Revenue, earnings up at Intertek as China still drags

Assurance, inspection, product testing and certification company Intertek posted full-year revenue of £3.19bn in its final results on Tuesday, making for an increase of 8.2% at constant rates and 14.6% at actual rates.

The FTSE 100 firm said its recent acquisitions of JLA, SAI and CEA performed well, contributing £153m of margin-accretive revenue in 2022.

Its like-for-like revenue growth was 4.9% at constant rates, with products growing 3.9%, trade growing 5.6%, and resources growing 7.9%.

Outside of China, like-for-like revenue grew 6.5% at constant rates, with products growing 5.5%, trade growing 7%, and resources growing 8.5%.

Adjusted operating profit for the company was £520m, making for an increase of 3.8% at constant rates and 9.7% at actual rates.

The firm’s adjusted operating margin was 16.3% - 70 basis points lower at constant and actual rates, although the second-half margin of 17.8% showed improvement.

Intertek's adjusted diluted earnings per share came in at 211.1p, an increase of 4.6% at constant rates and 10.6% at actual rates.

The company had an adjusted free cash flow of £386m and a strong balance sheet, with a 1.1x net debt-to-EBITDA ratio.

Its return on invested capital was 18%, up 20-basis points year-on-year at constant rates, and down 20-basis points at actual rates.

Intertek announced a full year dividend of 105.8p with dividend cover returning to 2.0x, and also announced a cost reduction program to streamline operations and deliver annual savings of £15m.

Looking forward, Intertek said it was expecting mid-single digit like-for-like revenue growth, margin progression, and strong free cash flow in 2023.

“We have a group of excellent businesses globally which performed well across 2022,” said chief executive officer André Lacroix.

“In China, however, the Covid-related lock-down restrictions and consequent revenue headwinds faced in March to June did have an impact on our performance, as did the high level of Covid-related sickness we experienced in November-December, all of which have also impacted group margins.

“Post Covid-19, the quality assurance market will grow faster as the demand for quality assurance solutions is expanding across all our business lines given the increasing stakeholder expectations in quality, safety and sustainability.”

At 0912 GMT, shares in Intertek Group were down 2.33% at 4.274p.

Reporting by Josh White for Sharecast.com.