Testing business ALS Ltd
) has reported its FY20 result today.
What is ALS?
ALS is one of the world’s largest and most diverse analytical testing services providers.
ALS’ FY20 result
The company announced that revenue rose by 10% to $1.83 billion.
Life Sciences total revenue rose by 13% with organic growth of 5.9%. Commodities revenue grew by 3.5% with organic growth of 0.6%. Industrial revenue grew by 17.6% with organic growth of 15.2%.
The testing business reported underlying net profit from continuing operations of $188.8 million, up 4.3% from last year. Statutory profit was $127.8 million, down $24.8 million due to the effect of one-off gains and impairments.
ALS has recorded a $50 million impairment of goodwill of its Latin American Life Sciences business reflecting enhanced risks, particularly in Brazil and Peru due to socioeconomic issues, COVID-19 and a devaluing of currencies. It also recognised an impairment of $40 million for the industrial division due to COVID-19 impacts and downturn in oil and gas.
Balance sheet and dividend
ALS said it has a “strong” balance sheet with 2.1x leverage, which is well within its covenants with $650 million of liquidity including a $200 million increase of debt facilities.
The business declared a final dividend of 6.1 cents per share, management wanted to be prudent and keep good liquidity.
Time to buy ALS shares?
I don’t know how much growth (or not) ALS will be able to generate in the current environment and over the long term. I prefer industrial shares like Ansell (ASX: ANN) and Fisher & Paykel Healthcare (ASX: FPH).
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
