Halma PLC (LSE:HLMA) shares fell after the safety products group released a solid first-half update amid "varied market conditions" and said its full-year expectations remained unchanged.
For the six-month period to 30 September 2023, the FTSE 100-listed group said it expects to report "good" organic constant currency revenue growth against a strong comparative period last year, with return on sales "towards the lower end" of its 18-22% target range.
Stronger revenue growth in the Safety and Environmental & Analysis sectors offset weaker trading in the Healthcare sector amid customer destocking.
By geography, the US and Europe were strong on the organic revenue front, while the UK has grown "modestly" and AsiaPac declined as growth in Australasia was not able to offset weakness in China.
Guidance is for organic revenue growth to remain "good" and return on sales to improve to 20% for the full year.
Despite a strong cash performance to support further M&A activity, just £80 million has been spent so far this year on three deals compared to the company's record outlay of almost £400 million on seven purchases last year.
The shares dropped 1.5% to 2,044p, where they are just in positive territory for the year to date.
Broker comment was more positive, with Shore Capital saying that the M&A pipeline "remains strong across all three sectors and current dynamics provide the group with opportunities to further accelerate its strategy, noting the average cost of debt is still relatively low".
Broker Peel Hunt said "the Halma check list of organic growth, high margins, cash generation and M&A activity continues to deliver".
But at UBS they predicted a "weak" share price response, adding "highlighting customer destocking in Healthcare, and declines in China, will likely play to the fearful narrative in the market today: although we highlight - having previously been concerned about flood exposure - that China exposure is 6% of Group and 6% of Healthcare. "