Halma PLC on Wednesday said it expects annual profit to meet market forecasts, though the safety equipment group cautioned its return on sales will begin to normalise as it steps up spending.

The Amersham, England-based company said it expects a ‘further sequential improvement in revenue’ in the second half of its financial year ending March 31. Revenue growth for the year as a whole will be ‘substantial’.

The hazard detection and life protection services provider had posted revenue of £1.32 billion in financial 2021. It also reported statutory pretax profit of £252.9 million as well as adjusted pretax profit of £278.3 million.

For the current year, Halma said it expects adjusted pretax profit to be in line with market forecasts, which range from £300.7 million and £313.4 million. With a consensus of £306.5 million, Halma could see adjusted pretax profit rise 10%.

‘There was further organic constant currency revenue growth across all sectors in the period, following a strong first half. There was widespread growth geographically in the period, with the strongest performances (on an organic constant currency basis) in the USA and the UK, and good growth in Mainland Europe and Asia Pacific,’ the company said.

‘The Environmental & Analysis sector has continued to deliver strong organic constant currency revenue growth. This reflects ongoing high demand for its products and services, particularly for technologies that support the building of digital and data infrastructure, and for gas monitoring products. The Safety and Medical sectors are expected to report good organic constant currency revenue growth, also against a strong comparative. On a reported basis, the Medical sector’s revenue growth will also benefit from recent acquisitions, while the Safety sector’s progress will see the impact of the disposal of Texecom made in the first half of the year.’

It forecasts a currency hit to earnings, however. Based on sterling exchange rates of $1.37 and €1.18, it will see a £41 million revenue hit and a £9 milion negative effect on profit.

There was also a slight warning on its return on sales, a key performance indicator, which it expects to ease closer to pre-virus levels. The measures refers to adjusted pretax profit as a percentage of revenue.

Return on sales in financial 2021 was 21.1%, up from 19.9% a year earlier.

Halma said on Wednesday: ‘As planned, we increased strategic investment in talent, new product development, information technology and cybersecurity, to support our growth over the longer term. We also saw a return of discretionary overhead costs to support our current strong growth. Therefore, as guided at the half-year, full year return on sales is anticipated to be more in line with historical levels.’

Halma shares were 1.4% higher at 2,551.19 pence each in London on Wednesday morning.

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