a placing.

And for us, it’s just all the optionalities. And also, I think you saw in the stock exchange announcement, I think it said up to $185 million. So I don’t think we don’t have to buy $185 million from the open market, it’s just opening up all the three avenues. That’s all that is optionality for us in ensuring we can complete the $500 million share buyback by the end of this year.

Brian McNamara: Yes, super. David, on Oral Health, just to reaffirm, very, very happy with the performance we’ve seen there and the share growth across all three of our franchises; our Denture Care, Parodontax and Sensodyne. You’re right, Clinical White is doing quite well. Whitening is a really fast-growing category. As I’ve said in the past, whitening toothpastes tend to be not good for sensitivity, so having a product that’s clinically proven, I think we’ve been able to secure dental recommendations behind this. They typically don’t recommend whitening toothpastes. But listen, every year, we come out with a big innovation on the Sensodyne franchise. Last year it was Pronamel Active Enamel Repair. Years back, it was sensitivity plus gum, it was Rapid.

So every year, we have a big launch in the beginning of the year and other launches throughout the markets. We’ll continue to see that trend as we go forward. I also think Clinical White is a product that will drive growth in year 2, year 3 of launch. We think it will have long-term potential. So I wouldn’t necessarily quantify the pipeline or what it looks like. Just know that this is our model. We have big launches every year successful, and we follow them up as the following.

David Hayes: Thank you.

Operator: Thank you so much. Our next question comes from Rashad Kawan from Morgan Stanley. Rashad, your line is now open.

Rashad Kawan: Hey, good morning, guys. Thanks for taking my questions. Just two for me, please. First one, can you update us on what you’re seeing in China? You said it was flat in the first half. Obviously, tough cold and flu comps, of course, but what was the performance ex-cold and flu? And obviously, it’s been a tough backdrop across the board there. What are you seeing in terms of consumption across your categories? Second question, on running down your oral phenylephrine stock, obviously, the FDA hasn’t made a formal decision there. So just curious as to how you think about these decisions, what drives you to take action at this point in time? Thank you.

Tobias Hestler: Thanks, Rashad. So let me do China. So I think, look, last year, China was up over 20%. This year it’s flat, and it was up 20% last year due to the pretty much defended upside. So doing it flat on top of the 20%, I think, is a really, really strong performance. So I think it just means that the rest of the portfolio is doing really, really well for us. So I think overall, the business has really grown through Fenbid. If you take also step back on Fenbid actually, very pleased with what we’ve done on Fenbid in China. We were able to retain quite a bit of the consumers that came into the category due to COVID. So that the brand is now quite a bit bigger than it was pre-COVID in China. So from that point of view, also in Fenbid, even you have to roll the cost, so if you take sort of a 3 to 4 years look at it, also good.

So look, I feel good about China, really good growth in the VMS business, in the Oral Care business, and also a bit of basic back, Oral Care was a bit weaker in the first half of last year, too, but still overall, good performance. And I think it goes back to our brands, right? These are healthcare brands, right? I think we are sort of not that directly exposed to the economic health of the market and the business, so I think which speaks to the defensive nature of the brands that we’re selling, so combining…

Brian McNamara: Yes, let me jump on the – thanks, Rashad, on the phenylephrine question. Yes, we did make the decision to kind of take down our inventory on phenylephrine and launch products for the cough/cold season, not including phenylephrine. The FDA didn’t make that decision. As you know, there was a 14 to 0 recommendation to the FDA from an advisory committee that phenylephrine wasn’t efficacious, but obviously, it’s still safe. We stand behind the efficacy of phenylephrine, but we worked with our retail partners to do this in a way that allows us to ensure that we will have the products on the shelf for the cold and flu season. Our main focus was to make sure that we can deliver for the cold and flu season, that consumers could – would have the products available to use.

And we’re not sure when the FDA will make that decision and what the outcome of that decision will be, when the products would need to be phased out and moved off the shelf. So we decided to get proactively ahead of that to ensure we can continue supply.

Rashad Kawan: Thank you very much.

Operator: Our next question comes from Jeremy Fialko of HSBC. Jeremy, your line is now open.

Jeremy Fialko: Hi, good morning. Thanks for taking the questions. So a couple from me. First one is on pricing. I think you had implied that obviously the pricing was going to step down for Q1 to Q2, which indeed is what we have seen. But then actually from kind of here on out it’s a relatively stable picture with the sort of the price rises sort of roughly offsetting the carryover effect. So I just wanted to check that, that is still the message. And then secondly, if you could talk about kind of bolt-on M&As, it’s something which, yes, you said you are keen to do, how you feel the market for the sort of midsized transactions is at the moment or whether you think there could be a little bit more movement over the coming, say, 6 months to 12 months? Thanks.

Brian McNamara: Thanks Jeremy. I will start with the bolt-on question and then Tobias will talk for the pricing. Just to get grounded on what we have said in the past, which is, first of all, we love the portfolio we have. We don’t believe we need to do anything with the portfolio to deliver on our guidance that we have given. But that said, we want to proactively and actively manage the portfolio. And as a result, you saw the three divestments that we did. We did those because we felt like we generated more shareholder value in divesting than in keeping, and we will continue to proactively manage that portfolio. Bolt-on M&A is clearly something we are actively, and we will actively look at. It’s in our capital allocation priorities invest in growth, one, two, bolt-on M&A, three, return cash to shareholders.

So, I won’t make any specific comments on what we are doing. But obviously, if something strategically makes sense and it creates value for the business, well, we are very committed to doing that.

Tobias Hestler: And on your price question, Jeremy, yes, you got that, I think exactly right. It’s exactly what we expected. The step-down was predominantly in the EMEA and LatAm. And that is all driven by the rollover, because I mean most of the pricing negotiations across Europe are done in Q1. So, in Q1, you still see the impact from prior year. In Q2, you see the new pricing that, that was agreed. So, I think the step down is really the expected one from how the pricing works. It’s not a change in how we are dealing with our customers. And I think in the other regions, it’s much more stable. Of course, in the U.S., you have pricing taken at different times of the year, so that might be a little bit more spiky up and down depending on the cycle over a year where you didn’t take the increase or where you did. But it’s really the EMEA, the euro pricing, so – and as you said, a step down to Q2 and then much more stable throughout the rest of the year.

Jeremy Fialko: Okay. Thanks.

Operator: Our next question comes from Olivier Nicolai of Goldman Sachs.

Olivier Nicolai: Hi. Good morning Brian, Tobias and Sonya. First question on net debt to EBITDA, which is below 2.9x now, so big achievements today. But both the disposals of NRT and considering the stronger EBIT growth this year, is it fair to assume that you could reach 2.5x mid-term guidance as soon as year end? And is there more disposals to come? That was the first question. Secondly, on – just to highlight, obviously, very strong gross margin expansion in H1, 150 bps. How much of it is linked to lower input cost versus productivity gains? Do you see any benefit yet from the Maidenhead closure to kick in? And I guess more broadly, since you have achieved really good top line growth since 2022, should we expect a bit more focus on margin provision since you are still a bit below peers? Thank you.

Tobias Hestler: Thanks Olivier. So, I mean on net debt, down to 2.9 is really strong. Also, I mean we returned $700 million to shareholders in half one as part of that. Part of that was supported by the ChapStick proceeds, but also by I think very, very strong cash flows that have come through. It’s true at the end of the year, we are going to get the proceeds from the Smokers divest, but also think of for you then roll this forward into ‘25, it’s also going to take EBITDA out, right. So, the impact on – while it brings the cash in, which is helpful, the impact on leverage is of course, much, much smaller. Look, we are confident on our medium-term guidance range, which we set around 2.5%, and we are working towards that.

And then of course, net debt, the net debt formula reacts very, very big to short-term FX movements as well. So, it’s very hard to predict a soft landing. This is a little bit like landing a 747 on the aircraft carrier. So, it’s hard to give you that. But I mean if you take a step back, it’s a highly cash-generated business. We have been very clear on our capital allocation priorities and the building blocks for that. So, I think the debt is coming down over time. On your gross margin question, so I think we have seen – of course, I mean we look at half one. So, clearly, there is still the help from pricing because pricing was with the rollover a bit higher in half one, some of that reduced slightly in the second half of the year given the rollover from Q1 that I just talked about in the prior question.

Then what we are seeing is easing inflation, so there is still inflation, but it’s on material costs, I mean there is – the first few materials are now, I think actually getting into deflation, but then we have labor costs to cover because I think a lot of our cost of goods are tied to either our own labor or then the labor of our contract manufacturers because I think our conversion is very much labor-intensive, it’s less exposed to the material costs, but that’s clearly easing compared to last year. But we are also seeing efficiencies improvement as we bring up our operating efficiencies in the site. And I think that helps offset, and I think all these factors together. And there is a bit of freight cost as well. Last year, we shipped a lot of air freight because we had the unexpected spike in demand, so that was also a bit of help there.

Your Maidenhead question, not yet. I think it takes time to shift production. So, I think these impacts are the positive impact, so further – we haven’t shut down the site yet. We announced that we will do that. So, these are usually 2-ish-year processes to happen. And the – as we ship production, you are going to see the – you see the benefits come through over time as the production moves across.

Olivier Nicolai: Thanks.

Tobias Hestler: Thank you.

Operator: [Operator Instructions] Our next question comes from Celine Pannuti of JPMorgan. Your line is now open.

Celine Pannuti: Thank you. Good morning everyone. I have one question on margin in the U.S., which was down 175 basis points reported. Can you flesh out – you said that higher A&P may be a category of why that was quite a drop? And did I understand correctly that you said that last year H2 margin had a tax credit, so this year, we are facing that plus further A&P, so are we expecting U.S. margin to be down several hundred basis points for the year? Thank you.

Tobias Hestler: Yes. Thanks Celine. So, yes, I think the U.S. margin was down. I think it’s a factor of – I think of several points. One, of course the volume decline in the market given the sell-in and also the stock in the inventory or the retailer destocking, so I think that, of course if you know volume here are in a declining volume environment that it leaves some marks on the gross margin side. And of course, that is very hard to offset with efficiencies that the team of course is still running. And then secondly, it’s really, I think most important is the step-up in A&P and the investments we are making into the market you saw and maybe you have seen in my slides the sellout, right, mid-single digit sellout growth.

And look, it’s a – it’s the overall environment. The U.S. market overall is still in a slight volume decline, right. So – and we have been gaining volume. So, we have to work for that. Plus, I think Brian mentioned earlier also, I think the launches we have done and the support we put behind the Sensodyne and so forth is still behind the Centrum claims. We have also launched Benefiber extension. So, I think there is strong support to deliver the continued growth in the market overall there. Look, perhaps, we are not guiding on segment margin, but you should expect us to continue to invest in the U.S. as well and also on top of that behind Eroxon launch later this year.

Celine Pannuti: Thank you.

Operator: Our next question comes from Iain Simpson of Barclays. Iain, your line is now open.

Iain Simpson: Thank you. Thank you very much for allowing me a follow-up. I just wondered if we could sort of briefly touch on some of the items between EBIT and EPS, because certainly, historically, there has been pretty good EBIT and above delivery, but EPS has not done an awful lot in the last year or 2 years. So, as we kind of think through ‘25, I guess, you have told that we saw finance costs come down a little bit this year. Presumably, we will get continued benefit there from deleverage, nothing where it’s happening to tax rate unless you are going to tell me, otherwise, and share count presumably comes down as well. I am just trying to think about how confident we can be that, that 6% EPS growth that you did in H1 ‘24 that we are now kind of in a place running forwards where EBIT growth translates to EPS growth. Thanks very much.

Brian McNamara: Thanks Iain. So, look, yes, net finance costs should continue to come down as our net debt goes down. I think you have seen that very much come through in half one, where net finance costs were 11% lower than a year ago. So, I think that’s absolutely happening. On the adjusted tax rate, we are bang on in the middle of the guidance range we have given early in the year already on ‘24 to ‘25. So, I think – that I think is – I believe we are here absolutely in the right range. Of course, there are still pluses and minuses on that as Pillar Two laws are enacted around the world. So, I think there – that could – that it’s within this range, plus/minus 50 bps. Let’s see where we get to, and – but I think very confident that’s the right range.

Then let me mention one of the things you didn’t mention, which is the non-controlling interest. Those were very much higher last year given the Fenbid spike. Fenbid sits in the joint venture part. So, it was much higher non-minority interest. That’s normalized now. So, what we have in half one is actually a pretty good run rate for the rest of the year. So, probably you should take a look at half one as – I would say is pretty balanced in half one and half two what we expect on that line. And then yes, from the share buybacks, we are going to get the benefit of the share count coming down, which has also been happening. So, all of those, I think moving in the right direction and are supportive to EPS overall, yes.

Iain Simpson: Thank you.

Brian McNamara: Thanks Iaian.

Sonya Ghobrial: If we take one more question and I will come back…

Operator: Our next question comes from David Hayes of Jefferies.

David Hayes: Hello. I am going to join the theme of second question. So, just to follow-up on the margin question we had earlier on the U.S. of Celine, I think. Is there also a one-off cost associated with the switch from the FDA reviewed products? Do you have to buy those products back and effectively write them off? Is that part of the equation in the first half as well, which obviously we wouldn’t see in the second half? I just want to understand whether that was contributing to the margin performance. Thank you.

Tobias Hestler: Thanks David. I mean not material, right. I mean there might be a packaging material here or there and that’s left over, right. But I think we have really proactively started at the beginning of the year to ramp down those inventory and not to re-pipe them, right. So, the big mark in the P&L is from just the selling less, of course, of higher-margin brands into the market. That is going to reverse out in the second half of the year. I think the write-offs on that, we are not buying it back, right, so the write-off should be not material. Of course, always some stuff left here or there, but not in the grand scheme of things that should impact the group margins materially in any way.

David Hayes: Great. Thank you.

Tobias Hestler: With that, back to Brian.

Brian McNamara: Yes, super. So, listen, thanks everyone for joining us today. As you can see from the results, our model is delivering. We feel really good about our first half. Do let Sonya and the IR team know if you have any further questions. But before we leave the call, I would like to express a big thank you to Sonya. Today will be her last Haleon investor call. And it’s been an absolute pleasure working with Sonya these last 4.5 years. I am forever grateful for all she did to help in the creation of Haleon. She has had a huge impact. I wish her well in her new life at Diageo and just want to say a big thank you, Sonya, and well done and wish you well. Okay, everyone, if you have any further questions, again, reach out to the IR team, and have a great rest of the summer.

Operator: This concludes today’s call. Thank you, everyone, for joining. You may now disconnect your lines.