Halma plc’s Post

Transcript

Marc Ronchetti joins us now, who is group CEO of Halma. Marc, thank you so much for joining us. A lot of positives in today's report numbers. The 7% increase in the dividend, the fact that you've got record revenue above ��2 billion for the first time, and the margin in the middle of the target range. But just talk to us about the start to the year and what you're seeing in terms of conditions and demand at this point. Yeah, as you say, really pleased with our results this year, another set of record results. In fact, it's our 21st consecutive year of record profit growth. So, really pleased with that. And you mentioned the dividend, it's actually our 45th consecutive year of dividend growth of 5% or more. So, really pleased with what we've seen in the last 12 months. But as you said, as we're looking forward, actually what the last 12 months is doing is just reinforcing our confidence in our future growth. So, we're a global group of just over 50 companies, all focused around health, safety and the environment. And we're really seeing the opportunities ahead of us around solving those problems. Our decentralised model of 50 companies, each operating with their own boards, means that they're agile enough to be able to take advantage of those opportunities. And it also gives us a level of resilience. So, what we've seen in the start of the year is a good level of order take, mixed across the portfolio, but it gives us that confidence to give the guidance. And we also had a good year in terms of investment for future growth. Marc, I'm going to pick up on where you've seen an area of strength in recent quarters, and that's around Environmental & Analysis. It feels like there's a heavy demand, as we look through the lens of just even the UK for instance, polluted rivers, polluted beaches. Can technology that you've got in the portfolio make a real difference here? And just how much appetite is there for the type of work you're doing? Yeah, absolutely. I mean, the whole group is very much focused on solving those big problems of our time, whether that be around clean air, clean water, whether that be around safety and in public spaces, in work, or healthcare for all. So, when we're then thinking specifically about water, we had a really good year in the UK, where actually across all areas of water, whether that be clean water, where we're identifying and finding leaks, or whether that also be in wastewater, where again, looking at those leaks and identifying the quickest and fastest ways to ensure that the clean water remains. So, there's a lot of investment, a lot of focus, and our technologies will help us more effectively identify those leaks, and then very quickly, and in a climate friendly way, fix those leaks and detection moving forward. Yeah, Marc, I mean, a significant portion of that revenue that you do make does come out of the United States, and particularly Europe then as well. But, is there still that stalling that you're finding out of the United Kingdom, and why is that? And do you anticipate that that perhaps continues, considering the kind of environment, the operating environment we're currently in? Yeah, we had good growth across all of our geographies. Actually, our focus as a group is very much through the lens of our companies and those end markets. So, the geographic performance is much more around just an outcome of where those companies are performing. That said, we saw good growth in the UK. We've just talked about water, we also saw good growth there in terms of our safety businesses and pretty similar in terms of healthcare, albeit I think globally over the last 12 months there's been a little bit of pressure from OEM destocking and also budgetary pressures. So, nothing different in the UK than in other regions. Actually, our results this year were just really about a strong comparator last year in the UK. Without that we would have grown at just under 8% in the UK, which is a really good performance by our companies. I also see that research and development costs, representing 5.3% of revenue. That's a slight draw down the in from the 5.5% previously. Priorities when it comes to R&D, what are those? Yeah, R&D is hugely important for us, as you say, reinvesting back in the business. We're very much focused on the medium term and maintaining that sustainable growth over the long term. The approach that we have for R&D investment is very much bottom up. As I mentioned earlier, we've got 50 companies, they're very autonomous and what that means is we have people close to their markets, close to their customers, and then with the autonomy to make those investment decisions about what do they require to take advantage of the opportunities going forward. So, it's very much bottom up as opposed to us allocating from the centre in terms of areas that we've seen that? We've seen that across the entire portfolio. So the 5.3% versus the 5.6% is largely around mix, but as I said, very much driven by the individual companies working through what investment do we need to ensure that we can take advantage of the opportunities as we move forward. Yeah. I mean, and you spoke about how you've also added to your M&A team as well, and that's why you're kind of seeing that ramp up in acquisitions, you've seen eight acquisitions completed as well, and you have a healthy pipeline in that regard too. Let's talk about your order book, and just, you know, your visibility when it comes to that and what's behind perhaps the underlying demand for your products. Yeah, I mean, just to close off the order book, we run with a relatively short order book. Historically it's been around 8 or 10 weeks, given everything that was going on over the last couple of years, we saw that peak may be up around 14 weeks, as we see it today, that order book is back around more normalised levels. So, it feels like we're operating in a more normalised environment compared to, let's say, the last 24 months. But when we then come back to what's the fundamental underlying demand drivers for our businesses, I come back to our purpose of growing a safer, cleaner, healthier future for everyone, every day. And each of our businesses are in high value niche markets, underpinned by those long term growth drivers. So, as we see globally investment in healthcare, as we see that around climate change, clean air, clean water, or in fact around safety and safety regulation. And that's what's driving the demand in our businesses. And that's what gives me confidence that we can continue to grow for decades to come. Marc, appreciate the time. Thank you so much for sharing your thoughts. Just on this, full year earnings picture then, as well, group CEO of Halma, Marc Ronchetti.