Haleon plc ($HLN)

Good morning. Welcome to today's Haleon first quarter trading update. My name is Sarah, and I'll be your moderator today. [Operator Instructions]. I would like to pass the conference over to our host, Joe Russell, Head of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Joan's conference call for our first quarter trading statement I am Joe Russell, Head of Investor Relations, and I'm joined this morning by Brian Macemore, our Chief Executive Officer; and Don Allan, our Chief Financial Officer. Just remind us on the call, as in the discussion today, the company may make certain forward-looking statements including those that refer to our estimates and expectations. Pleased to set this morning's announcement and the company's U.K. and SEC filings in more detail, including factors that lead actual results to differ materially from those expressed in or implied by any such forwarding statements. Today, we'll focus on organic revenue performance. There is a further continuation of organic revenue in the appendix of the company slide presentation. Following Brian and Bill's remarks, we will take your questions. And for those listening to our webcast, we would like to ask a question, you can find the details in Page 2 of today's press release. And with that, I'll hand over to Brian.

Thanks, Joe, and welcome to our Q1 2026 results call. We've navigated a challenging market in the first quarter where consumer confidence continued to weaken and deliver 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 Paradigm tax. And in VMS, Sintrom 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. And 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. Dan will take you through the numbers. But 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. And while we have reorganized the team to follow our category-led approach -- we have also created a cross-category platform team to capture opportunity to sit across the portfolio. A good example of this is GLP-1. We are taking a holistic view of consumer needs. This is not a simple category opportunity. It spans VMS, digestive health, pain relief and oral health, and we are 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 5 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 and 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. Next, 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 ENA. 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, but much will depend on the duration of the current conflict and any potential impact on the wider economic economies of our key markets. So we expect organic revenue growth to be between 3% and 5% for the full year. We will deliver improving growth momentum through improved performance in North America that I've talked about, increased investment in our e-comm channel in China, particularly 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 will 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 Dan 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 2 times ahead of the market. Key highlights were in the U.S., growth was driven by the innovation rollout of Sensodyne Clinical Repair, along with Paradigm tax, GoStrength and Protect. This resulted in double-digit consumption growth with Haleon growing 4x the market. In India, our INR 20 Sensodyne pack performed well with 70% of units being purchased by new consumers to the brand. And 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 digits. This was due to the launch of Centrum NutriReplenish targeting GLP-1 users, alongside continued strength in Centrum Silver helped by the activation of biological aging claims. And in Asia Pacific, the upgraded daily kits in China also performed well. On trade, while consumption remains healthy, organic revenue growth was impacted by itself comparative in the prior year. In OTC, we saw a mixed performance with strength on brands such as Parador, BeneFiber and TUMS offset by weak cold and flu season as well as declines across smokers health and Nexium. Within the pain category, revenue was broadly flat. Key highlights were Panadol maintaining strong momentum driven by a new campaign that won for Panado and an improving trend in Voltaren driven by the rollout of our 2% formulation in India and Saudi Arabia following the success in China and continued share gains in Adville 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. And in addition, Smokers Health continued to be a drag, declining double digits in the quarter. These factors more than offset strong performance from improved in-store execution and expert endorsement in Sonos as well as continued strong performance and expansion on Otabinnasallist. For digestive health, strong innovation and activations on Ben fiber and TUMS was offset by weakness in Nexium and ENO to deliver 0.4% organic revenue decline. And finally, therapeutic skin house and other grew 3% with continued strength in bactroban, partly offset by a decline in Senadstol. 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 Central and continued strong performance across tons, 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 EMEA 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 3 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 the backdrop of weaker consumption and lower consumer confidence. Strength in oral health, along with good growth in Panador 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%. While 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 continued to outperform and grew mid-single digits with double-digit growth in the e-commerce 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 Don 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 centrodine prone. As a result, centedine grew up 5x 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% to 5% organic revenue growth and high single-digit operating profit. We are watching carefully the potential impact from the conflict in the Middle East. And whilst we didn't see any significant impact in the quarter, we are mindful of potential changes in to consumer spending patterns and are monitoring costs in our supply chain closely. So in summary, for quarter 1, oral help continue to outperform North America returned to growth, and we saw continued resilience of our portfolio against the 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.

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

Brian on Joe, 2 questions for 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 to China a little bit weaker than you anticipated. But more importantly, there is now far more macro uncertainty versus a couple of months ago. So my question here is you reiterated the 2026 outlook. But some of the key moving parts change? And do you see now clear additional sources of downside or maybe conversely upside, particularly when it comes to savings. So 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. And then my second question is on North America. I mean, it does in 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. So can you maybe talk about the reason 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? And 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.

Gil. Let me start with full year guidance. So taking a step back, as you said, Q1 slightly lower than expected, but not material, honestly, so broadly in line little more downside in cold and flu in Asia Pac, specifically China. But -- so 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 going to happen and we're monitoring it closely. But to be clear, there was no impact in Q1. Don mentioned that. Middle East, by the way, just for perspective, it was about 5% of our overall business. So we do remain confident in the 3% to 5% guidance and then accelerating growth through the balance of the year. And that confidence comes from first North America. benefiting from the shelf resets, which are happening at our largest customers are happening as we speak. So they're going into place now and into early May, our partnership with the U.S. the cross-category initiatives on things like GLP-1, and frankly, just overall improved execution behind a very strong and new team in North America. Secondly, we mentioned Latin America and Brazil. I mean we did see a tough macroeconomic environment in Brazil. And our results were much softer there than they were in -- 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 3 weeks ago with Andres, our new leader there. 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. And then obviously, we're lapping softer comps in the back half in respiratory. And after 2 years of decline, we'd expect to see some growth off of that lower base. And you mentioned it on the profit side, productivity continues to be ahead of our expectations, honestly. So 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, but 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. Again, it was in North America a couple of weeks ago also really, really happy with the progress we've made there. The changes in distribution and shelving across oral health and pain release are going to 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. And it has a little bit of a halo effect on some other categories, pain relief and immunity and DMS and things like that. But overall, again, I don't think that's a structural thing. I think it's a cyclical thing, and that we would expect that, 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.

Next question is from Warren Ackerman from Barclays.

Brian, Joe 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 Boyan rollout. I guess, cough/cold flu was quite weak in China. So 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. And then Southeast Asia, are you seeing any kind of weakness in some of the smaller Southeast Asian markets, given the Middle East conflict. So yes, just any color on what you're seeing in those 3 big buckets of Asia? And then secondly, just back on cocoa flu. I don't know with the door you're able to just out for us in terms of what the impact was specifically in the U.S., in EMEA, LatAm and in Asia Pac to so that we can sort of see what the underlying numbers are.

Great. Thanks, Lauren. Let me take the first one, and then I'll pass it to Dan on cold and flu and impact in the U.S. So First of all, in China, mid-single-digit growth in China. We have a brand in China called Contact, 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 Dan in China, but we see a bigger opportunity there. And that business for us, by the way, grew 100% in Q1. But remember, we have over 1 billion business in China. And the other thing about Dan 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. So we feel good about China. India continues to be our star in seeing mid-double-digit growth. And frankly, oral health in China is doing incredibly well. The low-income consumer strategy we have there. The launch of Pro name is driving very, very strong double-digit consumption growth. And then 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. But overall, we're -- it seems to be fairly stable and continuing as is Don, do you want to talk on cold and flu?

Yes. Thanks, Warren. So look, in terms of cough, cold and flu. So 130 basis points in the quarter -- and the way I think about that, I mean, if you think about the majority of that is volume -- and if I compare it to Q4, where we had 150 basis points impact, so kind of broadly similar overall, but actually the split across the 3 regions is quite different. So a much bigger impact in terms of North America and Asia Pac, both of those down double digit. And as I said, the way to think about that from a volume perspective. So North America, if you think about volume down overall 2.7% send actually most of that cough cold and flu. And I think the same in Asia Pac, so the reason why Asia Pac 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 flowing in LatAm. The other thing -- the other 2 things to talk about, if you look at overall respiratory, remember in respiratory, have 3 parts. We have cost 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 smoked. So I think when you think about respiratory, you need to break it down into the 3 parts. The last thing I would say, I mean, look, over the last 2 years, we've seen 2 weak seasons on cough, cold and flu particularly in North -- particularly overall in North America. And if I think cough, cold and food volumes are down over that time, mid it. It's not unheard of to 2-week seasons, but it is quite rare -- so everything else, Ben, well, if we look forward, we are expecting to see improvement in cost cold and flu in terms of volume growth, particularly in the back half of the year.

Our next question is from Olivier Nicolai from Goldman Sachs.

2 questions, please. First of all, Q1, you saw a double-digit decline in smoker health next also continue to decline. What is the strategy to get these brands back to growth and will you also consider some portfolio adjustments, which will probably help you to reach your to midterm targets more easily without those drugs? And then secondly, just more follow-up on previous comments from you, Brian. But if you look at the Q1 growth, it was 3.5% when adjust for the code flu in part of 130 bps. Do you expect the acceleration from Macliver -- and could you remind us where this acceleration will come from in terms of regions and categories in the coming quarters?

Great. Let me take the first question, Lever,and then I'll pass it to Dan 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 are also, as I said in the past, there's a share challenge with private label. And remember, these products are in the $30 to $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. So obviously, it's a priority for us to stabilize as we move forward, and we have plans in place do that. Your question on portfolio adjustment, of course, if there is an opportunity for us to strengthen the portfolio by bringing higher growth assets and potentially divesting assets which are the core strategic, we're absolutely open to that, and we're actively looking at opportunities there. Why don't I pass it over to Don.

Yes. Thanks for the question. I mean when I think about the building blocks for the year. I would expect sequential improvement in growth as we move through the year. And you will have seen we held our guidance full year between 3% and 5% organic revenue growth. The way I see the moving parts, obviously, Brian has talked about North America, its great that North America is back in growth, 1%. We feel we're confident in terms of continued improvement in that growth rate, whether it's from shelf resets strong activation and the rollout of innovation. And we have put more investment in North America as well. If I look at Asia Pac, we also right on to talk about China in particular. So India continued double-digit growth, I talked on the call about the strength in oral health and excellent execution. So we expect that to continue and mid-single-digit growth from China. Again, we're also increasing investment, a very strong performance on e-commerce and further investment going in on -- and also, if I look at markets like Australia, very strong activation in terms of Panado campaign that's on for Panida. So I think Asia Pac, obviously, Q1 impacted by cost food. But I think the underlying performance and the key drivers remain intact in terms of strong performance moving forward. If I look at Europe, Middle East, Africa and Latin America, let me break it down into the 3 parts because Europe actually is a challenging backdrop in terms of category and consumer -- but 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, softer macro backdrop, stronger promotions in Q1. And so I would expect that to improve as we move through the year. Brian talked about Andre new leadership in new we feel good about that improvement. And in terms of Middle East and Africa, actually a big shout out to our commercial and supply chains that we did not see an impact in Q1 and actually Q1 at high single-digit growth in Middle East, 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. So 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. So as I said, holding guidance, 3% to 5% growth, organic revenue growth for the year and sequential improvement in growth as we move through the year based on the moving -- the different moving parts that I talked about.

Our next question is from Sarah Simon with Morgan Stanley.

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 would be helpful.

Yes, I could take that very quickly. It's roughly 1/3 in Q1 about 15% in Q2 and then about split almost evenly Q3, Q4, about 30% each rough numbers.

Our next question is Celine Pannuti with JPMorgan.

My question on North America. So clearly, a pleasing start, 1% growth. Pricing was very strong. Is that kind of a level to be sustained? Or was there maybe less promo because of the weak coal and to -- and what kind of pricing are we expecting for the year? I mean Q2 is your easier comparative in North America? Are we expecting a strong bounce back given what you said on the shelf reset. And are you still comfortable with the 2% for North America for the year? Or you think maybe it could be higher pricing to me seems to be quite a talent -- so if you could comment on that. And then my second 1 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, the that, obviously, we can't predict it could happen maybe on the second half, but like how comfortable are you that Europe is picking up. in the second half of the year. And 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 to 5?

Okay. Thank you, Colin. Listen, I'm going to -- I'll take the second 1 on Europe. And I think you're probably talking in Europe, Middle East, Africa, Latin America, in that context, it sounded like. And then I'll pass it to Dan for the North America question and maybe the guidance -- as guidance question. So it's an overall in Middle East, listen, is 5% of our business, 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 concept is going to last or what the ultimate impact is going to 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 conflict there from an oil price perspective. Obviously, we feel very good about the product programs we have in place. And again, they're exceeding our expectations and gross margin continues to see really strong progress. So we feel like we have a lot of flexibility to deal with that. And frankly, we're better positioned than most just because we have high gross margins and lower exposure to those input costs. So I think that's the Middle East piece. On Europe, I think Dawn mentioned it earlier, too, which is we're a pharmacy-driven market there. So we're seeing probably less of the impact that maybe others have seen in a more mass market driven. Now our toothpaste business is primarily in mass market, but I have to say, it continues to perform extremely well and we're up behind all the innovation and everything we've been driving there. Dawn, do you want to address the North America one?

Yes. I think in North America, look, as we move through the year, we expect to see a non-balance price volume mix split. I think in Q1, I talked about the drag on volume from cough, cold and flu -- and obviously, that will come out as we move through the year. I think from a pricing perspective, I mean, the price of 3.7% that includes carryover, particularly in Canada. And we will expect that level of pricing moving forward to the future quarters. So as I said, I think for North America more balanced price volume mix. We've always talked in North America about the 2 main factors. One is our speed of improvement in terms of execution -- and the other 1 is in terms of the category. And I think from an execution point of view on what we're seeing in the first quarter, actually think we're seeing real positive momentum and we're really pleased with the progress in North America. Obviously, what's also come up on the call is to the category remains still challenging -- but actually, our outperformance versus the category is improving in North America. When I look at the kind of phasing in terms of quarters, obviously, we're not going to guide to specific quarters. But as I said, we expect sequential improvement in growth as we move through the year.

Our next question is from Nicolas Ceron with Bank of America.

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

Yes. I think, look, on cough, cold and flue, I mean, I've already talked about this. If you look over the last 2 years, where we've had 2 big seasons, cost colon food volumes have been down mid to high single digit. And we would expect, therefore, we would expect to see volume growth in the back half of the year. 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 now. So we are expecting improvement in the lifetime performance as we move through the year.

So no selling benefit in ATM, all consumer-driven.

Yes, all consumer-driven.

Our next question is from David Hayes with Jeffries.

I'm going to be cheeky in to a follow-on then 2 questions, if I can. So just on the follow-up on the Middle East. You talked about some indications in the last few weeks of impact. But -- some companies have called out sort of 50% down in March. But 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? And then my 2 questions are just on the price-led growth versus just the volume performance still coming through. Is there a need, you think, to review the price points all markets, particularly maybe LatAm, to your point earlier on the competitiveness and to apply some more competitiveness in pricing into the second half maybe take that down and reinvest even more of the ongoing cost savings that you're achieving. And then the second 1 on input cost outlook for the second half. Some of your peers have sort of said your, et cetera, say as they are -- they kind of give a bit of indication on additional headwind. Is there anything you can give us on that in terms of the dynamics for the second half on cost effects?

Let me -- thanks, David. Let me address a couple of things and pass it to Don and you can talk the input costs and the headwinds 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. So is there opportunities exist for us to tweak pricing to tweak price gaps -- we're going to do that, and we're going to make that happen. And 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. So we're on top of that. I don't see major pricing reset or anything like that. But but where there's opportunities to tweak and make sure we're doing it and 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. Don, do you want to talk?

A Yes, I think, look, in terms inputs, 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, including guns, 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 first quarter, we started to see the impact. We start to see surcharges on freight. quite small, but I would expect that to increase in the second quarter and also in the second half of the year. But as I said, I think we're really well placed. -- in terms of the strength of our productivity program, and that's why we've maintained our guidance for the year by high single-digit operating profit growth.

Thank you. There are no questions waiting at this time. So 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 promoting meetings and roadshows and please feel free as you always do really reach out to the IR team if you have any further questions. Thanks for the continued interest and support in Helion. Have a good day.

Thank you. That concludes Haleon's first quarter trading update. Thank you for your participation. You may now disconnect your lines.