Intertek upbeat as revenue rises

Total quality assurance provider Intertek Group released a trading update for the period from 1 January to 30 April on Friday.

The FTSE 100 firm reported group revenue of £883.5m, up 14.2% at actual rates and 1.8% at constant rates, with “solid” organic revenue growth at constant rates, with products revenue up 5.8%, trade rising 5.0%, and resources falling 15.4%.

It claimed “good” performance of acquisitions in sectors with “attractive” growth and margin prospects, and described “operational discipline” on cost and margin management during the period.

Intertek also experienced “strong” cash conversion and disciplined capital allocation, the board said.

“In the first four months of the year, the group has delivered revenue of £883.5m, up 14.2% year on year at actual rates and up 1.8% year on year at constant rates, driven by solid organic growth of 0.9% and a good performance of the acquisitions we made in attractive growth and margin sectors,” said chief executive André Lacroix.

“We are on track to deliver our 2017 targets of solid organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion.”

Lacroix said the products and trade-related divisions, which represented more than 90% of the group's earnings, delivered “broad-based” 5.5% organic revenue growth at constant rates while, as the board had expected, trading conditions continued to be 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 explained.

He said the company operated a “high quality” and “highly cash generative” earnings model.

“Our differentiated growth strategy 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 attractive returns for our shareholders.”