The fallout from Brazil’s COVID-19 catastrophe is reaching the shores of the ASX!

Laboratory testing services group ALS Ltd (ASX: ALQ) took a $50 million hit to its bottom line due to the growing crisis in the region when it unveiled its full year profit.

Brazil’s economy is taking a big beating and the worst is yet to come. The number of coronavirus deaths in Brazil is projected to surge to nearly 126,000 by August, according to the Institute for Health Metrics and Evaluation at the University of Washington in Seattle.

Grim forecast reported in the Australian Financial Review is 42% higher than the IHME’s first projection released on May 12.

New COVID-19 epicentre

Brazil is fast becoming the epicentre for the COVID-19 pandemic as its defiant president Jair Bolsonaro refuses to implement any strict measures used in other countries to curb the outbreak.

This, combined with the country’s poor health care system, spells bad news for not only Brazil but its neighbours.

The impact is felt at ALS where its full year statutory profit slumped by $24.8 million to $127.8 million. Management also sliced its final dividend by nearly half to 6.1 cents from 11.5 cents a share.

ALS jumps on profit result

But the news didn’t bother investors. The ALS share price jumped 2.8% during lunch time trade to $7.25 when the S&P/ASX 200 Index (Index:^AXJO) is struggling at breakeven.

This is because underlying net profit (which ignores one-off issues) increased 4.3% to $188.8 million as revenue improved 10% to $1.83 billion in FY20.

That’s in-line with its guidance range of $185 million to $195 million. In this climate, hitting guidance is an achievement in itself!

Growth across divisions

Despite the disruption to its Latin American operations and the drop in demand from oil and gas customers, its Life Sciences, Industrial and Commodities divisions posted growth, even on an organic basis.

Management also boasted about its strong balance sheet with around $650 million of liquidity available. This includes an extra $200 million of debt it recently secured with its banks.

ALS said it’s shown resilience during the COVID-19 pandemic so far due to a diverse portfolio of businesses and geographies, with many of its services deemed as “essential businesses”.

ALS isn’t the only ASX company exposed to Brazil and Latin America. Some of our miners like Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32) also have operations in the region.

More reading

• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Why the NAB share price is surging higher today
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today
• 3 easy rules for building a massive ASX share portfolio

Motley Fool contributor Brendon Lau owns shares of Rio Tinto Ltd and South32 Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The ASX 200 stock hit by the Brazilian COVID-19 wave appeared first on Motley Fool Australia.

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The National Tyre & Wheel Ltd (ASX: NTD) share price is gaining traction today on the back of an FY20 trading update and related full-year guidance.

At the time of writing, National Tyre & Wheel shares have raced 26.79% higher so far today to 35.5 cents per share. This takes its current market capitalisation to around $36 million, so we’re very much at the smaller end of the ASX spectrum here.

About National Tyre & Wheel

As its name suggests, the company is in the business of tyres and wheels. It supplies the latest generation of tyres and wheels to consumers in Australia, New Zealand and, to a lesser extent, South Africa.

The company has a number of different brands under its banner to service the car, SUV, 4WD, light commercial and caravan segments. These brands include Exclusive Tyre Distributors, Cooper Tires, Mickey Thompson, and Dynamic Wheel Co.

Although National Tyre & Wheel’s history dates back to 1989, it is relatively new to the ASX scene after listing in December 2017.

Why the National Tyre & Wheel share price is gaining traction

This morning, the company released an FY20 trading update, providing details of recent trading conditions along with forecasts for the full-year.

According to the announcement, trading results in April and May have exceeded expectations and volatility has subsided to the extent that shorter predictions can now be made with reasonable certainty.

As a result, the company provided guidance for FY20 operating earnings before interest, tax, depreciation and amortisation (EBITDA) of between $8.9 million and $9.3 million. Additionally, the first quarter of FY21 is expected to be consistent with this trajectory.

Some of its subsidiaries have received JobKeeper support, while others remain above the eligibility threshold. JobKeeper payments received in the fourth quarter of FY20 will amount to $0.96 million, representing 25% of people costs in that period.

National Tyre & Wheel believes its experience in Australia and New Zealand over the past 2 months is generally consistent with the overall performance of the tyre and wheel industries. According to the company, these industries are proving to be resilient in response to a difficult economic environment.

As for Top Draw Tyres, National Tyre & Wheel’s 50%-owned South African subsidiary, trading remains limited by government-imposed restrictions. The company also warned of a potential impairment charge of up to $1.8 million relating to the value of intangible assets.

Importantly, National Tyre & Wheel stated it has no present need to increase non-trading debt or raise capital. As of 30 April, the company had cash on hand of $18.4 million, placing it in a net cash position of $6 million.

In addition, National Tyre & Wheel has reinstated its dividend policy after temporarily suspending it on 3 April. The board will now apply the policy based on trading results over the coming months.

More reading

• The ASX 200 stock hit by the Brazilian COVID-19 wave
• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Is Wesfarmers in the buy zone?
• Why the NAB share price is surging higher today
• 2 ASX growth stocks that could become 10-baggers in the next decade

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been a very eventful day for the S&P/ASX 200 Index (ASX: XJO). At lunch the benchmark index has recovered from a sharp decline in early trade to be up 0.1% to 5,784.3 points.

Here’s what has been happening on the market today:

Big four banks rocket higher.

The performance of the big four banks on Wednesday has been the ASX 200’s saving grace. The banking sector has been storming higher for a third day in a row, which has offset heavy declines in other parts of the market. Investors appear to believe the banks were oversold over the last three months and have been piling in. The best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a stunning 8.5% gain.

Afterpay sinks.

It looks as though investors have decided to take profit on a few growth shares today. One of the most notable examples of this is the Afterpay Ltd (ASX: APT) share price which is down 5.5%. Prior to today the payments company’s shares were up over 400% from their March lows. This impressive share price performance has been driven largely by its strong sales and customer growth and the arrival of Tencent Holdings as a substantial shareholder.

ALS result impresses.

The ALS Ltd (ASX: ALQ) share price is pushing higher on Wednesday after the release of a solid full year result. For the 12 months ended 31 March, the testing services company reported a 10% increase in revenue from continuing operations to $1,831.9 million and a 4.3% lift in underlying net profit to $188.8 million. ALS’ profits were in line with management’s guidance. Pleasingly for shareholders, the ALS board had enough confidence in its outlook and balance sheet to declare a final dividend. It will be paying shareholders a partially franked 6.1 cents per share.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the Southern Cross Media Group Ltd (ASX: SXL) share price with a 31% gain. This was despite there being no news out of the beaten down media company. The worst performer has been the Saracen Mineral Holdings Limited (ASX: SAR) share price with an 8.5% decline after a decent pullback in the gold price.

More reading

• The ASX 200 stock hit by the Brazilian COVID-19 wave
• Why the NAB share price is surging higher today
• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower appeared first on Motley Fool Australia.

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