ALS shares gain on first-half revenue growth
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More news: ALS shares lifted at market open on the ASX after the laboratory testing group reported double-digit growth in underlying revenue for the first half of the year, while acquisition-related costs weighed on profit.
ALS shares were up 5.2% to $15.42 by 10:50am AEDT, having added around 20% since the start of the year.
UBS analyst Nathan Reilly said ALS' result and FY25 outlook was "broadly consistent" with market expectations and the company's recent trading update. UBS has a 'buy' rating on the stock with a price target of $16.30.
What they said: "Solid operating result amidst a patchy environment," Reilly said. "Life sciences continues to outperform, while commodities performance was resilient given challenging exploration market backdrop."
ALS reports fall in first-half profit
The news: ALS reported a fall in first-half profit as acquisition-related costs and a "volatile" trading environment weighed on the laboratory testing group.
The numbers: ALS posted a statutory NPAT of $126.8 million, down 5% compared to the prior corresponding period, driven by integration and restructuring costs from recent acquisitions and its transformation of European pharmaceutical research and development business Nuvisan.
The group attributed a 3.9% fall in underlying NPAT to unfavourable foreign exchange impacts, higher interest costs primarily from debt funding new acquisitions, and softer conditions in global mineral exploration markets.
Underlying revenue rose 14% year on year to $1.46 billion, led by organic and scope growth within its life sciences business, partly offset by softer growth conditions within its commodities segment.
The board declared an interim dividend of 18.9 cents per share, partially franked to 30%, compared to last year's interim dividend of 19.6 cents per share, partially franked to 20%.
The context: ALS said the medium- to long-term outlook for its life sciences and commodities businesses remains positive. The group is targeting mid-single digit organic revenue growth in FY25, and "solid improvement" in its life sciences operating margins.
It noted that its focus remains on the integration of recent acquisitions and the Nuvisian transformation program, after it acquired full control of the European-based contract research organisation in March.
What they said: "The group has delivered resilient financial performance this half, driven by strong margins in minerals despite a volatile environment, alongside robust organic growth in the environmental and food businesses," said ALS CEO and managing director Malcolm Deane.
"This reflects ALS portfolio's strategic positioning and the business's adaptability in a complex landscape, even as minerals faced fluctuating and patch sample volumes."
The sources: ASX announcement, UBS research
