The guide was already second half weighted.
Yeah.
Even with the lowered guide, you still assumed a step up in the second half. I just want to underpin your confidence that the 3.5% is the absolute minimum you'll deliver. Could it still actually get closer to 4% if you have a good cough cold season? There was no season virtually last year. Just on that 3.5% number, your conviction that that is the floor.
First of all, I think if you step back and look at what we said at half year, we did do two things. We took down sales to around 3.5%, and we took up our profit guidance to high single digits on an organic basis. I'm sure we'll talk about that later. That's really underpinned by this productivity program really coming through very strongly and giving us a lot of confidence. 3.5%, to be very clear, it wasn't 3.5% per se. Listen, at halfway through the year, we're at 3.2% growth. Certainly in the U.S., we were, you know, we were down slightly. If you look at the U.S. consumption in Q3, you know, we were up roughly [0.5%] in consumption. The market was roughly down [0.5%] . The market was up much more in Q1, and so were we. That was a seasonality effect.
As we looked at the U.S. environment, two things were happening. We were seeing a bit of a muted overall market growth environment, and we're also seeing continued pressure on the inventory levels. Given all that, we decided to change our guidance to around 3.5%, not expecting, honestly, the U.S., for the balance of the year to change that much from a net sales perspective. We think there's continued inventory pressure in the U.S. We want to get much more proactive in managing that with our retailers because, frankly, you can get to the point also where you can start seeing out of stocks and some challenges on shelf. We want to get more proactively managing it. If you also remember last year, in Q4, cold and flu in December was down 10% from a consumption basis, which meant that inventories were kind of high at year end also.
We want to make sure that we end the year in a healthy place in the U.S. On the balance, if you look at the balance of our portfolio, we grew mid-single digits both in EMEA, LATAM, and in Asia-Pac. We do expect to see some acceleration in growth and consistent growth in those two regions. The combination of those two gives us the confidence in the around 3.5%, but certainly not counting on a big change in the U.S. trajectory to get there.
I'm glad to meet you touch on volume because one of the big features from results season is investors are super focused on volume. Do you, is there enough focus at Haleon on the volume mix? You know, you talk a lot about the 4%- 6% organic growth and some of your peers are targeting 3% volume growth. If I look at your volume mix since spin, and I track it since then, it's been tracking at around one, mid ones. It's been quite driven by Asia with volume mix quite low in the U.S. and Europe. Within the 4%- 6% guide, presumably the volume mix would need to be at least 2% or even higher.
My question is, is the top team incentivized enough on the volume mix or do you need to make a bit of a pivot between organic growth and volume mix or are you happy with the balance?
Yeah, just as a team, we're very focused on volume. Volume has such a big impact overall on a lot of things: cost structure, manufacturing sites, all that kind of stuff. If we think about our guidance of organic growth, we always said we expect to see a relative balance between volume, volume mix, and price. If you think 4%-6% , 2%- 3%, you know, volume mix, 2%- 3% price. I've always said what's balance? 60/40, 40/60. I mean, it's not a super exact science in any given year. It can fluctuate a little bit. I honestly don't really have a desire to get into very specific guidance on volume mix versus price and all that, but absolutely focused on it. We track it. We look at it.
Also, if you take a step back and see what we laid out for our capital markets today, reaching a billion more consumers, a lot of that is the opportunities we have with the low-income consumer in emerging markets. We're starting to see some of that. Launches are happening. It's a bit of a slower burn, but that's a volume play also. It's very much a big focus for the team and I, and we track both price and volume mix and are very rigorous about that.
Just digging into the destocking, I think it was a - 2 in both Q1 and Q2. What's your assumption on destocking in the U.S. in the second half? I've seen some of your peers talking about the difference between sell-in and sell-out of - 4, - 5. You talked about visibility. What visibility do you have on retailer inventory? Is there a risk that it becomes a bigger headwind as the drug stores lose share to retailers that have better inventory management such as Walmart or Amazon? Within your guide, what are you assuming? The - 2 continues, does it get a bit worse, a bit better? Where are we on your, how much visibility on that particular point?
From a visibility perspective, we have very good visibility on inventory, certainly with our top 10 customers, extreme visibility. That is the vast majority of our business. We have visibility below that too. We partner with our retailers. I think you're right that if you look at our business and our portfolio, we have more business in a Walgreens and maybe CVS type of retailer than someone who's in different consumer staple categories by the nature of the categories we're in. That is a reality. They tend to hold higher inventory levels. We do believe that the inventory reduction we saw in the first half and that gap will continue. We are not seeing those numbers swing higher. That is what we're assuming.
What we need to do is we need to get, and we are getting, much more proactive to partner to do that because one of the challenges is Walmart, Amazon, Dollar, Lowe's, Club are very good at inventory management. The drug channels just had a different bit of an operating model. The risk is inventories get lower and then it results in out of stocks in the store because the systems don't quite support the inventory levels they have. We are very conscious of that. We have teams on the ground that partner with all our big retailers and certainly those. In the balance of the year, we want to proactively manage that better than maybe, and everyone's been a little bit surprised by it. At this point, we see that there's going to be more pressure there and more opportunity. We want to proactively manage it.
That is in our guide for the year.
In terms of consumption in the U.S., you were 3% in Q1, you were 0.5% in Q2. The market was a - 0.5%. Can you break down why the market slowed from 3% to 0.5%? Is it smoker's health? Is it allergy? Is there any reason to think it doesn't naturally come back to the usual 2%- 3%? I guess you often think it's mostly cyclical. Are there any elements that potentially could be structural?
Yeah, I think it is more cyclical. I think if you just break down what happened in Q1 versus Q2. In Q1, what you saw consumption-wise was a high cold and flu season at the end of the quarter. We are a seasonal business and we are impacted by that, so that really drove that kind of higher growth in Q1. You come to Q2 and allergy season was lower. You lose the tailwind of the cold and flu because when you get into April and May, that kind of goes away. Allergy season was a bit lower. I think that's the natural dynamic on the business. Smoker's health we've talked about. That is a category that certainly is under more pressure in a $30- $40 price point kind of range.
For consumers that are really under a lot of pressure and feeling it, it's a much bigger choice than, let's say, an Advil at $5.99 or $6.99 or a Sensodyne kind of thing. The one thing that's been consistent throughout, I have to say, has been our oral health performance, which has continued to go from strength to strength. We continue to grow share. We continue to see good consumption growth. That is a category that we're seeing in the 3% kind of growth range. Being in therapeutic oral health, we're much higher than that and we're growing share in a healthy way.
I just want to touch on smoker's health because I think it was down 20% in the quarter, and the -1.7% you had in the U.S. would have been almost flat.
Yeah.
For the second half, should we assume that the down 20% continues at that run rate, or I think you've got a new innovation coming that might help a little bit? What should we think about in terms of the drag?
Yeah, I would expect that it's going to continue to be a drag, but not that level of drag. There were some unique things that happened, some things in the base. In the end, we believe we have plans that can help stabilize that a bit. We also do have a new innovation. It's a lozenge, FDA approved. There won't be private label on that. It's a flavored lozenge that stops cravings within three minutes. We're launching on e-comm in the back half and we'll do a full launch next year. We have reason to believe we can get that business more stable. It's never been a big growth driver business for us, but it is a good business. It meets a real unmet health need. We believe we can get it to a place where it can play the role it needs to in the portfolio.
Maybe following up on channel mix, you mentioned you're, you know, maybe slightly overweight at the drug stores. How are you executing with the growing retailers like Amazon, like Costco, like Walmart? Do you need to do anything around strengthening those relationships, in terms of execution, in terms of category management, in terms of supply chain, data, merchandise? I don't know what it is.
Yeah.
Are you happy with how you're executing with the growing retailers?
Yeah, listen, we have very good partnerships with all of them. You know, Walmart and Amazon are our top two customers in the U.S. We have teams on the ground like every other CPG company or consumer staples company in those locations. Very good business at Club, very good business at Dollar. It's not an issue of, you know, the channel shift has been going on for years. It's a bit exasperated because of the challenges that the drug channel is having and them trying to meet their financial commitments and things like that. I think we're very focused on winning with the winners also while ensuring, you know, we have a lot of consumers and our consumers that go through that drug retailer. We want to make sure we're right on that business.
No, I don't have a concern that we're moving to channels where maybe we have less strength. Actually, if you look at Amazon specifically, our top 18 brands are over 90% of the business in Amazon. Eighteen brands are over 90% of the business. Sixteen of those brands actually have higher share on Amazon than they do in bricks and mortar. For instance, Sensodyne, which is roughly a 21% share or so in bricks and mortar, is close to a 28% share on Amazon. Even when that channel shift happens, there is some benefit to us as you're moving from a channel with higher share.
This might be a final question on the U.S., but in terms of competitiveness, when you look at obviously a lot of stuff going on with the channel to consumer, where are we in terms of U.S. market share competitiveness? Are there spots where you're still not happy from a share point of view? I mean, Advil is an obvious one where it's been a share issue. Where are we on that? Are there any other spaces within the U.S. where you'd like to improve the share?
Yeah, if you take again a big step back and overall share, we're growing share in the U.S., huh? Again, [0.5%] up in a market, [0.5%] down from a consumption per basis needs, we're growing ahead of the market. We're growing share. Within that, clear strength in oral health continues, and we expect it to continue. Across any portfolio, you have areas that are doing better and not doing better. Advil grew share full year 2024. In the first half, though, it was under share pressure again. We've now, in the latest periods, stabilized that. We think we have strong plans in the back half. I think across any business in any portfolio at any given time, you'll have things that are doing better, not better. We're very focused on the overall consumption. Am I happy? I'm never happy.
I mean, yeah, we should be, you know, I want to see us grow more share. I want to see us grow a bigger percentage of the business growing share. I want to see us drive more volume. It's very much a focus of the business of how do we maximize the portfolio. It's not that we're losing across the board or we have major significant issues on share.
Maybe just turning to one of the key categories of BMS. The question we're getting from investors is, is the category structurally challenged, especially in developed markets? Obviously, it's a different story in emerging markets, but in developed markets, and, you know, Centrum's been doing well. You've been putting science in it with Centrum Silver, etc. You've got new stuff coming in Q3. Some of your competitors like Nestlé are now looking to sell big chunks of BMS, Church & Dwight. There's a bit of a question mark about actually, you know, does the consumer really believe in this science, you know, and why are other players actually exiting where you're doubling down? It's obviously been challenged in the first quarter. It was a bit better in the second quarter, but still negative in the U.S. How do you think about it kind of structurally?
Should we expect to see BMS in the back half in the U.S. turn positive?
If you take a step back and just look at our portfolio, three brands make up about 85% or so. That's Centrum, obviously, in 68 countries; Emergen-C [Immune+], very focused on the U.S.; and Caltrate, which is in a number of countries, the biggest country being China. We feel like China is a very strong place as osteoporosis is a major focus for the Chinese government. We partner with them and we think we drive really good business there. If you look at our business outside the U.S., it grew mid-single digits. It was the U.S. that was the challenge. The challenge specifically in the U.S. that we saw in the first half is a year ago, consumption on Centrum was up in the high teens, and that was driven by the activation of the cognitive function claim that you mentioned. Now it's down. We're giving some of that back.
We're not giving it all back. For us, it's more of getting the rhythm right on the claims and what we do. I do believe, and we have a new claim, as you mentioned, we're activating now in the back half around that cognitive function. We have a number of things going on to come out with new science-backed claims. We do believe that is a massive opportunity done in the right way with the right credibility. These cognition claims, some of them were done in partnership with Harvard Medical School. This is real credible stuff in a category where, frankly, there isn't as much credible stuff. We believe that really resonates with consumers. We also think Centrum is a brand with a history and legacy that can really carry that.
We believe there's an opportunity here as a consumer health company where we can do something unique and different, given our medical, regulatory, and clinical capabilities that maybe some other companies that aren't in the consumer health space would necessarily have. I'm still optimistic about it. There's no question we've faced some headwinds in the last six months.
BMS may be in emerging markets by contrast growing.
Yeah. In emerging markets, it's growing really well. It's also part of our focus on low-income consumer. We believe this is an opportunity. We believe those things are going to be slower burns. We launched in India, Centrum, a year and a half ago or so. A couple of years ago, we launched Centrum Essentials in Brazil. We specifically designed products for that low-income consumer. That kind of stuff takes a little bit of time, but we think can really build momentum. I look at launching Sensodyne in India, 11 years ago, and now it's our second largest market, continuing to grow in the mid-teens. In those first three or four years, it was a relatively small business. I believe some of this is long-term investment and category creation. If you look at China, it's a well-established category, and we have very strong positions with both Centrum and Caltrate.
Can we spend a bit of time on the oral care business? Obviously, great portfolio for you. You mentioned a multi-year runway for Sensodyne, and you've got a Clinical platform, a Clinical whitening platform, Clinical Repair, Pronamel as well. Are there any new areas that are untapped, or is it more about extending existing brands and then closing the incidents versus the treatment cap? What innovations should investors be most excited about? Is it more just about rolling it into more countries, maybe kind of size it for us?
Yep. If you look at the performance of Oral Health first and then Sensodyne over the last number of years, it continues to be really strong. We continue to grow share in the U.S. and outside the U.S. and on a global basis. The clinical platform, we started with Clinical White, and then we launched Clinical Repair. Now in the U.S., we launched Clinical Enamel. It's doing really, really well. It's really doubling down on what I would say makes Sensodyne kind of special, which is this therapeutic focus, the dental recommendation. What we've seen on all three of those innovations is that it really does get that dental recommendation in a big way because the data is real and it's there. I've told this story a few times, but six months after Clinical White launched last year, I went to Chicago for business meetings.
I spent a day with our dental detailing team. To a dentist, they would say, we don't recommend whitening products because they're not good for gums and sensitive teeth. Took them through the clinical data on Clinical White, and they said, we'd recommend that. That's the thing. Clinical White is now in 16 markets. It'll be in 21 markets by the end of the year. Clinical Repair is in 16 markets. It'll be in 21 markets by the end of the year. Clinical Enamel has launched in the U.S. and we'll start rolling that out, although Enamel isn't as big in many other markets. We're very clear. There are some markets where Clinical White may not launch for three years because the whitening segment isn't quite as established. Beyond that, we have additional clinical innovation that will come out that we haven't launched yet.
We also, again, the low-income consumer opportunity with INR 20 pack in India, we've launched that. We've gone from half a million outlets in India to a million . We'll go to 2 million to 3 million. We're also launching Cavity+ Sensitivity in emerging markets for low-income consumers because for that consumer and for that mother who's buying, she's buying for the family and cavity is still very important. We'll also launch slightly bigger sizes. We're continuing to learn and kind of evolve. We think in the longer term and mid-term, that's going to be a real, a real growth driver for us.
Maybe while we're asking, can you talk about parodontax? I mean, the feature in the CMD. How many countries is parodontax in today? I think China was a big new market.
Yeah, big, big launch.
Gums. Any idea of how big the brand is, how many countries?
Yep.
You've got a long runway to go.
Yeah, yeah. Listen, it's in about 60 countries, but I think the challenge for parodontax historically has been the resource allocation to be able to support it. I'm talking pre kind of Haleon, right? When we were still a division of a pharma company, we didn't have the P&L capacity necessarily to go fully activate that. We do now and we are. That's why launches in China, in India, in South Africa, and a number of markets we've kind of leaned in on. It is growing in the mid-teens. I don't think we've disclosed how big it is. It's not nearly as big as Sensodyne as you can imagine. Gum health is quite a big category. Actually, in China, it's multiples bigger than the sensitivity market. Early days again, and it's an investment we'll make for the medium term and long term.
We are quite optimistic about the launch in China and what's happening. We believe this mid-teens growth of parodontax can continue on for the foreseeable future.
I mean, you mentioned China. Maybe that's a good segue to talk about China. You've completed the buyout of your JV partner. Can you tell us now, post that buyout, what the opportunity is, what the growth was in the first half, the outlook? I guess you can reach more pharmacies. Why is it such a big unlock for you? What is the size of the prize in China?
Yeah, so listen, to step back, if you think about our business broadly, 20% oral health, we've owned that 100% all along. 40% BMS, that's been our business, 100% ownership. The joint venture has been on the OTC business. It was a 55%, 45% joint venture. First thing is, by doing the deal, it brings in 100% of the profit. We're not paying a JV partner. That was 2% EPS accretive. Financially, this absolutely made sense. From an operating perspective, we were running the business ourselves, but there was a JV board. It kept us from doing things that just made sense for the business. One of them you mentioned, which is our go-to-market model. We would have TSKF was the name of the JV. There was a TSKF sales force and a Haleon sales force calling on pharmacies, sometimes one after another.
Because of the structure of the JV, there wasn't really any opportunity to collaborate or work together. We're combining those sales forces now. It does two things. One is there's just cost synergies, although it's less about that for me in China. There's serious cost synergies because we don't need a thousand of these and a thousand of those calling the pharmacy. From a go-to-market perspective, now we're showing up to pharmacies with the broad portfolio and the scale. It does allow us to reach more markets. I think it was financially a really smart thing to do. Operationally, I think it frees us up to really invest and unlock the full potential of that business. Now the returns on the business are much greater because we're getting 100% of the returns.
Maybe moving to India, obviously growing very quickly already. Do you think India can accelerate the growth from here into the back half? You've got quite a small portfolio in India, although you said Sensodyne is the number two market already. Is there any reason why you can't surf in more of your portfolio more quickly into India to broaden your footprint, maybe expand distribution? I know that was a focus at the CMD. Maybe you can give us an idea of where the distribution points are today in India, how much you can increase those by. Presumably, at the end of the day, it comes down to price point as well. If you get the wrong price point, it's not going to work.
Yeah.
How do you balance the price point versus the margin as you're trying to scale a business in India?
Yeah, and listen, first of all, we look at our portfolio and business, Sensodyne, and like you, like I mentioned earlier, number two market globally, behind only the U.S., growing in the mid-teens. By the way, up until a year ago, in a half a million outlets, India has millions and millions. The other just to on the portfolio, we've launched parodontax, although not in a bigger way as China because gum health isn't as established. Again, we think as a longer-term play. We do have Iodex, which is a topical product that we've launched Voltaren brand under. It didn't make sense to launch Voltaren. We've launched it under that. ENO, digestive health brand, is also a very big brand in India. Then we've launched Centrum recently.
I feel like we have enough going on in India now to establish the launches that we have and stuff, but there's an opportunity over time for us to continue to expand the portfolio. From a distribution perspective, again, Sensodyne in a half a million outlets will get it up to 3 million outlets. On the low-income consumer and price point and stuff, if you think about the gross margin on that, if you design it right, it doesn't need to be significantly gross margin dilutive. Actually, our ENO brand in India, which sells the majority of the volume, goes through a INR 10 price point, has very healthy gross margin on it. We think there's opportunities to continue to expand, continue going after the low-income consumer on ENO, which is already established, on Sensodyne, on Centrum. I am optimistic that the back half will accelerate growth.
Okay. I am going to turn to savings. At the CMD, you outlined GBP 800 million of savings out for 2030. You guided to 50 basis points- 80 basis points of gross margin per annum and high single-digit adjusted EBIT growth at constant currency. If I do my math on that, if I take the midpoint, 65 basis points for four or five years, you get to a gross margin of basically 66%, 67% by 2030. That is a big increase. Does that drop through or does it get reinvested back? You are already spending 19% of sales on advertising. Does the advertising number need to go higher to improve your volumes more consistently in the U.S. and Europe?
If push comes to shove, would you sacrifice your gross margin target to do less than that if you needed to deliver more volume growth to hit the kind of healthy volume balance within the 4%-6% ?
Yeah.
There is one about the savings or drop through, and then how you think about it philosophically in terms of what's more important?
The GBP 800 million savings and 50 basis points- 80 basis points of gross margin, we're quite confident in that, just to be clear. If you saw the first half of the year, we grew gross margin 160 basis points. I think what you find, by the way, when you do these supply chain things is you try to quantify all the work you're going to do and what it's going to deliver. We did that. My feeling was there's more there once you get into it and you realize that. I feel very confident in the savings. What it allows us to do, by the way, is provide the high single-digit operating profit growth and still invest in the business. If you look at the first half, we invested in A&P, 6.8% growth, and R&D + 9%. I want to invest in A&P and R&D to unlock and drive growth.
We're not underfunded in A&P, to be clear. As we go after some of these new areas, low-income consumer, which requires education, launches of parodontax in China, that's going to require more investment. We want to invest to drive growth. Your question on gross margin versus sales growth, I actually think from a gross margin perspective, it's almost a bit independent because it's supply chain savings and things in our control. It's not like if I said I'll do a little less gross margin to drive more growth. I could transfer your question to operating margin. That's a different choice that anyone can make. The high single-digit growth, we believe, given our confidence in the productivity, will still allow us to invest in A&P and R&D in a healthy way.
It also gives us a ton of flexibility that if we don't believe the ROI is there, we don't believe that the investments make sense, we can bring more to the bottom line. We feel like that algorithm of the 50 basis points- 80 basis points, 4 % -6% growth with operating leverage in any business gets you the high single digit with still a lot of flexibility to make the investment choices.
Maybe can you talk a little bit more about the savings? When Namrata Patel gave the presentation, it was quite significant in terms of the buckets. People forget that Haleon is a three-year-old company, and there's actually a lot of opportunity. If you had to sort of rank the top three cost opportunities, what would you say on that?
I'd almost put it in three tranches. Again, as background, if you think about Novartis Consumer Health, GSK Consumer Health, Pfizer Consumer Health, three supply chains that historically, by the way, those supply chains were run by the pharma divisions of the company. By the way, three great companies, very good at what they do, but supply chain for pharma companies where you have 90% gross margin in some cases and low volume isn't the place where you get value. As we take a step back, and because we were a company that brought a portfolio together from three different companies, we focused on delivering GBP 1 billion of synergies across the two big deals. When we did the integration, there's a bit of low-hanging fruit tranche, which is clean up the portfolio.
Some of it is just blocking and tackling multi-language packaging, the number of different 12-oz size bottles we have, which drive changeovers in the plant. Over the next couple of years, what you're seeing now is a bit of the benefit of that. We're seeing more efficiency in the plant, better leverage in the plant, allowing us to bring things in from third parties into the plant. I'd say there's the portfolio simplification, make operations better. There's the CMO kind of in-house things as we get more capacity in our plant. The second is just around capital allocation to automation in the plant. We're beginning that now, but that will also take a little bit, it'll be a bit longer term that it'll continue to deliver dividends over the next number of years.
The third is the opportunity to build additional plants in areas that really make sense where we see the opportunity. All that is kind of the three-step approach. We've talked to India and China. I think we said that at Capital Markets Day. That's why we see this kind of five-year runway of the low-hanging fruit, not necessarily easy to do, but not rocket science, just blocking and tackling.
Maybe final question for you, Brian, on the algo. How confident are you of getting back to the 4 % -6% algo in 2026? What would you assume North America does within that? What would need to happen to get into the top of the range? What would need to happen if it was at the bottom of the range? Is it the U.S.? It's primarily the delta. In terms of your confidence into next year, what's North America assumption?
Yeah, yeah, yeah. Listen, we're in the process of finalizing all next year's plans. We have quite a robust strategic planning process and looking at the next three years, and we've done that. I really am confident in the guidance I gave at Capital Markets Day over the medium term, which is the 4%- 6% and the continued profit guidance and the strong cash flow and everything else that comes with that. I think as I look at next year, I expect to see the U.S. come back to growth. Not necessarily, let's say, not counting on some amazing turnaround or anything, but I see the opportunities for us to get that business back to a place and end the year in really healthy inventory levels. I remain confident. The stuff we laid out at Capital Markets Day still really holds.
The treatment for a sensitive gap, the innovation-led premiumization, which is, you know, oral health continues to go from strength to strength, the low-income consumer in the emerging markets. If you do look at this year, the challenge really has been the U.S. It's a bit of market dynamic. Honestly, I think we can and should do better. I think, you know, with our new leadership in the U.S., I'm quite optimistic that we'll get that right.
Good.
I have a few questions for you.
Oh, okay.
The reverse fireside, as I like to call it.
Okay.
We're a relatively young company, only three years old. As you look at our business, do you think there's areas, you talk to a lot of investors, that are less understood in the business, areas that we need to educate our investor base on more to understand our business?
I think one area that maybe goes under the radar is cash flow. I mean, from the CMD, you're talking about a 30% reduction in, like, you know, cash flow, working capital. Clearly, if you can really take down that cash or improve the cash conversion and reduce the inventory days, I think the impact on the balance sheet deleveraging hasn't been fully recognized by the market. It'd be lovely to get a little bit more detail on the drivers and the timing of that. There's so much focus on the top line and the margin and the savings. People forgot that actually cash flow was another big element of the CMD. I think that's one. I think two, we'd love to hear from Nathalie in the U.S.
when she's done the diagnosis of the business to hear from Nathalie about what the issues are, how you can improve things, where you are specifically around things like e-comm and marketing, given her background at L'Oréal.
Yeah, yeah.
We would love to do that. Maybe a little bit of an ask for a mini CMD on the U.S. when you can.
Okay.
Maybe thirdly, you're going from five categories to six categories, and you're breaking out for the first time therapeutic skin health as a category, as a sixth category. It'd be great to understand what your vision is in terms of growth, and you've obviously done it for a reason.
Yeah.
We'd love to know what the playbook is and how you think about it.
Yeah, three areas. I ask you a question, I end up with three questions.
Yeah, that's how it is.
Well done. Maybe just two things before I get to my second question. Listen, on cash flow, I think it's a really good point. Extremely strong cash business. As we look at investing more capital in our supply chain, we can fund that completely by the inventory reduction and working capital reduction. Part of that, by the way, links to the productivity program and the efficiency of our plants. Simpler the portfolio, the better our plants operate, the more room we have to reduce inventory perspectives. I do agree on the U.S. that we've had some discussions about how do we give more visibility to the U.S. as we get clear on that point. Thank you for that. Maybe my last question, listen, we obviously here talked a lot about the U.S. I would imagine that everyone is talking a lot about the U.S.
As you look across consumer staples more broadly, what's your takeaway on the U.S. environment, U.S. consumer? Do you see differences within consumer health versus other consumer staple categories you cover?
Yeah, I think a couple of years ago, consumer health was seen as being quite a homogenous category. I think what we're seeing now is there are some segments that are becoming winners and some that are becoming relative losers. I think that investors are starting to make that, you know, distinguish between the winners and losers. I also think there's a bit of a point around U.S. consumer health versus rest of the world consumer health. Ultimately, you know, I'm getting more questions about, you know, in consumer health in the U.S., is there a pricing issue? Has the price been taken a bit too high in some of the more commoditized categories? Ultimately, what everybody wants to know is when is the U.S. sell-out going to improve? When's the stocking? I think there's a question mark about this.
As long as I've been doing this job, we've been talking about destocking. It's not a new phenomenon. It just seems like it's getting a bit, yeah, a bit weaker. I think people are trying to sort of understand how much of that is actually just cyclical versus is there a lot of structural elements. Yeah, it's quite a complex environment in the U.S. and everybody's just trying to get their head around it.
Yeah.
On that note, Brian, we're going to cut it there.
Super.
We're going to have a breakout next door. We're going to have 15 minutes. If you want to join us next door for more questions for Brian, please do join us.
Great.
Thank you.
Yes, thanks.