HALMY - Halma plc (HLMAF) Q4 2024 Earnings Call Transcript

2024-06-13 17:27:07 ET

Halma plc (HLMAF)

Q4 2024 Earnings Conference Call

July 13, 2023 03:30 AM ET

Company Participants

Marc Ronchetti - Group Chief Executive

Steve Gunning - CFO

Conference Call Participants

Jonathan Hurn - Barclays

Rory Smith - UBS

Max Yates - Morgan Stanley

Bruno Gjani - BNP Paribas Exane

Stephan Klepp - HSBC

Presentation

Marc Ronchetti

Good morning, and welcome to our Full Year '24 Results Presentation. It's great to be here to present another strong set of results. And before we turn to the detail of the numbers, I'd like to take this opportunity to thank everyone at Halma for their personal contributions to our record performance in the year. The commitment to delivering our purpose and the success that we've achieved in varied market conditions is something we should all be proud of. Thank you.

So turning now to the highlights of the year. These record results have further strengthened our foundations and increased my confidence in our future growth. We've reported record revenue and our 21st consecutive year of record profit. We've delivered healthy revenue and profit growth, both on a reported and organic basis, our EBIT margin and our return on sales were well within our target ranges, we've continued to deliver high returns, substantially above our cost-of-capital and this, alongside our strong cash generation, which was well ahead of our KPI has enabled us to make substantial investments to support our future growth.

This financial performance, this supports a further dividend increase, making this the 45th consecutive year of dividend growth of 5% or more. All in all, a great demonstration of our sustainable growth model in action. Steve will give you more detailed insight on our financial results in a moment. And after that, I'll come back to share my reflections on my first full year as CEO. And I'll look at the elements within our model that have both enabled this strong performance and more importantly, give me confidence that we'll continue to deliver long-term sustainable growth.

With that, over to Steve.

Steve Gunning

Thanks, Marc. Good morning. As you've already heard, we have delivered a strong financial performance, achieving record levels of revenue and profit. Given the varied market conditions we've seen in the year and other headwinds such as FX and both higher interest rates and tax rates, results demonstrate the benefit of our sustainable growth model, in particular, the benefits of diversity and breadth of our portfolio and the agility our operating companies have to act and react. Importantly, the results have enabled us to continue to make substantial investments to support future growth, whilst maintaining a strong balance sheet.

So let's take a look at the results. I'm pleased that we have delivered good growth and returns. Revenue is up over GBP2 billion for the first time, up a healthy 10%. Adjusted EBIT is up 12% and EBIT margin at 20.8% around the middle of our target range of 19% to 23%. Given the increased interest costs from higher interest rates and higher average net debt in the year, the adjusted profit before tax is up 10%, resulting in a return on sales of 19.5%, flat compared to the prior year. This is the first full year of substantially higher interest rates, and it remains our objective to absorb these higher costs in the medium-term.

We continue to invest strongly to support future growth. R&D spend reached GBP107 million, which represented 5.3% of group revenue. This investment is critical for our companies to continue growing over the medium term. It's also a good reflection of the opportunities our companies see before them. We made eight acquisitions in the year, four standalone and four bolt-on and invested nearly GBP300 million, hence maintaining the momentum following the record investment last year. Marc will take you through the eight acquisitions later in the presentation....

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