This article has not been prepared in accordance with legal requirements designed to promote the No view is given on the present or future value or price of any investment,Īnd investors should form their own view on any proposed investment. This article is not advice or a recommendation to buy, sell or hold any investment. Investments rise and fall in value so investors could make a loss. These estimates are not a reliable indicator of future performance. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. It was correct as at the date of publication, and our views may have changed since then. This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture. Please remember yields are variable and not a reliable indicator of future income. Ten year average prospective dividend yield: 1.2%Īll ratios are sourced from Refinitiv.Prospective dividend yield (next 12 months): 1.1%.Ten year average forward price/earnings ratio: 28.8.Forward price/earnings ratio (next 12 months): 23.4.But we aren't alone, and while the valuation has come down from its pandemic highs, it's still towards the top of its peer group. Add in good cash flow, and there's plenty of room for investment should the right opportunities arise.Īll in, we're supportive of Halma's business model and growth drivers. Net debt more than doubled last year, but still looks manageable at 1.4x cash profit. We don't want Halma to buy for the sake of it, but we'd like to see more progress on the "healthy" pipeline over the second half. That was just about reached last year by spending nearly £400m, but with less than £60m spent in the first half, there's a decent gap. There's a lot to do over the second half if Halma wants to maintain its ongoing target of generating 5% growth from new deals. Progress on deals over the half has lagged last year's record levels. Buying businesses isn't cheap it's much more sustainable if it can be funded by internally generated cash. One of the first things we look at in a buy-and-build business model is its ability to throw off cash flow. Following a brief dip in the first half of last year, things look to have bounced back and we should see it above the 90% target this year. This provides some comfort that it can prosper even in a challenging economic environment, but there are no guarantees.Īcquisitions are key to the strategy, so cash conversion (the level of operating profit backed up by cash) is essential. Halma has shown itself to be a safe pair of hands, recently delivering its 20th consecutive year of record profit. These include increasing demand for healthcare, tighter safety regulations, and growing global efforts to address climate change, waste and pollution. This differentiated business model, geared toward non-discretionary and sustainability related demand, offers exposure to some resilient long-term growth drivers. Halma's essentially a mash-up of around 45 businesses working to provide technology solutions in the safety, health, and environmental markets. That 20% marker is key, and with forecasts currently looking for a full year outcome of 19.7%, it's good to see things trending in line. Halma has put in a solid first half, with consensus forecasts suggesting higher sales and improved profitability in the latter part of the year.Īt the start of the current financial year, the outlook for profitability was a little lower than markets were expecting, with return on sales (a measure of profit margin) expected around 20% for the coming year - analysts had pencilled in 20.4% at the time. The shares were up 4.9% following the announcement. The Board has raised the interim dividend by 7% to 8.41p. Halma ended the half with net debt of £618.8m.įor the full year Halma expects underlying pre-tax profit to be in line with consensus forecasts which are currently looking for growth of 7.7% to £389m, against growth of just 3% in the half just reported. This was slightly slower than revenue growth as margin improvements in Safety and Healthcare, weren't quite enough to offset a decline in Environmental & Analysis.įree cash flow was up to £134.7m from £78.9m reflecting an improvement in operating cash conversion that now sits above the 90% target. Underlying operating profit grew by 7% to £190m. There was growth in all regions except Asia Pacific which was held back by weakness in China and India. ![]() And all divisions grew organically, albeit only marginally in Healthcare where customers were seen to run down their stockpiles. ![]() Recent acquisitions made a 5 percentage point contribution to this growth. Halma has reported another record first half with revenue of £0.95bn, up 9%.
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