21st Sep 2023 11:34
(Alliance News) - Halma PLC on Thursday left guidance for financial 2024 unchanged, but its latest update left question marks over its acquisition pipeline, according to Hargreaves Lansdown.
In a pre-close update, the Buckinghamshire, England-based safety equipment firm cited "progress" in the first half, despite "varied market conditions". It reiterated guidance, first provided in June, for "good organic constant currency revenue growth" and 20% return on sales.
The FTSE 100-listed firm said order intake so far is ahead of the levels seen a year earlier. It also reported "strong organic constant currency revenue growth" in the US and mainland Europe.
UK revenue has grown "modestly", but in Asia-Pacific, it has declined, which it said was due to a revenue fall in China, partly offset by a "strong performance" in Australasia.
It said that after the "record" spend on acquisitions in its previous financial year, it maintains a "healthy pipeline" across all three sectors. In financial 2023, it completed seven acquisitions for a maximum of GBP397 million, and has made three acquisitions in the first half of its current financial year, for a maximum consideration of GBP80 million.
In the eyes of Matt Britzman, equity analyst at Hargreaves Lansdown, the M&A progress has been "a little slower than many would have liked" and a "stark comparison" to the levels seen in the prior year.
Shares in Halma were down 1.3% at 2,049.10 pence each in London on Thursday morning.
"Acquisitions are key for Halma, which is essentially a mashup of businesses providing tech solutions in the safety, health, and environmental markets."
"Of course, throwing cash at businesses that don't fit the bill is never the right move and timings are somewhat out of Halma's control. But markets could have done with a little more reassurance that the deal pipeline is on track to accelerate over the second half."
However, Britzman said the update makes it seem as "things are set to improve" over the first half.
"Halma continues to trade at a justifiable premium to the sector, but that does bring with it a pressure to keep delivering – markets will probably want a little more when half-year results are delivered in November," he added.
Halma will release results for the half-year ending September 30 on November 16.
By Elizabeth Winter, Alliance News senior markets reporter
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