ALS guides to stronger profit

ALS (ASX: ALQ) was up around 3.63% in early morning trade following revelations the global testing, inspection and certification business had boosted its anticipated profit guidance for the year ending June 30 by 6.5% on the previous range to between $260m - $265m.

Management attributed much of the upgrade to geochemistry which is experiencing strong sample volume growth and price improvement as the company benefits from the capacity increase being delivered during FY22.

Also contributing to the improved outlook are foreign exchange moves and its life sciences business.

Despite some pressure on input costs across the group, management expects these to be offset by price increases and improved procurement practices.

Today’s updated guidance numbers are a precursor to the release of the company’s full financial-year results in May.

Fundamentals

An ASX100 company, ALS (Formerly Campbell Brothers until 2012) provides laboratory and testing services across the mining, industrial and life sciences sector, and operates in over 65 countries.

Mid-November 2021 saw ALS deliver a strong first half FY22 results with organic revenue growth of 24%, due largely to Life Sciences and Commodities divisions. The interim dividend 15.8 cps (partially franked to 30%) was up 85.9% on first half FY21.

Late last year, the company paid $39m for MinAnalytical Laboratory Services Australia. A geochemistry testing business with operations in Perth and Kalgoorlie, MinAnalytical is expected to generate around $18m in revenue for the 2021 calendar year.

Management noted that the MinAnalytical acquisition will initially increase the company’s WA operations by 40%, with additional opportunities coming from utilising unused capacity.

This is in addition to the 15% increase in capacity across the global geochemistry network, which is expected to be complete by the end of FY22.

A day in the life of the ALS share price.