Halma reported another impressive performance, but it somehow failed to impress the market. That's in line with the wider pattern seen among the engineers, but may also reflect the slight slip in return on sales - from 20.3 per cent in the second half of last year to 19.8 per cent. This comes just six months after chief executive Andrew Williams told investors that a return on sales of over 20 per cent "could be possible if we achieve good revenue growth".
He puts the dip down to higher overheads, including research and development costs, as well as pressure on some raw material costs. But he stresses that these are temporary and have now been resolved. Moreover, as a design and assembly operation, Halma is protected from the more generic commodity price increases that may affect manufacturing margins next year. These pressures were, in any case, offset by strong revenue growth in all three divisions. The star performer was health and analysis, which makes devices for assessing eye health, light quality and the state of water pipes - led by 48 per cent sales growth in the Asia Pacific region.
Peel Hunt has upgraded its estimates and now expects full-year adjusted pre-tax profit of £104m and adjusted EPS of 21p (£86m and 17p in 2010).
HALMA (HLMA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 318p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 317-318p | 12-MONTH HIGH: | 346p | LOW: 222p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 86p* | NET CASH: | £27.6m | |
| Half-year to 2 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 222.1 | 35.4 | 6.87 | 3.31 |
| 2010 | 249.1 | 47.3 | 9.38 | 3.54 |
| % change | +12 | +34 | +37 | +7 |
Ex-div: 5 Jan Payment: 9 Feb *Including intangible assets of £225m, or 60p a share | ||||
