ii view: Halma now more optimistic about annual profits

First-half trading update to 30 September

• Continues to expect low double-digit growth in adjusted revenues for the full year
• Now expects a full-year profit margin of between 23.5% and 24%, up from 22.7% last year

ii round-up:

Halma (LSE:HLMA) today maintained annual sales guidance but raised hopes for full-year profit, fuelled by strong operational delivery and record investment in growth enhancing bolt-on acquisitions.  

The maker of health and safety products continues to expect low double-digit growth in adjusted revenue, but with annual profit margin now expected to be between 23.5% and 24%. That’s up from last year’s 22.7% and pushes a mid single-digit percentage increase in City profit forecasts.

Shares in the FTSE 100 company rose 2% in early UK trading having come into this latest news little changed so far in 2026. The FTSE 100 index is up 7% year-to-date.

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Halma’s many products include smoke alarms, devices to measure climate change and pollution, as well as light related or photonic products sold to data centre operators.

Full-year results to late March announced in June saw Halma flag a slowdown in photonic demand, causing the shares to plummet around 15% - their biggest one-day fall in years.

Photonic sales are still expected to generate year-over-year growth of around 30%, although that remains down from 55% previously.

Record investment of £515 million in six acquisitions year-to-date includes £154 million on healthcare related Dreampath Diagnostics, a French company specialising in automated systems for anatomical pathology laboratories.

Management flagged a healthy pipeline of potential bolt-on acquisitions. First-half results are scheduled for 19 November.

ii view:

Halma employs over 9,000 people across more than 20 countries. Customers include utility companies, commercial and public buildings, healthcare providers, as well as oil and gas and mining companies. Safety and Environmental profit each generated around 40% of profits over its last financial year with Health the balance of 20%.  

Geographically, the US accounted for most sales during its last financial year at 48%. That was followed by Europe at 19%, the UK and Asia each at 13% and the rest of the world the balance of 7%.

For investors, a slowdown in photonics sales continues to persist. Accompanying management comments flagged ongoing economic, geopolitical and market uncertainty. A continuing flow of bolt-on acquisitions is not guaranteed, with each bringing some risk, while currency moves can hinder performance.

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More favourably, a diversity of products and geographical regions regularly sees challenges for one area countered by positives for another. Health and safety products are arguably required whatever the economic backdrop. A forecast price/earnings (PE) ratio of around 25 times is a 35% premium to the sector and down from a historical premium of 50%, 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 forward dividend yield of under 1%.  

In all, and while risks remain, a consensus analyst fair value estimate above £43 per share for this historically well-managed company should keep investors interested.  

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:

Buy