Halma Plc (HLMA.L): CFO & Safety CEO webcast takeaways

Research evidence excerpt

Halma Plc (HLMA.L): CFO & Safety CEO webcast takeaways

Goldman Sachs Halma Plc (HLMA.L)

towards the midpoint of its +5% to +7.5% through-cycle levels. We forecast +5.4%.

Within E&A, Water Analysis and Treatment has benefited from the latest UK AMP

cycle and from broader investment in Water disinfection. Halma expect another

solid year for growth, given their focus on supplying niche technologies into

regulated end-markets where the products have a high cost of failure. Excluding the

impact of the Nuvonic one-off, we forecast +5.1% OSG for E&A ex-Photonics in

FY27.

n Under Halma’s decentralised model, the sector CEO role ensures accountability

for delivering on organic and inorganic growth at the BU level. In addition to

ensuring execution against both organic and inorganic growth initiatives, there is a

clear focus from internal management on ensuring group expectations are well

understood by business leaders within the organisation. The Safety segment has two

clear underpinnings to demand: (1) Regulations; and, (2) Supplying customers with

critical products and services where there is a high cost of failure. These features

drive both strong growth and consistent pricing power (+1-2ppt p.a. on average). We

therefore forecast +5.8% Safety OSG in FY27.

n All businesses, including Avo Photonics, are regularly reviewed to ensure they

meet the group’s high standards as contributors to group KPIs on growth,

margins, and cash generation. When asked about the potential prospects for a

divestment or separation of the Photonics business, Halma highlighted that there

could be two sides to a potential spin-off of the Photonics business. On the more

positive side, the growing shift towards the use of Photonics in datacentres provides

significant potential for growth.