ii view: Halma a beneficiary of data-centre demand

First-half trading update to 30 September

• Now expects a low double digit percentage increase in adjusted revenues for the full year, up from a previous high single digit gain

ii round-up:

Industrial conglomerate Halma (LSE:HLMA) today increased its full-year growth expectations, driven by demand for photonics or light related products used by datacentre operators. 

The health and safety focused company now expects annual currency and acquisition adjusted revenue growth in the low double-digit area, up from a previous forecast for high single digit improvement.   

Shares in the FTSE 100 company rose 1% in UK trading having come into this latest news up almost a quarter so far in 2025. The FTSE 100 index is up close to 12% year-to-date and takeover target Spectris (LSE:SXS) has soared more than 60% during 2025.

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Halma operates across the three divisions of safety, the environment, and health. Its many products include those to aid safety such as smoke alarms, devices to measure climate change and pollution, as well as medical instruments to test eyesight and hearing. 

Photonics falls within the group’s Environmental & Analysis division, which generated 35% of 2024 sales, behind the Safety business at 40%. 

Halma highlighted group-wide growth, supported by order intake which remains ahead of revenues for both 2025 so far and the comparable period last year. 

Management expectation for full-year adjusted profit margin remains unchanged at just over 21%

Acquisitions year-to-date include Brownline, a provider of gyroscopic systems used by drilling contractors for £129 million, and Nu Perspectives, a cryogenic therapy healthcare device company for £1.5 million.

Broker UBS reiterated its ‘buy’ stance on Halma post the update, raising its fair value target price to £40 per share from a previous £37.30. 

First-half results are scheduled for 20 November.   

ii view:

Started in 1894, the Amersham, Bucks, headquartered company today employs over 9,000 people across more than 20 countries. Group customers include utility companies, commercial and public buildings, healthcare providers, as well as oil & gas and mining companies. Geographically, the US accounted for most sales during its last financial year at 46%. That was followed by Europe at 19%, the UK and Asia each at 14% and the rest of the world the balance of 5%. 

For investors, the strength of the pound is expected to offer a headwind to performance over this current financial year. a knock-on impact of US trade tariffs to US companies could eventually result in reduced corporate spending, dampening demand for its products. European sales, its second-biggest region, only grew 3% over its last financial year, while a forecast price/earnings (PE) ratio above the 10-year average may suggest the shares are not obviously cheap.

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To the upside, exposure to light-related photonics is generating demand from the expansion in datacentres globally. A diversity of products and geographical regions regularly sees challenges for one area countered by positives for another. Health and safety related products are arguably required whatever the economic backdrop. A dividend track record of more than 40 years of annual consecutive increases is also highly enviable despite leaving the shares on a modest forecast dividend yield of under 1%.  

On balance, and while risks remain, this well managed company continues to justify its place in many already diversified long-term focused investor portfolios. 

Positives: 

• Diversity in both products and geographical sales 
• Ongoing bolt-on acquisitions

Negatives:

• Economic and geopolitical outlook uncertainty
• Currency movements can hinder performance

The average rating of stock market analysts:

Strong hold