The rebound in global resources and in the wider economy has seen the Brisbane-based global testing giant, ALS Limited boost interim dividend by a third after lifting earnings by 30% on an underlying basis to $93.3 million for the September half of its 2018-19 financial year.
Shares in Brisbane-based global testing giant, ALS Ltd surged yesterday, adding more than 11% in value after the company’s annual meeting heard an upbeat outlook for the first half of the 2018-19 financial year.
ALS Ltd ((ALQ)) earnings grew less than brokers expected in the first half, driven by weaker profit growth from the commodities unit and margin declines in life sciences. There was significant working capital outflow and impairment charges, which resulted in a reported loss of -$8.9m. Underlying profit was just inside the low end of the $70-75m guidance range.
While the stock is priced for a recovery in geochemistry Credit Suisse finds little evidence this is occurring. The focus at the result is likely to be on the volume growth in geochemistry and continued margin improvement in life sciences.
The first half guidance issued at the AGM was slightly below Morgans' expectations. The broker believes peak commodities-driven growth is now behind the company and the health of the exploration and mining capital raisings remain key to the performance in FY20.
Macquarie expects earnings growth will prove to be robust when the company reports its FY19 result on May 21. Life Sciences produced strong sequential improvement in the first half and the broker expects a margin expansion of 130 basis points in the second half.