Halma top brass hike dividend for shareholders as revenue rises
Technology group Halma raises dividend as sales grow, but shares fall as return on sales narrowly misses forecasts
- Lifesaving technology group saw its shares drop more than 5% today after update
Halma has increased its dividend after a 21 percent increase in revenue, despite the FTSE 100 technology group posting a dip in like-for-like earnings.
Regulatory profit before tax fell 4 per cent to £291.5m in the year to the end of March, reflecting the one-off gain on the sale of a Safety Sector business in the previous year.
On an adjusted basis, pre-tax profit was 14 percent higher at £361.3 million, a 20th consecutive year of record profits.
Dividend boost: Halma has increased its shareholder dividend on an increase in earnings
Halma said its £1.85 billion bumper revenue was driven by growth across all sectors and regions, with the exception of the security sector, which saw a marginal decline.
The group’s two largest regions, the US and mainland Europe, “expanded strongly,” it said, while growth in the UK was slower.
The company increased its full-year dividend by 7 percent to 20.20 pa share.
Boss Marc Ronchetti, said: “This performance was supported by strong and broad demand for our products and services, and enabled by our Sustainable Growth Model which gives our businesses significant autonomy and flexibility, enabling them to respond quickly to new growth opportunities and to act quickly to address operational challenges as they arise.
At the same time we were able to make substantial investments, totaling more than half a billion pounds, to support our future growth.
“This included record levels of spending on research and development, technology infrastructure and acquisitions to expand our market opportunities.”
Halma shares fell 5.29 percent or 128.54 p this morning to 2,300.46 p, after rising more than 15 percent in the past year.
Matt Britzman, equity analyst at Hargreaves Lansdown, attributes the drop to Halma’s full-year 2014 forecast of a 20 percent return on sales, just below market expectations of 20.4 percent.
He added: ‘Halma is pushing hard with the investment in bolt-on business, with seven in the year and two more since the end of the year.
“This is all part of a business model that acts more like a holding company, attracting technology-focused companies and founders in the safety, health and environmental markets.
“End markets look promising in the long run, but valuation is demanding – any hint of weakness in orders or profitability and the pressure is mounting.”