It’s no wonder Brisbane-based testing group ALS Limited will pay a sharply higher dividend for the half year to September 30. It not only boosted underlying net profit more than 57% to $127.1 million but sees more of the same happening in the current half.
The company told the ASX on Wednesday that it sees a continuation of the sharp improvement in revenue and earnings seen in the six months to September over the next six months.
The country’s biggest testing group told the ASX that the higher interim profit was off the back of a 23% rise in revenue to $1.031.1 billion for the half year “due to strong performance from Life Sciences and Commodities.”
Interim dividend was lifted sharply as well to 15.8 cents a share, up 85% from the depressed first half of 2020-21.
Directors said that was a payout ratio of 60% of interim underlying net after tax profit and “reflects the strong first half performance and liquidity position” of the company.
The company’s interim results on Wednesday revealed a rarity for the current reporting period – a defined and optimistic guidance for the rest of the 2021-22 financial year.
Looking into next year, directors said that the underlying net profit after tax “is expected to range between $242 million and $252 million which is a 33% increase compared to FY21 (at the midpoint of guidance). “
“The strong performance in the first half of FY22 has continued into the early part of the second half, however, H2 FY22 will be compared to a particularly strong pcp for the Life Sciences and Commodities divisions.
“FY22 guidance includes a six-month contribution from the recently-acquired 49% stake in Nuvisan.”
The company said its balance sheet at September 30 was in a strong position with around $720 million of available liquidity and considerable interest cover with weighted average debt maturity of 5.4 years.
The company said its Life Sciences underlying Earnings Before Interest and Tax (EBIT) margin of 17.7% was up 131 basis points (bps) “driven by strong volume, process automation and efficiency gains combined with lower capex spend in the previous corresponding period in response to the COVID-19 pandemic (reducing depreciation and amortisation recognised in H1 FY22).
Its commodities business reported an underlying EBIT margin of 29.9%, up 519 bps “primarily driven by strong sample volume volumes in Geochemistry (+46% vs prior corresponding period (pcp)”
ALS said it had “emerged as a stronger company from the early stages of the COVID-19 pandemic and we remain well-positioned to capitalise on the long- term megatrends driving structural growth across the Testing, Inspection and Certification industry.”
CEO, Raj Naran added “The Group has delivered significant organic growth as the Life Sciences and Commodities divisions performed very strongly across all regions.”
“All three Life Sciences businesses delivered double-digit organic growth as volumes surpassed pre-pandemic levels. The Commodities division continues to benefit from the strong commodity cycle with Geochemistry in particular, seeing strong sample volume growth from both major and junior mining clients as it capitalises on its market leading position”.
For all the good news in the result the shares were caught up on Wednesday’s market malaise and ended the session down 0.2% at $13.58.
