ii view: Halma shares suffer biggest one-day fall in years

Full-year results to 31 March

• Revenue up 15% to £2.58 billion
• Adjusted profit (EBIT) up 22% to £594.5 million
• Adjusted profit margin up 1.1% to 22.7%
• Final dividend of 15.11p per share
• Total dividend for the year up 7% to 24.74p per share
• Net debt of £769 million, up from £536 million a year ago

Guidance:

• Expects low double-digit growth in adjusted revenues for the full year ahead
• Expects the adjusted profit margin to prove similar to the year just completed

ii round-up:

Industrial products maker Halma (LSE:HLMA) today reported a 23rd consecutive year of adjusted profit growth but with sales of photonics, or light related products sold to data centre operators forecast to slow.

Record revenues for the year to late March of £2.58 billion pushed adjusted profit up 22% to £594.5 million. Sales of photonics products are predicted to slow to growth of around 30% for the year ahead, down from growth of 52% for the year just gone.

Shares in the FTSE 100 company plummeted 15% in UK trading having come into these latest results up by almost a third so far in 2026. The FTSE 100 index is up 4% year-to-date.

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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.

Sales for the Environment and Analysis division, including photonics, rose 34% to £1.04 billion, with one “hyperscale” technology customer accounting for 20% of groupwide revenues. That’s up from 15% a year ago. Divisional adjusted profits soared 35% to £251 million.

Safety related sales improved 5% to £948 million, with adjusted profit climbing 16% to £254 million. Healthcare related revenues improved 5% to £598 million, pushing profits up 10% to £143 million.

A final dividend payment of 15.11p per share, payable to eligible shareholders on 14 August, takes the total dividend for the year up 7% to 24.74p per share.

A first-half trading update is likely on 24 September.

ii view:

Started 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 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 predicted slowdown in photonics sales sits alongside an expected similar profit margin for the year ahead. Accompanying management comments continue to highlight varying conditions across end markets, with economic and geopolitical uncertainties being battled. A forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while currency moves can hinder performance.

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On the upside, 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. Management’s estimate for photonics sales could prove conservative, 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 estimated dividend yield of under 1%.  

In all, a potential slowing in photonics offers some caution. However, this is a well-managed company with a great track record, so continues to deserve a place in many diversified long-term focused 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