Struggling industrial conglomerate Alesco Corporation seems to have emerged from a couple of years of tough times, losses and lean profits.

The company managed to produce a small improvement in earnings, once the impact of asset sales in the 12 months to May 31 are discounted, with a final dividend being paid, and a special payment to shareholders also being announced.

The company told the ASX yesterday net profit for the 2010-11 financial year was $13.573 million, up from a loss of $124.3 million the year before.

The market liked the news, pushing the company's shares 5.6% or 15c higher to $2.84.

They touched a day's high of $2.91 to be up around 8%.

The result came on lower revenue, however, down 12.1% at $679.865 million, thanks to the sale of the company's tyres and water services and products divisions.

The sale also saw a fall in earnings before interest, tax, depreciation and amortisation (EBITDA) to $51.2 million from $57.2 million in the 2010 financial year.

Group EBIT (earnings before interest and tax) was down 5% to $34.2 million for the same reason.

Directors said EBIT from continuing businesses increased 9%, to $36.5 million (2010 - $33.3 million), despite a 3% decline in revenue.

Alesco declared a final dividend of 7c, fully franked, after paying no final dividend in 2009-10.

The company paid a 1.5c a share interim and it said yesterday that a special 5.5c a share dividend to be paid from the proceeds of the sale of the two divisions.

This brings total dividends for 2010-11 to 14c, fully franked, from 7cs fully franked in the prior year.

The final and special dividends will be paid on September 6, meaning shareholders will receive a total of 12.5c a share, which is a good outcome given the problems of the previous year.

Directors described the 2011 year as "challenging", a word we are going to hear a lot more of in the 2011 reporting season.

The company benefitted from the stronger Australian dollar in the year.

"The Australian dollar strengthened against all major currencies during the period.

"This had a net positive impact on Group profitability, which was partly offset by hedging and reductions in market pricing.

"In addition, lower corporate costs resulting from reduced discretionary spending and salary costs have contributed to the improved financial performance of the continuing business.

"With the current portfolio of businesses, the Board expects to maintain in future years an average full-year dividend payout ratio in the range of 60% - 80% of net profit after tax."

The dividend before the special payments is equal to a payout ratio of 60%.

Looking to the current year, directors said, "Trading conditions in Alesco's markets are expected to remain challenging in Financial Year 2012 (Y12).

"Alesco has a focused portfolio of businesses and a strong balance sheet.

"Its operational capabilities have improved over the past 12 months, particularly in two of the three divisions and progress is being made in Functional & Decorative Products.

"Over the medium term, Alesco is well positioned to benefit from the capital investments made during FY11, sensible bolt-on acquisitions and other growth opportunities to deliver improved operational and financial performance.

"Given the challenging and subdued conditions in the building products markets, Alesco remains cautious about the year ahead.

"However, the Company's disciplined operational approach and Project Restore business improvement program places Alesco in a good position to counter what are likely to be challenging market conditions over the next 12 months."

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