ALS (ALQ) H1 2025 earnings summary

Executive summary

• Revenue grew 14% year-over-year to $1,464.2m (AUD 1.4 billion), with 5.6% organic growth and strong acquisition contributions, despite adverse FX impacts.

• Underlying EBIT rose 2.1% to $250.4m (AUD 250 million), or 8.5% to $266.0m at constant currency, reflecting business model resilience.

• Life Sciences led growth, especially Environmental and Food testing, while Commodities and Minerals maintained resilient margins in subdued markets.

• Cash conversion was robust at 91% of underlying EBITDA, with free cash flow reaching $274m, supporting investment and dividends.

• Integration of recent acquisitions (Nuvisan, York, Wessling) is progressing well, with Nuvisan transformation ahead of plan.

Financial highlights

• Underlying EBIT margin declined to 17.1% due to acquisition dilution and FX headwinds.

• Underlying NPAT was $152.3m, down 3.9% year-over-year; statutory NPAT fell 5.0% to $126.8m, mainly due to FX and higher interest costs.

• Return on capital employed increased by 66 bps to 19.4%, net of Nuvisan impairment.

• Group leverage at 2.3x, at the upper end of the target range, with net debt rising due to acquisitions.

• Interim dividend declared at 18.9c per share (AUD 0.189), 60% payout ratio, 30% franked.

Outlook and guidance

• Targeting mid-single-digit organic revenue growth for FY25, with Life Sciences expected to outperform commodities.

• Margins in Life Sciences expected to improve in H2 FY25 and beyond as integration and optimisation continue.

• Focus on integrating recent acquisitions and Nuvisan transformation, with capital allocation prioritizing Environmental and Minerals.

• On track for FY27 targets: $3.3bn revenue and $600m EBIT.