Intertek says it's on track as revenue slips

Intertek Group said it was on track to deliver on its 2018 targets in a trading update on Thursday, reporting group revenue of £861.2m for the four months to 30 April - an increase of 4.4% at constant rates, but down 2.5% at actual rates.

The FTSE 100 company said it saw “good” organic revenue growth of 4.0% at constant rates in the period, with the products division up 6.6%, trade ahead 0.6%, and resources rising 0.3%.

Its board said it was focussing on acquisitions in sectors with attractive growth and margin prospects, along with operational discipline on cost and margin management.

The company also claimed to have maintained strong cash conversion and disciplined capital allocation.

“In the first four months of the year, the group has delivered revenue of £861.2m, up 4.4% year on year at constant rates, driven by a good organic growth of 4.0% at constant rates and by the contribution of the acquisitions we made recently in attractive growth and margin sectors,” said chief executive André Lacroix.

“We are on track to deliver our 2018 targets of good organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion.”

Lacroix said the $250bn global quality assurance industry had “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 subject-matter experts and over 1,000 state-of-the-art facilities in over 100 countries.”

Intertek operated a “high quality” and “highly cash generative” earnings model, Lacroix added, which he said was delivering strong returns.

“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 policy that delivers sustainable shareholder value creation.”