Essa net profit up, solid earnings outlook

Belmont-based mineral sampling equipment manufacturer, Essa Australia Ltd, has posted a record net profit of $1.9 million for the six months to December 2007, an increase of 23 per cent over the same period in 2006.

The result represents after-tax earnings per share of 4.03 cents on weighted issued capital.

On a pre-tax basis, net profit increased by 64 per cent from $1.8 million to $3.0 million.

Essa said the pre-tax result was the most relevant measure of the company's underlying profit improvement, given the lower tax rate last year (as a result of previous over-positioning) and the higher rate this half (mostly due to the sale of the company's joint venture interest in South America).

Essa's record financial performance was driven by a strong increase in sales revenue of 58 per cent to $20.4 million, which compares with $12.9 million for the corresponding period last year.

The company's main sampling and sample preparation equipment operations recorded a 50 per cent increase in revenue from $12.2 million to $18.3 million, attributed to the increase in demand for Essa's standard lab equipment and automation products.

Essa has also announced that it will open an office and warehouse facility in Soligen, Germany, in March 2008.

The new European operation will be conducted through a joint venture company, Essa Europe GmbH, which is 60 per cent owned by Essa.

In order to address cost pressures from the ongoing labour shortage in WA, Essa said it was carefully implementing an overseas outsourcing strategy driven by its new chief executive Kevin Mennell.

Essa said its strong financial performance in the first half and a strong order book undepinned the directors' confidence that it would record a "solid increase" in both pre and post tax profit for the 2008 financial year.

Shares in the group gained 9 cents, or 7.9 per cent , to end the day at $1.09 each.