Shares in Brisbane-based mining testing group, Campbell Brothers, jumped sharply yesterday after the group revealed a solid profit forecast for the 2010-11 financial year.
Shares in Campbell, which still has its chemicals manufacturing business, ended up 4.8%, or a large $1.41, at $30.71, in a market that was very mixed yesterday, rising then easing to close down almost 1% on the day.
Campbell said that after the first quarter of the 2011 year, it expects to post a record first half-year underlying net profit of $63 million, due to favourable trading conditions and solid contributions from acquisitions Pearlstreet and Ecowise.
Campbell told the ASX yesterday that it expects a result of between $63 and $68 million for the six months to September 30, compared with $38 million actual net profit for the same period last year.
That was ahead of the record $57 million result achieved prior to the global financial crisis in the half year to September 2008, the company said in the statement yesterday.
Campbell, which offers laboratory and technical services and makes cleaning and chemical products, acquired Perth-based mining supplier Pearlstreet and environmental monitoring and research group Ecowise in the second half of last year.
The acquisitions had no real impact on the 2009-10 second half performance as integration and restructuring costs were absorbed, but appear to be making a solid contribution already in the 2010-11 financial year.
Campbell said the record profit prediction was due to continued strong demand for its mineral, environmental and coal analytical services accompanied by improved margins.
Sample flows into Australian Laboratory Services (ALS) increased more than 50% in the first 12 weeks of financial year 2009/10 and would be maintained until at least December, before tapering off during the traditional off-season.
The company warned that pricing pressure seen over the past year would remain as ALS and its competitors increase capacity as mining industry rises.
"The Chemical Division is performing slightly ahead of the previous year, but Reward Distribution Group has struggled in the first two months of the financial year in a challenging business environment," Campbell said yesterday.
The company said it was "cautiously optimistic about the March 2011 second half, as the northern hemisphere winter causes a significant slowdown in environmental sampling and mineral exploration activity from January to March 2011".
Campbell has another takeover underway for Perth-based tester, Ammtec.
It’s a $3.35 cash or two Campbell shares for every 17 Ammtec shares held. Ammtec has told shareholders to reject the offer, but the bid’s success will come down to price.
Pearlstreet directors initially told Campbell to go away, but after talks and a higher priced offer, they said ‘yes’.
If the bid for Ammtec is successful, it will contribute more revenue and earnings to Campbell and its major subsidiary, ALS.
