Strong results at Intertek impaired by oil uncertainty

Intertek Group reported on what it termed a solid year on Wednesday, though uncertainties in the global oil and gas markets forced the FTSE 100 firm into a statutory loss for the 2015 calendar year.

The inspection and certification company's adjusted revenue rose 3.5% to £2.17bn during the year. Adjusted operating profit increased 5.9% to £343.4m, with Intertek's adjusted operating margin improving by 40 basis points to 15.9%.

Intertek's adjusted profit before tax was £319.2m, up 6.3%, and its diluted earnings per share were 140.7p. On a statutory basis, however, the company made a loss before tax of £307.7m, with losses per share totalling 224.2p, which Intertek put down to a non-cash impairment during the year.

"Given the continuing challenging trading conditions in the global oil and gas industry, a non-cash impairment charge of £577m has been taken for past acquisitions in Industry Services to reflect these uncertainties, and is included in deriving the statutory results," Intertek's board said in a statement.

The firm's directors said they would put a final dividend of 35.3p per share to shareholders at the annual general meeting on 25 May 2016, taking the full year dividend to 52.3p, an increase of 6.5%.

"The group has delivered a solid performance during 2015 with improved revenue and profit driven by a strong performance across our product and trade-related businesses which represent 90% of the Group's earnings," said Intertek CEO André Lacroix.

"Our organic growth momentum improved through the year and margin management remained an important priority enabling the group to deliver a 20 basis point improvement at constant exchange rates, driven by continuous cost discipline across all businesses," he added.

Lacroix said Intertek remained strongly cash generative, delivering an operating cash flow of £466m, which was a 15% improvement year on year.

The company also continued to invest in growth, with capex initiatives and acquisitions targeting business lines and countries with attractive growth and margin prospects.

Lacroix pointed to the industry as one with attractive structural growth prospects, and looking forward he said the company would continue to benefit from increased consumer demand for higher quality and more sustainable products, expanding regulations, technological innovations, more complex supply chains, global trade flows and the increased focus on risk management at corporations.

"Intertek is well positioned to take advantage of these attractive growth opportunities. We have a global network of state of the art facilities, a powerful portfolio with leading positions, a wide range of quality assurance solutions, a passionate and entrepreneurial culture and a high margin and strongly cash generative earnings model," he concluded.