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Halma sets new records as growth engine roars
HALMA (HLMA) £13.42
Gain to date: 6.3%
Original entry point: Buy at £12.62, 18 October 2018
More record-breaking results from Halma (HLMA) will surprise no one familiar with this health, safety and regulations-led electronics equipment supplier. What does stand out is the broad spread of the performance in the half year to 30 September, with each of its four divisions putting up double-digit organic, constant currency-adjusted growth.
To deliver 23% underlying, FX-adjusted progress in the US is a real achievement, and one that shows the scope for further growth even from seemingly more mature markets.
If organic growth is one of the key measures of Halma’s journey so far this year, operating margins (adjusted for amortisation charges, acquisitions, disposals and restructuring costs) of 20.1% is another, smack bang in the middle of management’s 18% to 22% long-run target. Converting 86% of £117.9m (adjusted) operating profit to cash is also right on track with its 87% long-term average.
Halma aims to double every five years or so, aided by select small acquisitions, the latest of which – Limotec and Navtech – add up to five so far in 2018. These additions should be able to retain an entrepreneurial culture with the wider group’s support.