Brisbane-based laboratory services and cleaning products company, Campbell Brothers made the upgraded guidance in October for a profit rise of around 75% for the six months to September 30.
The company yesterday told the ASX that earnings jumped 74.7% and it’s on track for a 70% improvement for the full year result, as the October upgrade forecast.
Campbells said net profit for the half was $57.044 million, up 74.4% from the $32.66 earned in the same period of 2008.
The result was struck on first half revenues of $456.36 million, an increase of 24.5% on the previous corresponding period.
With the growth coming from the company’s minerals based laboratory
Chairman Geoff McGrath said in the statement to the ASX that the company was in a good position to manage the impact of the economic slowdown on future earnings.
"All business units are closely monitoring the effects of the current global financial turmoil on both revenue and costs," he said in a statement.
"The group is not immune to these events but is well positioned to respond quickly and appropriately to manage any impact on future earnings."
The company reiterated its guidance that it expected underlying net profit before unusual items in fiscal 2009 would be approximately 70% higher than the $71.3 million achieved in the prior year.
Managing director Greg Kilmister said the half year results had been driven by a strong performance in the company’s analytical laboratory services (ALS) division, which benefited from capacity upgrades and acquisitions in the US and Thailand in the last 18 months.
Further acquisitions had been made in the US since the reporting period, he said.
ALS had 49.3% of group revenue, but provided more than 76% of earnings, so it is the powerhouse for the company.
Campbell Brothers’ chemicals division, which produces a wide range of commercial and industrial products, recorded "pleasing" revenue growth of 7.2% on the previous corresponding period, given the "difficult economic conditions", the company said.
Its distribution operations, which send kitchen goods to motels, hospitals and restaurants, reported an 8.8% fall in revenue in the half.
Mr Kilmister said the business had suffered from softening in the tourism and hospitality industries, and efforts were being made to move away from less profitable customer segments and into more attractive areas.
The company declared an interim dividend of 50c per share, half franked. That’s up 43%, or 15c from the 35c paid in the first half of 2008.
But as impressive as the result was, there is some doubt about just how long this can go on.
The international mining sector is turning down as mines and projects are cancelled, scaled back or run at lower levels. Exploration spending is falling and there’s every chance this will continue well into 2009. (See the OZ Minerals story).
The company is feeling the cold winds of the economic slowdown.
Mr Kilmister said in yesterday’s statement that the company "has suffered reduced revenues from the general softening in tourism and hospitality markets during 2008. Revenues also fell as the company moved away from less profitable customer segments in order to focus on more attractive areas.
“Whilst efforts remain focused on rationalising products, warehousing, distribution, and administrative costs, significant effort has also been directed at business development initiatives into new market segments”, he added.
Campbell Brothers shares were up $1.45, or 7.7%, at $20.20.
