Laboratory and chemicals group Campbell Brothers has posted a 29% drop in annual net profit, as forecast in a February guidance update.
Net profit fell to $75.3 million for the year to March 31, down from the all time high of $106.2 million in 2009.
Campbell declared a 50% franked dividend of 55 cents, bringing the full year dividend to $1 a share, steady on 2009 and a sign of caution.
Campbell shares were down 74c, or 2.6%, at $27.14 in a market that was down 3% in a rough day’s trading.
The Brisbane-based company said in a statement to ASX yesterday that it was cautiously optimistic about the 2010-11 financial year.
Revenue for the year fell 10% to $825.5 million from $920.3 million the year before, as the company was hit by the downturn in mineral exploration and testing.
Campbell Brothers managing director, Greg Kilmister, said lower revenue and profit was primarily due to a reduced global demand in mineral exploration markets for analytical testing services, which is provided by Campbell’s ALS Minerals division.
"Although the ALS Minerals business experienced a significant reduction in sample volumes during the year … increases in sample flows in the last two months of the financial year give cause for cautious optimism about the year ahead," he said in the statement.
Campbell made several acquisitions in its last fiscal year, including ‘non-destructive testing’ services provider PearlStreet Ltd.
Campbell is continuing with its expansion plans, last week revealing a $123 million takeover offer for minerals testing company Ammtec.
The addition of new businesses to Campbell’s portfolio place the group in a strong position to take advantage of opportunities as business conditions improve, it said.
Campbell’s chairman, Geoff McGrath, said the 2010 full year results compare favourably with those achieved two years ago, "whereby revenue was 6.9% ahead of that earned in the year to March 2008 ($772.3 million) and net profit after tax was up 5.7% (March 2008 underlying net profit after tax excluding unusual items: $71.3 million)".
"In historical terms, both revenue and net profit after tax for the 2010 financial year were second only to the record results booked in the year to March 2009," he said.
The ALS minerals testing business is the major business and pre tax earnings here fell 52% to $53.3 million from 2009’s record $112.2 million.
"Although the ALS Minerals business experienced a significant reduction in sample volumes during the year as global exploration activity fell in response to tight credit conditions, increases in sample flows in the last two months of the financial year give cause for cautious optimism about the year ahead.
"Whilst the contribution margin as a percentage of revenue fell substantially from the previous year, the division’s ability to react quickly in reducing its variable costs produced a strong margin performance given the difficult market conditions", Mr Kilmister said in yesterday’s statement.
Other parts of ALS boosted revenue and profits; the coal division saw a 14% rise in pre-tax contribution to $15.03 million, but the environmental division saw a 54% jump in earnings to $43.7 million from 428.8 million in 2009.
Mr Kilmister said, "The ALS Environmental division produced a strong result for the full year to March 2010, with the increase in revenue driven by both acquired and organic growth".
Other divisions, the chemicals and the rewards businesses, lifted their pre tax profit contributions by 4% and less than 1% respectively.
