Brisbane-testing and based Laboratory group Campbell Brothers is certainly bullish about the coming year.
And it has every right to be, a strong interim earnings result and higher dividend sent the shares to an all time high of $38.34 yesterday.
The company said in its interim results yesterday that it is looking for a 73% rise in full year earnings.
"Trading in October and November has remained very strong and the company expects the full year after tax profit excluding unusual items will be in the range of $120 to $130 million," chairman Geoff McGrath said as the company reported its first half results yesterday.
That was after a 73% jump in interim profits to a record net profit of $66.3 million for the six months to September 30.
That was on revenue of $547.53 million, up 37% on the September 2009 half.
Campbell Brothers declared an interim dividend of 65 cents, franked to 50%, up from the previous year’s 45c a share interim.
The shares jumped 4.4% or $1.57 to $37.50 by the close yesterday, after hitting the all time high during trading.
The result was in line with its earlier guidance, and was driven by a recovery in business conditions and increased operational capacity through acquisitions.
Growing mining activity around the world was a key factor, delivering a 56% jump in first half revenue in the minerals division of its Australian Laboratory Services (ALS) business which has become the heart of the company.
The industrial division of ALS contributed earnings of $7 million in its first period of operation, with the division created after the acquisition of mining supplier Pearlstreet in the second half of fiscal 2009. That was on revenues of over $57 million for the new business for the six months.
Campbell Chemicals posted earnings of $4.4 million in the first half, up 9% from the previous corresponding period, benefitting from a stronger Australian dollar and lower costs.
Campbell Brothers’ Reward Distribution business, which supplies non-food items to the hospitality industry, contributed a first half loss of $1.8 million.
Managing director Greg Kilmister said Reward Distribution had seen improved sales volumes in September and October due to seasonal trends and the securing of new sales contracts.
"An improved performance is expected from Reward in the second half," he said.
The company said it now held 97.34 per cent of ordinary shares in Ammtec, which provides metallurgical services to the mining industry.
The sale of Campbell Chemicals’ Cleantec business is due to be completed on December 1, with an expected pre-tax gain of $8 million to be recorded in the full year results.
This expected gain is not included in the full year net profit forecast.
Grocery and hardware wholesaler (and forthcoming opponent of the ACCC) Sydney-based Metcash has warned that it may struggle to achieve full year guidance for a profit rise of a modest 6% to 8% in underlying earnings.
Metcash said the current tight trading conditions were expected to continue well into 2011 and had put the full year profit forecast, made mid year, at risk.
The news saw the shares lose around 2.5%, or 11c, yesterday to close at $4.17.
The company yesterday reported that earnings for the six months to October 31 rose 0.9% to $110 million, off the back of a 5.8% rise to $5.98 billion.
It declared an interim dividend of 11c, fully franked.
"The board expresses its concern that the continuation of the extremely tight trading conditions experienced throughout the first half onwards into the second half will exert pressure on the group’s ability to achieve its guidance," Metcash said.
In June, Metcash said during fiscal 2011 it expected 6%-8% growth in underlying earnings per share.
It said impacts on its ability to meet guidance included prices that were unchanged or falling slightly, due to the strong Australian dollar, and a more "value conscious" consumer.
The company said the following factors should be considered:
- Zero inflation to deflationary impacts being driven by the strong Australian dollar
- Elevated promotional activity and a more value conscious consumer
- Rising interest rate regime entrenching cost-conscious and cautious consumer behaviour
- Ongoing cost inflation pressures, particularly in utilities and wages
"Management remains determined to steer the Group successfully through the second half of FY11 and towards achieving the previously stated guidance. However, given the uncertainty created by the above factors, especially their longevity, the Board wish to caution shareholders that achievement of guidance is at risk, “directors warned.
Metcash said its earnings before interest, tax, depreciation and amortisation (EBITDA) lifted 7.7% to $199.4 million compared to the previous corresponding period.
Metcash CEO Mr Andrew Reitzer said, “We are pleased to announce a half year
