ii view: Halma breaks records amid data centre boom

First-half results to 30 September

• Revenue up 15% to £1.24 billion
• Adjusted profit (EBIT) up 27% to £282 million
• Interim dividend up 7% to 9.63p per share
• Net debt of £641 million, up from £632 million as of late March

Guidance:

• Now expects mid-teens percentage growth in full-year adjusted revenue, up from a previous low double-digit gain
• Now expects full-year adjusted profit margin of around 22%, up from around 21% previously

Chief executive Marc Ronchetti said: 

“We made excellent progress in the first half, further extending our track record of delivering strong and compounding growth and returns, while growing a safer, cleaner, healthier future for everyone, every day."

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ii round-up:

Halma (LSE:HLMA) today raised full-year sales and profit forecasts again, driven by demand across all divisions and including that for photonics or light related products used by data centre operators.

First-half revenue up 15% to £1.24 billion drove a more than one-quarter increase in adjusted profit to £282 million. Each are new half-year records, beating City forecasts of £1.2 billion and £242 million respectively. The Industrial conglomerate now expects growth in annual adjusted sales in the mid-teen’s region, pushing a potential adjusted profit margin of around 22%. That’s up from low double-digit growth and a 21% margin.  

Shares in the FTSE 100 company rose 12% having come into these latest results up by close to a quarter so far in 2025. The FTSE 100 index is up close to 16% year-to-date. 

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. 

Sales at the Environment and Analysis division, including photonics, rose 35% to £488 million, with one “hyperscale” technology customer accounting for 19% of group-wide revenues during the period, up from 14% a year ago. Divisional adjusted profits soared 48% to £121 million. 

Safety related sales improved 4% to £463 million, although with a new divisional adjusted profit margin of 27% pushing profits up 16% to £125 million. 

The healthcare business returned to sales growth. Revenues rose 7% to £287 million, pushing profits up 10% to £61 million. The interim dividend payment rose 7% to 9.63p per share. 

Broker UBS reiterated its ‘buy’ stance on Halma post the results, raising its target price to £41 per share from a previous £40. 

A full-year trading update is scheduled for 12 March. 

ii view:

Founded in 1894, the Amersham, Bucks headquartered company today employs over 9,000 people across more than 20 countries. Halma customers include utility companies, commercial and public buildings, healthcare providers, as well as oil and 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, accompanying management comments highlighted varying conditions across end markets, with economic and geopolitical political uncertainties. The full impact of US trade tariffs may not yet have been seen, with slower growth yet to impact. Currency moves can hinder performance, while a forecast price/earnings (PE) ratio in line with the 10-year average may suggest the shares are not obviously cheap. 

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More favourably, exposure to light related photonics is generating demand from the expansion in global data centres. Health and safety related products are arguably required whatever the economic backdrop. A diversity of products and geographical regions regularly sees challenges for one area countered by positives for another, while a dividend track record of more than 30 years of annual consecutive dividend increases is highly enviable, despite leaving the shares on a modest dividend yield of under 1%.  

In all, and despite ongoing risks, this well-managed company continues to remain worthy of its place in many 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