The new reality of the mining slump here and offshore has mugged Brisbane-based Campbell Brothers Limited.
But it’s the sort of mugging many companies would cheerfully grab with both hands at the moment as sales and earnings slide across the economy as a whole.
Campbell told the ASX yesterday that "underlying net profit after tax (before unusual items) for the full year to 31 March 2009 is expected to be approximately $106 million, a 49 percent increase on the underlying net profit after tax achieved for the full year to March 2008."
Campbell’s earnings have been growing strongly because of its deepening involvement in resources with its ALS analytical businesses.
"Previously directors had indicated an approximate 70 percent increase for the full year.
"Underlying net profit for the second half ending 31 March is expected to be approximately $49 million; a 26 percent increase on the record profit achieved in the second half of the previous year.
"The markets for Campbell Brothers’ services remain volatile, being affected by seasonal changes as well as the financial downturn.
"This is particularly so in the minerals division of the laboratory services business.
"However, the Company is confident that its business model will allow an effective scaling of its businesses in line with expected market conditions.
"Because of the current general investment focus on funding, the Board provides the following information:
"The Company’s debt position remains conservative and continuing strong cash flows ensure that the Company can endure the current financial crisis affecting global markets without requiring additional borrowings or any equity raising.
"The company has $410 million dollars of committed bank funding against a net debt position at the end of January 2009 of $224 million and is well within financial covenants.
"$380 million of the committed funding is from Australian banks, including $200 million due for renegotiation in November 2009.
"The Company expects to have these negotiations substantially completed by the end of May.
"The Company has adequate borrowing facilities available for acquisition opportunities that may present themselves as the global economic downturn takes hold."
Campbell said that it has "undertaken cost cutting measures across all its businesses, reducing capital expenditure and downsizing personnel in some operational areas.
"Because of the diversity of its business segments, the Company is confident of emerging from the current economic downturn in a strong state, ready to take advantage of the expected recovery of the economy."
Outside of health care and isolated retailers like Woolworths and JB Hi-Fi, Campbell was one of the few unqualified successful stories among major and mid-level industrial and mining companies.
No longer, and as world mining activity and commodity prices continue to fall, there could be further pressure on the company in coming months.
New exploration has been scaled right back, which means less work for the fast growing ALS analytical labs business.
As a result investors went right off the stock, marking it down more than 11%, or $1.35 to a new 52 week low of $10.85 at the close.
