Intertek reports robust first-half growth

Testing and assurance provider Intertek reported robust first-half revenue growth, improved profit margins, and a higher return on invested capital on Friday.

The FTSE 100 company reported revenue of £1.64bn in the six-month period, making for an increase of 8.3% at constant rates and 9.9% at actual rates year-on-year.

Moreover, the company recorded like-for-like revenue growth of 7.1% at constant rates, marking its highest like-for-like revenue growth in the last 10 years.

The acquisitions of JLA, SAI, and CEA were said to be performing well, contributing to the overall positive financial performance of the company.

Additionally, the integration of Controle Analitico was progressing as planned.

Intertek reported improved profitability, with an adjusted operating profit of £245.4m – up 13.3% at constant rates and 12.9% at actual rates.

Its adjusted operating margin also saw improvement, rising by 70 basis points at constant rates and 40 basis points at actual rates, reaching 15%.

The company's adjusted diluted earnings per share rose to 95.2p, ahead 10.6% at constant rates and 10.1% at actual rates.

Intertek recorded strong growth in operating cash flow, which increased by 13.6%.

The company also maintained robust adjusted free cash flow of £79.6m, contributing to a strong balance sheet with a net debt-to-EBITDA ratio of 1.1x.

Its return on invested capital reached 19.3%, making for an improvement of 120 basis points year-on-year at constant rates and 260 basis points at actual rates.

The company declared an interim dividend of 37.7p, representing a 10.1% increase compared to the prior year.

Looking ahead, Intertek said it was optimistic over the rest of 2023, as it anticipated mid-single digit like-for-like revenue growth, continued margin progression, and strong free cash flow.

“We expect to deliver a robust performance in 2023, given the increased demand for our ATIC solutions, the strengths of our portfolio, our superior ATIC customer service, our productivity and cost initiatives, as well as our daily cash flow discipline,” said chief executive officer André Lacroix.

“We expect the group will deliver mid-single digit like-for-like revenue growth at constant currency, with margin progression year on year, and a strong free cash flow performance.”

At 0802 BST, shares in Intertek Group were down 0.47% at 4,251p.

Reporting by Josh White for Sharecast.com.