Halma makes 'strong progress' in first half

(Sharecast News) - Halma reported "strong progress" in its first half in a trading update on Wednesday, with its financial performance ahead of the board's expectations, while revenue growth and return on sales exceeded expectations and historic levels.

The FTSE 100 safety products company said order intake had been ahead of both revenue this year and of order intake for the same period last year.

It said that performance reflected the benefits of long-term growth drivers in its markets, the breadth of its portfolio, and its business model which had enabled its divisions to respond to changing market conditions.

"We expect to report strong organic constant currency revenue and profit growth for the first half of the year, with profitability benefitting from a slower-than-expected return of variable overhead costs as restrictions due to the Covid-19 pandemic have eased," the board said in its statement.

"This performance compares to a weaker comparative period in the first half of the 2021 financial year, when we saw the largest impacts from the pandemic.

"We expect more typical rates of revenue growth and return on sales in the second half of the year, with the latter more in line with historic levels as variable overhead costs gradually return."

Although the firm said it expected to see a continued impact on revenue, costs and working capital from increased supply chain, logistics and labour market disruption, it currently expected adjusted profit before tax for the full year to be "slightly ahead" of its previous guidance.

Thus, it said its results for the full year were expected to be more weighted to the first half than in previous years.

The company's safety, and environmental and analysis sectors, reported the strongest organic revenue and profit growth in the year to date, with many companies experiencing significant increases in demand because of a rebound in customer activity as the effects of the pandemic moderated.

Its medical sector also delivered strong growth, with revenue benefiting from a recovery in demand for most products and services related to elective healthcare procedures, which offset declining demand for products and services directly related to Covid-19 diagnosis or treatment.

The safety, and environmental and analysis sectors saw a "small negative impact" from recent disposals, net of acquisitions, while the medical sector benefited from recent acquisitions.

"There was widespread growth geographically, with double-digit percentage organic constant currency revenue increases in all major regions," the board said.

"There was very strong organic constant currency growth in the UK and Asia Pacific, while the United States and mainland Europe also grew strongly."

The board said the strength of sterling was having a negative currency translation effect on its results, though it expected that effect to reduce in the second half.

Halma had made 10 acquisitions in the financial year to date for a maximum total consideration of £108m.

It also completed the disposal of Texecom for £65m, which the board said demonstrated the firm's "disciplined approach" to portfolio management.

Cash generation, meanwhile, was described by the board as "good".

"This, together with Halma's strong financial position, will support continued investment in growth, both organically and by acquisition," the directors said.

"We have a healthy acquisition pipeline and continue to actively manage our portfolio of global businesses to ensure that it is aligned with our purpose of growing a safer, cleaner, healthier future for everyone, every day, and continues to deliver strong growth and returns over the long term."

Halma said its results for the six months ending 30 September would be released on 18 November.

At 0827 BST, shares in Halma were up 1.37% at 3,099p. Halma