ALS Ltd (ALQ) - First-half softness

ALS provides professional technical services primarily in the areas of testing, measurement, and inspection in Africa, Asia/Pacific, Europe, the Middle East, and the Americas. It operates in two market segments, commodities and life sciences. ALS was founded in 1863 and is headquartered in Brisbane, Australia.

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ALS warned that first-half FY25 underlying net profit would be down around 5% on a year ago, as volume declines, particularly in its Australian and Latin American operations, and higher finance costs squeezed margins for the commodity testing and life sciences group.

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The company blamed the decline in volumes on several factors:

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• Sluggish investment in mineral development in some Latin American countries due to political volatility;

• Weaker demand from China, the world’s largest commodity consumer; and

• Extended delays in clients raising capital before starting exploration on Australian projects

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We maintain our Accumulate recommendation given the recent fall in share price, its exposure to an eventual rebound in commodity volumes as the global economy strengthens, and upside in the life sciences operations.

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