ALS Global’s profits take a hit from challenging conditions in mining sector

Laboratory testing group ALS Global has warned profits will be hit by challenging conditions in the mining sector in Australia and Latin America.

ALS now operates one of the world’s largest analytical and testing services businesses with more than 350 sites around the world.

Laboratory testing group ALS Global has warned profits will be hit by challenging conditions in the mining sector in Australia and Latin America.

The Brisbane-based company, which provides mine site analysis and ore testing among other ser­vices, on Thursday said it had encountered “volume headwinds” in its commodities business that would cut half-year underlying profit by about 5 per cent.

Shares in ALS dropped 8.6 per cent to close at $13.67.

“Volumes in geochemistry and metallurgy remain patchy and fluctuations have become even more pronounced in July and Aug­ust,” the company told investors. “This is especially the case in the Australian and Latin American markets and has resulted in volume declines and margin pressure in these markets.”

ALS said earlier this year that soft capital markets continued to limit exploration activities in the mining sector.

Its North American business has proved more stable while the performances of the life sciences operations were tracking to expectations.

ALS said interest expenses were tracking slightly above expectations due to higher average debt levels and lease interest costs from recent acquisitions. The integration of recent acquisitions including Europe-based Wessling Holding and US-based York Analytical Laboratories was on track.

ALS managing director Malcolm Deane said earlier this year the acquisitions were focused on expanding both the geographic reach and service offerings for existing and new clients.

York Analytical Laboratories provides environmental analyses for groundwater, drinking water, wastewater, soil and air samples.

Wessling, which provides environmental, food and pharmaceutical testing across 22 locations in Europe, gave ALS an immediate pathway and operational footprint into the large German and French environmental and pharmaceutical markets, which will complement its existing reach in Europe.

“York will accelerate our expansion into the US environmental market, particularly in the fast-emerging northeast region where investment in infrastructure and contamination supports the long-term outlook,” Mr Deane said.

“The Wessling acquisition provides a unique opportunity for ALS to build a sizeable presence in Europe’s largest testing, inspection and certification markets,” he said. “It expands ALS’s geographic reach and service offering into key regions, such as Germany, France and Switzerland, which previously have not been captured by ALS.”

In March, ALS announced it was acquiring the remaining 51 per cent in German-based Nuvisan Pharma. Founded in 1979 as a family-owned contract research organisation, Nuvisan has expanded to early discovery, safety testing, clinical trial management and regulatory support.

The company said a further update on its outlook would be provided at its first-half results announcement on November 19.

ALS, started as Brisbane-based Campbell Brothers in 1863, operates commodities, life sciences, and industrial divisions.

Commodities have traditionally generated the majority of underlying earnings, providing geochemistry, metallurgy, inspection and mine site services for the global mining industry.

Expansion into environmental, pharmaceutical and food testing areas and commodity price weakness have lessened earnings exposure to commodities.

ALS now operates one of the world’s largest analytical and testing services businesses with more than 350 sites in more than 65 countries across the globe.

Originally published as ALS Global’s profits take a hit from challenging conditions in mining sector