Intertek's revenues grow but resources continues to weigh

While conditions for its resources division continue to remain challenging, Intertek drove revenues higher in the third quarter to remain on track to deliver full year growth and cash generation.

For the 10 months ended 31 October, revenue grew 18% to £2.09bn compared to the same period last year, or 10% at constant rates, of which 6% was contributed by acquisitions. On an underlying organic growth basis, revenues were flat.

The FTSE 100 company said it was on track to “deliver robust revenue growth, with strong operational discipline, stable machine and good cash generation” for the year.

The Products and Trade related divisions, which represent over 90% of the company's earnings, delivered good organic growth of 4% at constant rates.

However, as expected, trading conditions remain “challenging” in the Resource related division, with inspection services affected by lower investments and reduced exploration activities by commodities companies, with Intertek and its clients expecting conditions to remain challenging.

The acquisitions made since January 2015, including FIT Italia, a provider of food testing services, EWA Canada, a cyber security provider, and the joint venture with ABC Analitic for an environmental quality assurance provider in Mexico, contributed £200m of additional revenues.

Chief executive André Lacroix said: “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.”

He said the company was “uniquely positioned” to seize on growth opportunities with a proposition that offers global assurance, testing, inspection and certification to customers across multiple industries in its network of over 1,000 facilities in over 100 countries.

He added: “Our differentiated Total Quality Assurance growth strategy will 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, with a disciplined capital allocation to deliver attractive returns for our shareholders."