Key Takeaways:
Halma shares plunged 11% after the FTSE 100 company guided to a smaller contribution from its photonics business, overshadowing a revenue and profit beat.
"The concentration risk in the fast-growing photonics business, where revenue from a single customer rose to 20% of group sales, may have spooked investors," Alex da Silva O'Hanlon, analyst at Panmure Liberum, said.
The safety and environmental technology company reported revenue of 2.58 billion pounds for the year through March, up 15% from a year earlier and ahead of the 2.56 billion-pound average analyst estimate. Adjusted earnings before interest and tax jumped 22% to 594.5 million pounds, topping the 567.9 million-pound consensus. Organic revenue rose 16%, with the photonics business contributing about eight percentage points of that growth. The board proposed a final dividend of 15.11 pence, bringing the full-year payout to 24.74 pence from 23.12 pence — extending the company's dividend growth streak to 47 years but missing the 25.9 pence analysts had forecast.
The stock dropped as much as 11.3% to 4,116 pence, erasing some of the 32% gain it had posted since the start of the year. Halma trades at about 36 times 2027 earnings, nearly double the sector average of 22 times, leaving little room for disappointment, according to Panmure Liberum.
The company invested more than 600 million pounds during the year, including a record 447 million pounds on five acquisitions. Two additional deals worth about 75 million pounds have been completed since the year-end. Net debt stood at 1.16 times adjusted EBITDA, comfortably below the company's two-times target.
For the current fiscal year, Halma expects low double-digit organic revenue growth, including about five percentage points from its photonics business. Group margins are expected to be broadly in line with 2026 levels.
The guidance suggests Halma's photonics-driven growth may be approaching a plateau after a period of rapid expansion fueled by data-center demand. Investors will watch the company's first-quarter trading update for signs of whether the single-customer concentration in photonics continues to increase.
This article is for informational purposes only and does not constitute investment advice.
