Campbell Brothers flags a surge in its full-year profit

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Laboratory group Campbell Brothers has increased first half profit 54 per cent to a record and flagged a surge in its full year result.

Chairman Geoff McGrath flagged a jump in the company’s full year result after very strong trading in October and November.

Strong growth in global mineral exploration activity lifted demand for the analytical testing services provided by Campbell Brothers’ ALS minerals division, which booked revenue growth of 51 per cent, Mr McGrath said in a statement.

The company expects to book a full year net profit, excluding unusual items, of $200 million to $220 million.

This compares to an underlying profit, before unusual items, of $132.2 million for the company’s fiscal 2011, which ended on March 31.

The ALS environmental division delivered strong gains in revenue and profit, particularly within the Australian and North American regions, mainly a result of winning new contracts and clients.

Managing director Greg Kilmister said the division processed a record number of samples.

ALS’ coal division also achieved improved revenue and margin performance in South Africa and Canada due to new work contracts.

The testing services company on Monday booked net profit for the six months to September 30 of $102.3 million.

The performance of its Australian coal business was steady, despite a slow start to the year because of natural disasters.

However, revenue from the tribology division, which tests oil, fuel, coolant, and metalworking fluid, fell by 4.5 per cent due to exchange rate movements.

On an unchanged currency basis, revenue from this division grew modestly, which was notable, given the largest part of that business was in the economically ailing United States, Mr Kilmister said.

“A lot of our customer base there was in the transport, truck hire area, new trucks being bought and warranty monitoring, and that’s been fairly depressed,” Mr Kilmister told AAP.

“Because it is a little bit of a discretionary spend, a lot of companies will start to cut it back.”

The business had been underperforming in North America, a small, tight market for tribology services, but was now back on track.

“I think we’ll see further improvements in the second half.”

He also said the company continued to keep an eye out for acquisition opportunities, although they had to be a good fit.

Campbell Brothers declared an interim dividend of 95 cents per share, up from 65 cents for the same period last year, both franked at 50 per cent.

The company’s shares ended steady at $49.00 on Tuesday.