The resources boom and subsequent higher terms of trade continue to pay off for Brisbane company, Campbell Brothers.
It has become one of the fastest growing companies listed on the ASX in the past five years, with sharp rises in revenues and earnings as it has expanded its resources-based testing business here and offshore, moved into other areas of testing (such as water and pharmaceuticals) and made its biggest ever deal a month ago in the $222 million purchase of a smaller US rival, the Stewart Group.
It survived the GFC and slump in resources in 2008-10 and emerged stronger and leaner, and went on an expansion drive in Australia in its key testing businesses.
Now it’s paying off and yesterday’s AGM in Brisbane was told the company is expecting another year of record earnings, it’s second in a row.
So shares in the company jumped sharply on the forecast news yesterday to close at the day’s high of $47.15, a rise of $2.39 or 5.3%.
Both chairman Geoff McGrath and CEO Greg Kilmister told the meeting that the company expected "underlying net profit after tax for the six months ending 30th September to be in the range of 90 to 95 million dollars.
"This represents an increase in excess of 36% on last year’s result," Mr McGrath said.
Much of the revenues and earnings gains are coming from Campbell’s key business, its ALS testing operation here and offshore, which is experiencing record levels of activity.
"This will be a record first half and includes trading for the Stewart Group for the three months to September and a full six months of trading relating to Ammtec which was acquired in November last year. This is a positive start to the current financial year.
"For the first 15 weeks of the current year we have seen mineral sample flow increase by 40 percent compared to last year and environmental samples by 9 percent," the chairman told the meeting.
In the year to March 31, Campbell Brothers generated record revenues and earnings. Revenues reached $1.108 billion dollars, 20% above the record result just two years ago. The record profit of $132.1 million dollars was also 24% up on the previous record of two years ago.
If the expected 36% rise in first earnings could be maintained for the full year, the company could see net profits of around $180 million for the year to March 31, 2012.
Mr Kilmister told the meeting that the company has started the year well.
"Markets for the majority of ALS’s services have been strong through the first quarter of the current financial year, continuing the trend we saw right through the 2010-11 year.
"In particular mineral sample flows have been very strong and we are seeing a high level of demand for the metallurgical services provided by ALS Ammtec.
"Capacity increases and a broadening of pilot plant offerings started both before and subsequent to the acquisition of Ammtec are having the expected effects.
"Sample flows in to our traditional mineral laboratories have likely reached peak levels for the current year but are expected to be maintained through until the end of the calendar year at which time we will see the traditional off season.
"We are seeing strong levels of activity across all regions of the world with global sample flows up in excess of 30 percent on this time last year.
"We are also seeing increases in both the revenue and profit margin in our other major division, the Environmental Division.
"Australia, Europe and North America are all ahead of both budget and last year for the first quarter despite the strong Australian dollar.
"The minor divisions in ALS are also doing well and are on track to post record years. Reward is trading profitably and the Chemical Division is doing well post the disruption of untangling Cleantec from the other operations.
"Excluding acquisitions and property purchases I expect we will see approximately 60 million dollars in CAPEX in the current year.
"In summary the record result expected in the first half will be well deserved," the CEO said.
