There might be a more consistent performer than Halma (HLMA) among London's largest listed companies, but it doesn’t spring readily to mind. Once again, the safety equipment manufacturer delivered 9 per cent revenue growth at constant currencies in the six months to September, with growth recorded across all four sectors and underlying operating profit up 12 per cent to £99.5m.
There’s nothing fortuitous about this performance. Halma's ability to efficiently market its products is aided by a devolved management structure, while profitability is underpinned by a rollout of innovative, higher-margin product lines. This latter point is borne out by a 19 per cent increase in research and development (R&D) expenditure in the period, “with higher rates of investment in the medical, environmental and analysis sectors”. The efficacy of this targeted approach is seen in the consistently high contribution that new product lines make to overall sales.
Management is keen to point out the gathering benefits of geographic expansion. Consistent currency revenue from the Asia Pacific region increased by 14 per cent, eclipsing domestic UK sales for the first time. Top-line growth in the US, Halma’s largest end-market, was relatively subdued at 6 per cent, largely due to weaker demand in the fire safety business.
Investec forecasts adjusted profit of £211m for the March 2018 year-end, leading to EPS of 43.3p, up from £194m and 40.2p in FY2017.
| HALMA (HLMA) | ||||
| ORD PRICE: | 1,325p | MARKET VALUE: | £5.03bn | |
| TOUCH: | 1,324-1,327p | 12-MONTH HIGH: | 1,341p | LOW: 880p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 204p* | NET DEBT: | 23% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Sep | (£m) | profit (£m) | share (p) | per share (p) |
| 2016 | 442 | 65.2 | 13.8 | 5.33 |
| 2017 | 506 | 76.8 | 16.3 | 5.71 |
| % change | +15 | +18 | +18 | +7 |
| Ex-div: | 28 Dec | |||
| Payment: | 7 Feb | |||
| *Includes intangible assets of £803m, or 212p a share | ||||
