Products and trade boost Intertek, while resources sector drags
Inspection, product testing and certification company Intertek Group reported “solid” organic growth, margin accretion and expectations of strong full-year cash in its trading update on Tuesday.
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The FTSE 100 company said revenue for the period from 1 January to 31 October stood at £2.3bn, up 9.8% at actual rates and 3.0% at constant exchange rates.
Organic revenue growth was said to be 1.9% at constant rates, with products accounting for 5.5% growth, trade at 4.0%, and resources dragging as it slipped 10.3%.
Its board said it saw “good performance” of acquisitions in sectors with attractive growth and margin prospects.
The company also highlighted operational discipline on cost and margin management, as well as “strong” cash conversion and disciplined capital allocation.
“In the first 10 months of the year, the group has delivered revenue of £2.3bn, up 9.8% year on year at actual rates and up 3.0% year on year at constant rates, driven by solid organic growth of 1.9% and the good performance of the acquisitions we have made in attractive growth and higher margin sectors,” explained chief executive André Lacroix.
“We are on track to deliver our 2017 targets of solid organic revenue growth at constant rates, with robust margin expansion at constant currency and strong cash conversion.”
Lacroix said the products and trade related divisions, which represent 94% of the group's earnings, delivered an “excellent performance” with organic growth of 5.1% at constant rates while, as the board expected, trading conditions remained challenging in the resources-related division.
“The $250bn global quality assurance industry has attractive structural growth prospects driven by an increased focus of corporations on risk management, global trade flows, global demand for energy, expanding regulations, more complex sourcing and distribution operations, technological innovations, government investments in large infrastructure projects, and increased consumer demand for higher quality and more sustainable products.
“We are uniquely positioned to seize these exciting growth opportunities with our ‘Total Quality Assurance’ value proposition that provides a superior service, offering global assurance, testing, inspection and certification solutions to our customers across multiple industries through our global network of over 1,000 state of the art facilities in over 100 countries.”
Lacroix said the company operated a “high quality” and highly cash generative earnings model.
“Our '5x5' differentiated strategy for growth will continue to move the centre of gravity of our portfolio towards the attractive growth and margin opportunities in the industry based on a disciplined approach to revenue, margin, portfolio and cash performance management, and an accretive disciplined capital allocation to deliver sustainable returns for our shareholders.”