How Did ALS Achieve 14.7% EBIT Growth? Inside Its Commodities Surge
ALS Limited has posted a robust first half for FY26 with underlying EBIT growth of 14.7%, driven by strong performance in its Commodities segment and improved Life Sciences results. The company also raised its interim dividend and updated its growth outlook for the year.
- Underlying EBIT up 14.7% to $287.2 million with margin improvement
- Revenue grows 13.3% to $1.7 billion, led by Commodities segment
- Interim dividend increased to 19.4 cents per share, partially franked
- Strong cash flow and reduced net debt following May equity raise
- Revised FY26 guidance, Commodities growth upgraded, Life Sciences trimmed
Strong First Half Performance
ALS Limited (ASX – ALQ) has delivered a solid start to FY26, reporting a 14.7% increase in underlying EBIT to $287.2 million, alongside a modest margin uplift to 17.3%. Underlying revenue rose 13.3% to $1.7 billion, reflecting robust organic growth primarily within its Commodities segment. The company’s underlying net profit after tax (NPAT) climbed 17.2% to $178.4 million, while statutory NPAT increased 11.8%.
Commodities Segment Drives Growth
The Commodities division was the standout performer, posting 14.3% organic revenue growth (12.0% in constant currency) and maintaining a resilient EBIT margin of 28.1%. This growth was underpinned by increased sample volumes and a favourable revenue mix, despite the lingering effects of price discounting from prior periods. Minerals testing remained strong, with margins holding above 31%, supported by major and mid-tier miners as well as improved funding conditions for junior explorers.
Life Sciences Sees Mixed Results
Life Sciences experienced more varied outcomes, with organic revenue growth of 4.0% led by strong Food testing results and steady Environmental growth in key regions such as APAC and EMEA. However, challenges in the Americas, including regulatory changes in Mexico affecting pharmaceutical testing, tempered overall performance. Nuvisan, the company’s pharmaceutical services arm, delivered encouraging margin improvements and revenue growth, signaling successful transformation efforts.
Capital Discipline and Balance Sheet Strength
ALS continues to invest in growth while maintaining financial discipline. The company spent $67.7 million on its hub laboratory expansion program across strategic locations including Lima, Sydney, Bangkok, and Prague. Core capital expenditure totaled $89.1 million, exceeding depreciation and reflecting a commitment to capacity enhancement. The balance sheet remains strong with net debt reduced by nearly 17% to $1.15 billion, aided by a May 2025 equity raise. Liquidity stands above $550 million, and cash conversion remains high at 88%.
Dividend and Outlook
Reflecting confidence in ongoing performance, ALS declared an interim dividend of 19.4 cents per share, a 2.6% increase over the prior year, partially franked at 30%. The company revised its FY26 guidance, upgrading expected organic revenue growth in Commodities to 12-14% while lowering Life Sciences growth expectations to 4-6%. ALS remains on track to meet its FY27 targets of $3.3 billion revenue and $600 million underlying EBIT, with a margin floor of 19%.
Leadership and Strategic Moves
Notably, ALS relocated its operational headquarters from Houston to Madrid, aligning leadership closer to its European workforce. The Minerals division will see a leadership transition with Bruce McDonald retiring in March 2026 after 22 years. The company is actively pursuing bolt-on acquisitions to complement its organic growth strategy.
Bottom Line?
ALS’s strong H1 momentum and strategic investments set the stage for continued growth, though regional challenges and leadership changes warrant close watch.
Questions in the middle?
- How will ALS manage the leadership transition in its critical Minerals division?
- What impact will the regulatory environment in key Life Sciences markets have on future growth?
- Can ALS sustain margin improvements amid evolving pricing dynamics in Commodities?