ALS Limited (ASX:ALQ) remains resilient in H1 FY21, delivers better Q2 performance

  • November 20, 2020 05:17 PM AEDT
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ALS Limited (ASX:ALQ) remains resilient in H1 FY21, delivers better Q2 performance

Summary

  • ALS Limited declared H1 FY21 result showed revenue from continuing operations dipping by 8.7 per cent with underlying NPAT down by 17.9 per cent.
  • Q2 saw significant improvement in revenue as the economies re-opened from the lockdown restrictions due to pandemic.
  • Interim dividend stood at 8.5 cps (fully franked) compared to 11.5 cps in H1 FY21.
  • ALS highlighted a robust balance sheet representing 1.9x times leverage and liquidity availability of ~AUD 620 million.

The global testing, inspection & certification service provider ALS Limited (ASX:ALQ) released its H1 FY21 result on 18 November 2020. With a diverse portfolio of businesses and geographies and flexible ‘hub and spoke’ model, the company has shown resilience during the ongoing pandemic crisis.

Financials statistics

In H1 FY21, revenue from continuing operations stood at AUD 838.8 million, down 8.7 per cent on pcp (previous corresponding period). Underlying basic earnings per share (eps) was 16.7 cents per share (cps), down by 17.7 per cent. Statutory eps stood at 14.6 cps, dropping 48.1 per cent due to one-off gains in H1 FY20. 

However, Q2 saw a significant improvement in revenue as against Q1 as the economies re-opened from the lockdown restrictions due to pandemic. Q2 improved with a 7.8 per cent drop compared to a 9.7 per cent decline in Q1.

In H1 FY21, the underlying net profit after tax (NPAT) from continuing operations was impacted by the ongoing Covid-19 crisis, and it stood at AUD 80.6 million, down by 17.9 per cent on PCP. However, statuary NPAT was recorded at AUD 70.3 million, down by 48.1%.

Interim dividend stood at 8.5 cps (fully franked) compared to 11.5 cps in H1 FY21, reflecting the sound capital management strategy and confirming the powerful liquidity position.

Due to growth in cash collection and reduction in DSO despite pandemic, ALQ declares strong cash conversion of 99 per cent of underlying EBITDA converted into cash. It also reports a robust balance sheet representing 1.9x times leverage and liquidity availability of ~AUD 620 million.

Segment Performance

Life Sciences division delivered revenue of AUD 452.1 million, a decline of 3.5 per cent propelled by an organic decrease of 7.4 per cent, with scope growth of 5.5 per cent and unfavourable currency impact of -1.6 per cent. Life Sciences division provides testing services essential to crucial supply chains and mostly avoided laboratory closures during economic shutdowns. It

Underlying EBIT is dipped by 2.9% per cent to AUD 74.0 million; the margin expanded further to 16.4 per cent, up 10 bps compared to H1 FY20. The demand remains stable despite the pandemic.

Commodities division reported a revenue decline of 13.0 per cent in H1 FY21 due to the ongoing pandemic. The Q2 revenue performance was better than Q1. Q2 revenue experienced a 10.5 per cent decline due to the increase in mining activity when economies re-opened. Q1 had witnessed 15.7 per cent decline. The underlying EBIT margin was of 24.7 per cent.

Industrial revenue dipped by 17.1 per cent.

On 20 November 2020, at AEDT:1:55 PM, ALQ was trading at AUD 10.270, up by 0.195 per cent with a market capitalisation of AUD 4.94 billion.

 

 


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