ALS's Half-Year Earnings Down, Minerals Testing and Pricing Weaker, We Lower Fair Value Estimate

ALS announced first-half fiscal 2015 earnings results, which indicated a surprisingly stronger-than-anticipated underlying net profit after tax, or NPAT, of AUD 67.7 million, against the company's forecast of AUD 64 million. Nevertheless, it should be reinforced ALS's first-half result is still 33% lower than first-half 2014. The reasons for the lower earnings are the same issues which have plagued the company for the past 12 months: deteriorating demand for minerals testing, pricing pressure from life-sciences customers and integration issues with the oil and gas services business acquisitions. Weak operating cash flow, down 13% to AUD 87 million, resulted in the interim dividend being reduced by 42% to just AUD 0.11 per share, partially franked. Management did not provide specific fiscal 2015 guidance but noted the December quarter NPAT would be approximately AUD 40 million and March quarter NPAT "remains difficult to predict".