ALS HIT WITH $290M IMPAIRMENT CHARGE
Written on the 30 April 2015
FALLING oil prices are expected to hit ALS Limited's (ASX:ALQ) bottom line, with non-cash impairments valued at $290 million.
The lab testing provider has forecast a full year underlying net profit after tax of $135 million, a 21 per cent decline compared to the previous period.
Underlying audited net profit after tax was $67.3 million in the second half, down from $71.1 million in the second half of FY14.
The company says the result is a "solid outcome" considering current market conditions, and demonstrates its geographical diversification strategy is working.
ALS managing director Greg Kilmister (pictured) says the company is confident of achieving its long-term goals in the oil and gas markets.
"The impairment charge against ALS's oil and gas investments is an outcome of current and expected mid-term market conditions as the result of the rapid decline in the global oil price, and where ALS is along the journey of developing the suite of services identified in our 2012 strategic planning," Kilmister says.
"We are continuing to implement our strategies, including the opening of a new $10 million oil and gas laboratory in Houston in the latter part of this year."
Kilmister says ALS will assess the need for potential impairments against the value of oil and gas investments, considering significant movements in the oil price in the past eight months.
The company will continue to expand its global food testing footprint, after securing ControlVet in Europe.
The deal brings another 100 employees to ALS's offshore operations, with more acquisitions planned in Europe later this year.