Intertek lifts dividend after first-half growth

Intertek reported a solid first-half financial performance on Friday, achieving double-digit growth in operating profit, earnings per share, and free cash flow.

The FTSE 100 company’s revenue reached £1.67bn, marking a 6.6% increase at constant currency and 1.8% at actual rates.

Notably, like-for-like revenue growth was broad-based across its sectors, with consumer products up 6.0%, corporate assurance up 8.3%, health and safety up 8.5%, industry and infrastructure up 2.2%, and ‘World of Energy’ up 8.3%.

Intertek said its recent acquisitions in high-growth and margin segments performed well, contributing to its positive results.

The company’s cost reduction programme yielded £5m in savings during the first half, with total savings expected to reach £11m for the year.

Adjusted operating profit increased by 14.2% at constant currency to £265.1m, while strong margin progression was achieved, driven by a combination of pricing, operating leverage, cost control, and productivity improvements.

Adjusted earnings per share grew 17.5% at constant currency, reflecting robust profitability.

Intertek said its focus on cash management resulted in a 118% cash conversion rate and a 14% growth in free cash flow.

The company also strengthened its financial position, reducing net debt to £708m and improving its net debt/EBITDA ratio to 1.0x.

Investment in growth remained a priority, the board said, highlighted by the acquisition of Base Met Labs and capital expenditures of £56m.

Return on invested capital (ROIC) saw significant improvement, rising to 20.4%.

Reflecting confidence in its performance, Intertek announced an interim dividend of 53.9p, a 43% year-on-year increase, in line with its new dividend policy of a 65% payout ratio.

The company said it was optimistic for the second half and was on track to meet its medium-term targets, including mid-single digit like-for-like revenue growth, a margin of over 17.5%, and continued strong cash flow.

“We enter the second half of the year with confidence, given the day-adjusted like-for-like growth rate acceleration in the May-June period and we expect the group will deliver a strong performance in 2024 with mid-single digit like-for-like revenue growth at constant currency, margin progression and a strong cash flow performance,” said chief executive officer André Lacroix.

“We are well-positioned to deliver our medium-term target of 17.5%+ margin, leveraging the revenue growth acceleration we are seeing for our ATIC solutions, our disciplined performance management and our investments in high growth and high margin segments.”

At 0926 BST, shares in Intertek Group were down 0.24% at 4,942p.

Reporting by Josh White for Sharecast.com.