TIDMITRK
RNS Number : 9151Z
Intertek Group PLC
23 May 2019
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TRADING STATEMENT
23 May 2019
Intertek Group plc ("Intertek" or "the Group"), a leading Total
Quality Assurance provider to industries worldwide, today releases
its May Trading Update for the period from 1 January to 30 April
2019 ("period"). All comparative comments in this statement reflect
comparisons with the corresponding period during 2018. The Group's
half year results to 30 June 2019 will be announced on 1 August
2019.
Good start to the year with Robust Revenue Growth of 5.3%(1)
-- Group revenue of GBP924.3m, up 5.3% at constant rates:
Products +5.5%, Trade +6.5%, Resources +2.9%
-- Broad-based organic revenue growth of 3.3% at constant rates:
Products +2.6%, Trade +5.3%, Resources +2.9%
-- 2.0% revenue growth at constant rates from Acquisitions in
attractive growth and margin sectors
-- 7.3% revenue growth at actual rates; 200bps foreign exchange translation benefit
-- Continuous operational discipline on margin management and cash conversion
-- On track to deliver full year revenue, margin and cash targets
André Lacroix: Chief Executive Officer statement, May 2019
"In the first four months of the year, the Group has delivered
revenue of GBP924.3m, up 7.3% year on year at actual rates and 5.3%
at constant rates, driven by broad-based organic growth of 3.3% at
constant rates, by the contribution of the acquisitions we made
recently in attractive growth and margin sectors and by a 200bps
benefit due to foreign exchange translation.
We are on track to deliver our 2019 targets of good organic
revenue growth at constant rates, with moderate margin expansion
and strong cash conversion. Given a good start to the year, we
expect good organic revenue growth at constant currency rates in
each of our three divisions: Products, Trade and Resources.
The $250 billion 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
subject-matter experts and over 1,000 state-of-the-art facilities
in over 100 countries.
We operate a high quality and highly cash generative earnings
model 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."
Note 1: At constant currency rates
Revenue Performance
4 months - January to April
2019 2018 Change at Change at
GBPm GBPm actual constant
====== ====== ========== ==========
Group
Revenue 924.3 861.2 7.3% 5.3%
====== ====== ========== ==========
Organic Revenue 906.4 861.1 5.3% 3.3%
====== ====== ========== ==========
Products
Revenue 549.7 508.1 8.2% 5.5%
====== ====== ========== ==========
Organic Revenue 534.4 508.1 5.2% 2.6%
====== ====== ========== ==========
Trade
Revenue 216.0 200.7 7.6% 6.5%
====== ====== ========== ==========
Organic Revenue 213.4 200.6 6.4% 5.3%
====== ====== ========== ==========
Resources
Revenue 158.6 152.4 4.1% 2.9%
====== ====== ========== ==========
Organic Revenue 158.6 152.4 4.1% 2.9%
====== ====== ========== ==========
Contacts
For further information, please contact:
Denis Moreau, Investor Relations
Telephone: +44 (0) 20 7396 3415 investor@intertek.com
Jonathon Brill, FTI Consulting
Telephone: +44 (0) 20 3727 1000 intertek@fticonsulting.com
Analysts' Call
A live audiocast for analysts and investors will be held today
at 7.45am UK time; +44 (0) 20 3003 2666 (Link to audiocast).
Details can also be found at http://www.intertek.com/investors/
together with a pdf copy of this report. A recording of the
audiocast will be available later in the day.
Intertek is a leading Total Quality Assurance provider to
industries worldwide.
Our network of more than 1,000 laboratories and offices and over
44,000 people in more than 100 countries, delivers innovative and
bespoke Assurance, Testing, Inspection and Certification solutions
for our customers' operations and supply chains supply chains.
Intertek Total Quality Assurance expertise, delivered
consistently, with precision, pace and passion, enabling
our customers to power ahead safely.
intertek.com
Products Divisional Review
Our Products related businesses delivered a trading performance
in line with expectations with revenue growth of 5.5% at constant
currency rates, driven by good organic growth of 2.6% at constant
rates and the benefits of acquisitions recently made in high growth
and high margin sectors.
-- Our Softlines business reported a solid organic growth
performance. We are leveraging the investments we have made to
support the expansion of our customers into new markets and to
seize the exciting growth opportunities in the footwear sector. We
continue to benefit from strong demand from our customers for
chemical testing as well as from a greater number of brands and
SKUs.
-- Our Hardlines and Toy business continues to take advantage of
our strong global account relationships, the expansion of our
customers' supply chains into new markets and our innovative
technology for factory inspections. We delivered solid organic
revenue growth performance across our main markets of China, Hong
Kong, India and Vietnam.
-- We delivered robust organic revenue growth in our Electrical
& Connected World business driven by higher regulatory
standards in energy efficiency and by the increased demand for
wireless devices and cybersecurity.
-- Our Business Assurance business delivered good organic
revenue growth as we continue to benefit from the increased focus
of corporations on risk management, resulting in strong growth in
Supply Chain Audits and increased consumer and government focus on
ethical and sustainable supply.
-- Driven by the growing demand for more environmentally
friendly and higher quality buildings and infrastructure in the US
market, our Building & Construction business reported solid
organic revenue growth.
-- Our Transportation Technology business delivered robust
organic revenue growth as we capitalise on our clients' investments
in new powertrains to lower emissions and increase fuel
efficiency.
-- We continue to benefit from the increased focus of
corporations on food safety and delivered robust organic revenue
growth in our Food business.
-- We delivered an organic revenue performance below last year
in our Chemicals & Pharma business due to a base line effect in
2018 as we saw robust demand from our clients to meet the 1 June
2018 REACH registration deadline. Moving forward we will continue
to benefit from the structural growth opportunities in the
healthcare markets in both developed and emerging economies.
2019 outlook
We expect our Products division to benefit from good organic
revenue growth at constant currency.
Mid to long-term growth outlook
Our Products division will benefit from mid to long-term
structural growth drivers including product variety, brand and
supply chain expansion, product innovation and regulation, the
growing demand for quality and sustainability from developed and
emerging economies, the acceleration of e-commerce as a sales
channel, and the increased corporate focus on risk.
Trade Divisional Review
Our Trade related businesses delivered a trading performance
in-line with expectations with revenue growth of 6.5% at constant
currency rates, driven by robust organic revenue growth of 5.3% at
constant rates and the benefits of acquisitions recently made in
attractive growth and margin sectors.
-- Our Caleb Brett business reported good organic revenue
growth, reflecting the structural growth drivers in the Crude Oil
and Refined Product global trading markets.
-- Our Government and Trade Services business delivered
double-digit organic revenue growth driven by growth with existing
contracts and the benefits of new contracts.
-- Our AgriWorld business delivered good organic revenue growth.
2019 outlook
We expect our Trade related businesses to deliver a good organic
revenue growth performance at constant currency.
Mid to long-term growth outlook
Our Trade division will continue to benefit from both regional
and global trade-flow growth, as well as the increased customer
focus on quality, quantity controls and supply chain risk
management.
Resources Divisional Review
Our Resources related businesses delivered a trading performance
ahead of expectations with good organic revenue growth of 2.9% at
constant rates.
-- We delivered good organic revenue growth in our Capex
Inspection Services business which benefited from the increased
investment of our customers in exploration and production, while
the demand for Opex Maintenance Services remained stable.
-- We benefited from good organic revenue growth in our Minerals business.
2019 outlook
We expect our Resources related businesses to deliver good
organic revenue growth at constant currency.
Mid to long-term growth outlook
Our Resources division will grow in the medium to long-term as
we benefit from investments in exploration and production of oil
and minerals, to meet the demand of the growing population around
the world.
M&A
Intertek is well positioned to seize the attractive external
growth opportunities in a very fragmented industry and we continue
to make progress with our M&A strategy.
The acquisitions made recently in attractive growth and margin
sectors are performing well:
-- In March 2018, the Group acquired Aldo Abela Surveys, a
leading provider of quality and quantity cargo inspection services,
based in Malta.
-- In April 2018, the Group acquired Proasem, a leading provider
of laboratory testing, inspection, metrology and training services,
based in Colombia.
-- In June 2018, the Group acquired NTA Monitor, a leading
network security and assurance services provider, based in the UK
and Malaysia.
-- In August 2018, the Group acquired Alchemy, a leading
provider of SaaS-based People Assurance solutions, based in North
America.
In addition, the Group entered into an exclusive agreement with
the Certified Automotive Parts Association (CAPA) in March 2018, to
operate their automotive certification programme.
Investment & Financial Position
Our year end net debt guidance of GBP670-700m pre the impact of
IFRS 16, assuming no further acquisitions and no significant forex
changes, remains unchanged. The strength of Intertek's balance
sheet will enable the Group to seize attractive growth
opportunities ahead and continue to deliver strong shareholder
returns.
Outlook
We expect to deliver a good organic revenue growth performance
at constant currency in 2019 with moderate margin expansion and
strong cash generation. Given a good start to the year, we expect
good organic revenue growth at constant currency rates in each of
our three divisions: Products, Trade and Resources.
Looking further ahead, the global Assurance, Testing, Inspection
and Certification industry will continue to benefit from exciting
growth prospects driven by an increased focus of corporations on
risk management, global trade flows, global demand for energy,
expanding regulations, more complex supply chains, technological
innovations and increased demand for higher quality and more
sustainable products.
Intertek is well positioned to take advantage of these growth
opportunities in the Quality Assurance market. We offer a
high-quality Assurance, Testing, Inspection and Certification
service to our clients based on the depth and breadth of our
technical expertise, our global network of state-of-the-art
facilities and our customer-centric culture.
-ENDS-
The 2019 May Trading Statement Audiocast CEO Script will be
available after the call at www.intertek.com/investors/
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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