Halma plc (LON:HLMA), the global group of life-saving technology companies focused on growing a safer, cleaner and healthier future, has released its scheduled trading update, for the period from 1 April 2021 to date.
Strong progress in the first half and improved guidance for the full year
Halma has made strong progress in the first half of the financial year, and the Group’s financial performance has been ahead of the Board’s expectations, with revenue growth and return on sales exceeding expectations and historic levels. Order intake has been ahead of both revenue this year and of order intake for the same period last year. This performance reflects the benefits of the long-term growth drivers in our markets, the breadth of our portfolio, and the agility of our business model which has enabled our companies to respond rapidly 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 pandemic have eased. This performance compares to a weaker comparative period in the first half of the 2020/21 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 we expect to see continued impact on revenue, costs and working capital from increased supply chain, logistics and labour market disruption, we currently expect Adjusted profit before tax for the full year to be slightly ahead of our previous guidance (see Notes 1 and 2). Therefore, our results for the full year are expected to be more weighted to the first half than in previous years.
All sectors and major geographic regions delivered strong organic constant currency growth
The Safety and Environmental & 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 COVID pandemic moderated.
The 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 diagnosis or treatment.
The Safety and Environmental & 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. There was very strong organic constant currency growth in the UK and Asia Pacific, while the USA and Mainland Europe also grew strongly.
The strength of Sterling is having a negative currency translation effect on the Group’s results (see Note 4); we expect this effect to reduce in the second half of the year.
Good progress in M&A, opportunities and resources for future investment
We have made ten acquisitions in the financial year to date for a maximum total consideration of £108 million. We also completed the disposal of Texecom, for £65 million (see note 5), which demonstrates our disciplined approach to portfolio management.
Cash generation remained good. This, together with Halma’s strong financial position, will support continued investment in growth, both organically and by acquisition.
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.
Half Year Results
Halma’s results for the half year ending 30 September 2021 will be released on Thursday 18 November 2021.