TIDMITRK
RNS Number : 7630P
Intertek Group PLC
22 November 2016
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TRADING STATEMENT
22 NOVEMBER 2016
Intertek Group plc ("Intertek" or "the Group"), a leading Total
Quality Assurance provider to industries worldwide, today releases
its Trading Statement for the period from 1 January to 31 October
2016 ("period"). All comparative comments in this statement reflect
comparisons with the corresponding period during 2015. The Group's
full year results to 31 December 2016 will be announced on 7 March
2017.
On track to deliver robust earnings growth in 2016
===================================================
Strong revenue growth: +10% at constant rates, +18% at actual
rates
High revenue growth in the high margin Products division: +22%
at constant rates, +33% at actual rates
Recent acquisitions contributed GBP200m of additional
revenues
Stable organic revenue growth at constant rates: Products +5.5%,
Trade +1%, Resources -13%
On track to deliver 2016 target of robust revenue growth at
constant rates with stable margin
André Lacroix: Chief Executive Officer Statement
======================================================
"In the first ten months, the Group has delivered 10% revenue
growth at constant rates and is on track to deliver robust revenue
growth, with strong operational discipline, stable margin and good
cash generation in 2016.
The Products and Trade related divisions, which represent over
90% of the Group's earnings, delivered an excellent performance
with good organic growth of 4% at constant rates. However, trading
conditions remain, as expected, challenging in the Resource related
division. The acquisitions made since January 2015 are performing
well and contributed GBP200m of additional revenues.
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 operate a high quality and highly cash generative earnings
model and we are uniquely positioned to seize these exciting growth
opportunities with our Total Quality value proposition that
provides a superior service, offering global Assurance, Testing,
Inspection and Certification solutions to our customers across
multiple industries delivered in our global network of over 1,000
state of the art facilities in over 100 countries.
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."
Revenue Performance
====================
10 months - January 4 months - July to October
to October
============== ===================================================== ===============================================
2016 2015 Change Change 2016 2015 Change Change
at actual at at actual at
constant constant
============== ============= ============= =========== ========== ========== ========== =========== ==========
Group
======================================================================================================================
Revenue GBP2,097.7m GBP1,779.5m 17.9% 9.9% GBP893.8m GBP719.3m 24.3% 9.0%
============== ============= ============= =========== ========== ========== ========== =========== ==========
Organic
revenue GBP1,896.7m GBP1,769.0m 7.2% 0.0% GBP805.9m GBP711.6m 13.3% (0.7%)
============== ============= ============= =========== ========== ========== ========== =========== ==========
Revenue GBP201.0m GBP10.5m GBP87.9m GBP7.7m
from
acquisitions
============== ============= ============= =========== ========== ========== ========== =========== ==========
Products
======================================================================================================================
Revenue GBP1,193.8m GBP901.1m 32.5% 22.1% GBP515.8m GBP369.4m 39.7% 21.8%
============== ============= ============= =========== ========== ========== ========== =========== ==========
Organic
revenue GBP1,026.8m GBP896.6m 14.5% 5.5% GBP441.6m GBP364.9m 21.0% 5.5%
============== ============= ============= =========== ========== ========== ========== =========== ==========
Trade
======================================================================================================================
Revenue GBP474.3m GBP445.1m 6.5% 0.9% GBP201.8m GBP177.8m 13.5% 0.7%
============== ============= ============= =========== ========== ========== ========== =========== ==========
Organic
revenue GBP474.3m GBP445.1m 6.5% 0.9% GBP201.8m GBP177.8m 13.5% 0.7%
============== ============= ============= =========== ========== ========== ========== =========== ==========
Resources
======================================================================================================================
Revenue GBP429.6m GBP433.3m (0.8%) (6.8%) GBP176.2m GBP172.1m 2.4% (10.2%)
============== ============= ============= =========== ========== ========== ========== =========== ==========
Organic
revenue GBP395.6m GBP427.3m (7.4%) (12.9%) GBP162.5m GBP168.9m (3.8%) (15.5%)
============== ============= ============= =========== ========== ========== ========== =========== ==========
Products Divisional Review
===========================
Our Product related businesses delivered an excellent revenue
performance with a growth of 22%, driven by robust organic growth
of 5.5% at constant rates and the contribution from
acquisitions.
-- Our Softlines business delivered robust organic growth,
benefiting from our clients' supply chain expansion in Vietnam,
Cambodia and India as well as a strong performance in the footwear
sector;
-- Our Hardline and Toy business continues to take advantage of
our strong global account relationships and delivered robust
organic growth performance;
-- In our Transportation Technologies business, we capitalised
on our clients' investments in new powertrains and delivered
double-digit organic growth;
-- Our Business Assurance business delivered double-digit
organic growth, benefiting from the increased focus of corporations
on risk management;
-- We delivered solid organic growth in our Electrical &
Wireless business, driven by higher regulatory standards in energy
efficiency;
-- We continue to benefit from the increased focus of
corporations on food safety that saw our Food business deliver good
organic growth;
-- Our Chemicals & Pharma business contributed solid organic
growth performance as we continue to leverage the structural growth
opportunities in healthcare; and
-- Our Building & Construction business benefited from the
acquisitions of PSI and MT Group in the USA and delivered robust
organic growth, driven by the growing demand for greener and higher
quality buildings in the USA as well as significant wins in large
infrastructure projects.
The full year outlook for our Products division remains
unchanged and we continue to expect to deliver robust organic
growth as well as seeing the benefit of acquisitions.
Trade Divisional Review
========================
Our Trade related businesses delivered solid organic growth of
1% at constant rates.
-- Benefiting from structural growth drivers, our Cargo/AA
business reported solid organic growth performance;
-- Lower trade volume activities in the Middle East and Africa
resulted in reduced demand for our Government and Trade Services
compared to the same period last year; and
-- Our Agriculture business continued to benefit from the
expansion of the supply chain of our clients in fast growing
markets to deliver robust organic growth performance.
The full year outlook for our Trade division remains unchanged
and we continue to expect to deliver solid organic growth.
Resources Divisional Review
============================
Our Resource related businesses faced, as expected, challenging
trading conditions and saw an organic revenue decline of 13% at
constant rates.
-- Demand for Capex inspection services was impacted by lower
investments and reduced exploration activities by our clients;
-- The demand for Opex maintenance services remained stable; and
-- Testing activities in the Minerals business are stable.
The full year outlook for our Resources Division remains
unchanged: we do not believe we have reached the trough in the
Capex inspection services end market and we expect the trading
conditions to remain challenging.
Strategy and M&A
=================
We have started the roll out of our differentiated growth
strategy outlined earlier this year and we are pleased with the
progress we have made.
Our 5x5 growth strategy will move the centre of gravity of the
Group towards the attractive growth and margin areas in the $250bn
Quality Assurance market.
At the heart of our 5x5 growth strategy is our Total Quality
Assurance value proposition that provides a superior customer
service to our clients based on our industry leading Assurance,
Testing, Inspection and Certification solutions.
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.
-- In January 2016, we completed the acquisition of FIT Italia,
an Italian company providing food testing and assurance services to
the retail and agricultural sectors;
-- In October 2016, we completed the acquisition of EWA Canada,
a leading cyber security assurance business providing solutions to
a broad range of industries; and
-- In November 2016, we announced the formation of a joint
venture with ABC Analitic to create a market leading environmental
quality assurance business and take the #1 position in Mexico's
fast growing environmental market.
Investment & Financial Position
================================
Our year end net debt guidance of GBP770-820m, assuming no
further acquisitions and no significant forex changes, remains
unchanged.
Outlook
========
The Group remains on track to deliver its 2016 target of robust
revenue growth at constant currency with stable margin and strong
cash generation. We will continue to benefit from the acquisitions
made since January 2015 and we expect organic growth to be stable
at constant currency.
We expect our Product related businesses to deliver robust
organic growth, our Trade related businesses to report solid
organic growth performance, while the market conditions will remain
challenging in our Resource related businesses.
Looking further ahead, the global Quality Assurance market will
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 sourcing and
distribution operations, technological innovations, government
investments in large infrastructure projects, and increased
consumer demand for higher quality and more sustainable
products.
We provide our customers with a Total Quality Assurance
differentiated value proposition based on the depth and breadth of
our technical expertise, our global network of over 1,000 state of
the art facilities in over 100 countries, our industry leading
Assurance, Testing, Inspection and Certification solutions, and our
customer centric culture.
We continue to be uniquely positioned to benefit from the GDP+
organic growth prospects in the Quality Assurance Industry in the
medium to long term, leveraging our high quality and highly cash
generative earnings model.
-ENDS-
Contacts
For further information, please contact
Josh Egan, Investor Relations Director
Telephone: +44 (0) 20 7396 3400 investor@intertek.com
Jonathon Brill, Oliver Winters, 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 8.00am. Details can 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.
About Intertek
Intertek is a leading Total Quality Assurance provider to
industries worldwide. Our network of more than 1,000 laboratories
and offices and over 40,000 people in more than 100 countries,
delivers innovative and bespoke Assurance, Testing, Inspection and
Certification solutions for our customers' operations and supply
chains.
www.intertek.com
Bringing quality and safety to life
This information is provided by RNS
The company news service from the London Stock Exchange
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