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Halma takes the long view

The safety equipment manufacturer has delivered record profits in three out of four divisions
June 13, 2017

Halma (HLMA) exited its 2017 reporting period with record profit recorded across three of its four business divisions, and since the year-end order intake has continued to outstrip historic revenue. The only relative laggard in the reported period was the process safety division, but it still grew adjusted profits through the second half, while its exposure to energy markets has been reduced.

IC TIP: Hold at 1132p

All up, the group's adjusted pre-tax profits, before amortisation and one-off charges, came in at £194m, representing a 3.6 per cent rise at constant currencies. Shareholders will be encouraged by business levels across the group's geographies, although Asia-Pacific provided the standout performance with organic constant-currency revenue growth of 9 per cent. Material and labour costs remain remarkably consistent, and a return on invested capital of 15.3 per cent provides a clear pointer to the strong performance of the group's acquired assets.

With one eye on future revenue streams, Halma, which fabricates employee safety equipment, fire and smoke detectors, and medical devices, boosted its R&D spend by 13 per cent at fixed currencies to £50.6m, including further incorporation of cyber security features within its products. Innovation has been central to the group's expansion - the average contribution to group revenue from products launched in the past three years has been around 22 per cent.

Goldman Sachs expects adjusted profits of £233m for the year to March 2018, with EPS of 46.3p, rising to £251m and 49.7p in FY2019.

 

HALMA (HLMA)
ORD PRICE:1,132pMARKET VALUE:£4.29bn
TOUCH:1,132-1,135p12-MONTH HIGH:1,168pLOW: 856p
DIVIDEND YIELD:1.2%PE RATIO:33
NET ASSET VALUE:205p*NET DEBT:25%

 

 

Year to 1 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201361912024.810.43
201467713928.111.17
201572613427.511.96
201680813628.812.81
201796215834.313.71
% change+19+16+19+7

Ex-div: 13 Jul

Payment: 16 Aug

*Includes intangible assets of £838m, or 221p a share