Halma’s profits rise to new record, dividend hiked for 42nd straight year

The Halma share price has just fallen from recent record highs. But today the company put out another perky trading update. Here are the key points.

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Price action remains pretty muted in Thursday afternoon business. The FTSE 100 and FTSE 250 are trading fractionally higher and lower, respectively, as market participants eagerly await key economic data on Friday. The Halma (LSE: HLMA) share price is one that remains flattish despite the release of fresh financial news.

The FTSE 100 company was recently trading 1% lower on the day at £26.60 per share. This is just off yesterday’s record closing highs of £26.80 and suggests Halma’s full-year numbers were in line with forecasts.

Halma raises dividends for 42nd year

Safety equipment supplier Halma saw revenues during the 12 months to March 2021 drop 1.5% year-on-year to £1.32bn, it said. Sales dropped 5.4% during the first half as the Covid-19 outbreak ballooned. But the top line increased 2.2% in the final six months.

Organic sales at constant currencies meanwhile dropped 5.6% from financial 2020, though an 11% drop in the first half improved to a 0.3% dip in the second half.

Last year’s sales drop didn’t knock Halma’s proud record of profits increases off the tracks, however. Adjusted profit before tax rose 4.2% year-on-year to £278.3m, while on a statutory basis pre-tax profit was £252.9m, up 12.9%. This was the 18th year on the spin that the FTSE 100 firm has printed record profits.

Further progress here has allowed Halma to raise annual dividends yet again. For financial 2021 it plans to pay a total dividend of 17.65p, up 7%. This makes it 42 years on the bounce that the UK electronics share has raised the annual payout.

Starting the new year strongly

Pleasingly, Halma said that it has made a strong start to the current financial year, too. Order intake is ahead of turnover and surpassing levels recorded last year. Halma also mentioned that organic revenues at constant currencies from the start of January to the end of May are up 10% year-on-year.

Andrew Williams, chief executive at the FTSE 100 firm, said that “we expect our markets to continue to recover, albeit at varying rates”, though he added that the company could face multiple headwinds including inflation, supply chain troubles, and adverse exchange rates.

Williams expects Halma to deliver a low double-digit percentage rise in organic sales (at constant currencies) in financial 2022. He said too that the company has “a good pipeline of potential acquisition opportunities”.

Expensive but exceptional

The Halma share price has risen an impressive 184% during the past 12 months. And I expect it to keep rising as awareness of — and legislation related to — the safety and protection of people and the broader environment gathers pace. Profits at the firm could be blown off course if the pandemic worsens again, in turn derailing its operations as well as the broader economy.

Still, I believe the long-term future for this FTSE 100 share remains exceptionally bright. The Halma share price commands a high forward price-to-earnings (P/E) ratio of 39 times. But I think this high-calibre and ultra-reliable UK share deserves such a premium rating and I’d happily add it to my own investment portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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