13th Jun 2024 10:36
(Alliance News) - Halma PLC's financial performance was "impressive" with its focus on niche areas proving successful once more, analysts on Thursday said.
On Thursday, the Buckinghamshire, England-based safety equipment maker said pretax profit jumped 17% to GBP340.3 million in the financial year ended March 31 from GBP291.5 million a year prior, as revenue climbed 9.8% to GBP2.03 billion from GBP1.85 billion.
Shares in Halma rose 11% to 2,601.00 pence in London on Thursday. It was the best performing stock in the FTSE 100 which was down 0.4%.
The company noted sound overall demand for its products and services, with the Environmental & Analysis sector delivering "very strong revenue growth" in the photonics business, and supported by Water Treatment and Analysis.
Environmental & Analysis revenue surged 19% to GBP658.4 million from GBP552.1 million.
"This was another successful year for Halma. We delivered record revenue and profit, continued high returns. Strong cash generation enabled us to make substantial investments in opportunities for future growth, while maintaining a strong balance sheet," said Chief Executive Officer Marc Ronchetti.
Halma recommended a final dividend of 13.20 pence per share, up 7.0% from 12.34p a year prior. This brings the total payout to 21.61p, up 7.0% from 20.20p.
Looking ahead, CEO Ronchetti said: "We have made a positive start to the new financial year. Our order intake in the year to date is ahead of both revenue and the comparable period last year. We expect to deliver good organic constant currency revenue growth in the year ahead, and an adjusted earnings before interest and tax margin of around 21%, in the middle of our target range. We remain well positioned to make further progress this year and in the longer term."
Matt Britzman, equity analyst, Hargreaves Lansdown said Halma's attraction is simple.
"It’s a mash-up of businesses working to provide technology solutions in the safety, health, and environmental markets. These may not be the most exciting businesses, but Halma’s clear purpose and quality of execution mean performance is impressive. Revenue passed the GBP2 billion mark for the first time in Halma’s history, and improving margins meant profits had an even bigger uplift, coming in ahead of expectations too."
Britzman explained Halma is a "beast" when it comes to converting profit to cash, a "key advantage and marker of a well-run business."
He noted total acquisition spend was down after record spending the prior year and thinks investors will be hoping to see a little more activity over 2024.
"Halma’s strengths are well known, so don’t come here if you want a bargain. But paying up for quality isn't a bad way to go," he added.
AJ Bell Investment Director Russ Mould was also positive after Halma delivered "yet another record set of results."
"The company’s focus on niche areas and providing technology-enabled health, safety and environmental solutions proved to be a winning formula yet again," he remarked.
By Jeremy Cutler, Alliance News reporter
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