First-Half 2013--Inevitable End to a Growth Streak for ALS

First-half 2013 net profit after tax (NPAT) increased 32.5% to AUD 135.5 million, the midpoint of management guidance between AUD 130 million and AUD 140 million. The result was slightly below our expectations, but given a substantial part of earnings is tied to volatile mining and exploration activity, the small miss is not alarming. Shareholders have come to expect strong growth, and the first-half results did not disappoint with revenue increasing by 24% to AUD 771 million, and operating margins excluding the divested chemicals businesses firming by 150 basis points to 26.8%. Upgrading assets of acquired facilities to bring them in line with ALS efficiency and refurbishing existing sites has driven growth and margins. ALS has seemingly avoided the pressures of an uncertain resources market in the first half, but guidance of a softer second half reinforces our high uncertainty rating, attributable to exposure to mining exploration and production activity.