TIDMITRK
RNS Number : 2954G
Intertek Group PLC
26 May 2017
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TRADING STATEMENT
26 MAY 2017
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
2017 ("period"). All comparative comments in this statement reflect
comparisons with the corresponding period during 2016. The Group's
half year results to 30 June 2017 will be announced on 1 August
2017.
ON TRACK TO DELIVER 2017 TARGETS
=================================
-- Group revenue of GBP883.5m, up 14.2% at actual rates and 1.8% at constant rates
-- Solid organic revenue growth at constant rates: Products
+5.8%, Trade +5.0%, Resources -15.4%
-- Good performance of acquisitions in sectors with attractive growth and margin prospects
-- Operational discipline on cost and margin management
-- Strong cash conversion and disciplined capital allocation
André Lacroix: Chief Executive Officer statement
======================================================
"In the first four months of the year, the Group has delivered
revenue of GBP883.5m, up 14.2% year on year at actual rates and up
1.8% year on year at constant rates, driven by solid organic growth
of 0.9% and a good performance of the acquisitions we made in
attractive growth and margin sectors. We are on track to deliver
our 2017 targets of solid organic revenue growth at constant rates,
with moderate margin expansion and strong cash conversion.
The Products and Trade related divisions, which represent over
90% of the Group's earnings, delivered broad-based 5.5% organic
revenue growth at constant rates while, as expected, trading
conditions continued to be challenging in the Resources related
division.
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 over 1,000
state of the art facilities in over 100 countries.
We operate a high quality and highly cash generative earnings
model. Our differentiated growth strategy 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 to
deliver attractive returns for our shareholders."
Revenue Performance
====================
4 months - January to April
================= ======================================
2017 2016 Change at Change at
GBPm GBPm actual constant
================= ====== ====== ========== ==========
Group
=========================================================
Revenue 883.5 773.9 +14.2% +1.8%
================= ====== ====== ========== ==========
Organic revenue 873.9 772.0 +13.2% +0.9%
================= ====== ====== ========== ==========
6
================= ====== ====== ========== ==========
Products
=========================================================
Revenue 507.0 426.0 +19.0% +6.3%
================= ====== ====== ========== ==========
Organic revenue 502.6 424.1 +18.5% +5.8%
================= ====== ====== ========== ==========
Trade
=========================================================
Revenue 213.7 177.0 +20.7% +7.6%
================= ====== ====== ========== ==========
Organic revenue 208.5 177.0 +17.8% +5.0%
================= ====== ====== ========== ==========
Resources
=========================================================
Revenue 162.8 170.9 (4.7%) (15.4%)
================= ====== ====== ========== ==========
Organic revenue 162.8 170.9 (4.7%) (15.4%)
================= ====== ====== ========== ==========
Products Divisional Review
===========================
Our Products related businesses delivered 5.8% organic revenue
growth at constant rates, driven by broad-based revenue growth
across business lines and geographies:
-- Our Softlines business reported robust organic growth
performance. We are leveraging the investments we have made to
support the expansion of our customers in 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 robust organic
revenue growth performance across our main markets of China, Hong
Kong, India and Vietnam.
-- We delivered good organic revenue growth in our Electrical
& Network Assurance business driven by higher regulatory
standards in energy efficiency and by the increased demand for
wireless devices.
-- Our Business Assurance business delivered double digit
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.
-- Driven by the growing demand for more environmentally
friendly and higher quality buildings and infrastructure in the US
market, our Building & Construction business reported robust
organic revenue growth.
-- Our Transportation Technology business delivered solid
organic revenue growth as we capitalize 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 good organic revenue
growth in our Food business.
-- We delivered solid organic revenue growth in our Chemicals
& Pharma business as we continue to leverage the structural
growth opportunities in the healthcare markets in both developed
and emerging economies.
2017 growth outlook
We expect our Products division to benefit from robust organic
revenue growth at constant currency.
Trade Divisional Review
========================
Our Trade related businesses delivered 5.0% organic revenue
growth at constant rates, driven by broad-based revenue growth
across business lines and geographies.
-- Our Cargo/AA business reported solid organic revenue growth,
reflecting the structural growth drivers in the Crude Oil and
Refined Product global trading market.
-- Benefiting from new contracts, our Government and Trade
Services business delivered robust organic revenue growth.
-- The continued expansion of the supply chain of our clients in
fast growing markets led our AgriWorld business to deliver robust
organic revenue growth.
2017 growth outlook
We expect our Trade related businesses to deliver good organic
revenue growth performance at constant currency.
Resources Divisional Review
============================
Our Resources related businesses faced, as expected, challenging
trading conditions and reported an organic revenue reduction of
15.4%.
-- Driven by a lower volume of investments in exploration
activities from our clients and price pressure in the industry,
revenue from Capex Inspection Services was lower than last
year.
-- The demand for Opex Maintenance Services remained stable in a
competitive pricing environment.
-- Maintaining the trend seen in 2016, we saw a stable level of
demand for testing activities in the Minerals business.
2017 growth outlook
We do not believe that we have reached the trough in the
Resources division. We expect the trading conditions to remain
challenging and we continue to be focused on cost and capacity
management.
Strategy and M&A
=================
Our 5x5 growth strategy will continue to 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.
The acquisitions made recently in attractive growth and margin
sectors are performing well:
-- In January 2016, the Group acquired the Food Institute Trust - Italia SRL ('FIT-Italia'), an Italian-based business providing food quality and safety services to the retail and food service sectors.
-- In October 2016, the Group acquired EWA-Canada Ltd ('EWA'), a
leading provider of cyber security and assurance services to a
broad range of industries.
-- In November 2016, the Group entered into an agreement with
the shareholders of Laboratorios ABC Química Investigación y
Análisis S.A. de C.V ('ABC Analitic') to form an environmental and
food services Joint Venture in Mexico, which now operates as
'Intertek+ ABC Analitic'.
-- In April 2017, we completed the acquisition of KJ Tech
Services GmbH ('KJ Tech'), a leading provider of vehicle, component
and fuel testing services based in Germany.
Investment & Financial Position
================================
Our year end net debt guidance of GBP650-700m, assuming no
further acquisitions and no significant forex changes, remains
unchanged.
Outlook
========
The Group remains on track to deliver its 2017 target of solid
organic revenue growth at constant currency with moderate group
margin progression and strong cash conversion. We will continue to
benefit from the acquisitions made since January 2016.
We expect our Product related businesses to deliver robust
organic revenue growth, our Trade related businesses to report good
organic revenue growth performance, while the market conditions
will remain challenging in our Resources 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 fueled by our passionate colleagues around
the world.
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
Telephone: +44 (0) 20 7396 3415 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 7.45am. 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
Total Quality. Assured.
Intertek is a leading Total Quality Assurance provider to
industries worldwide. Our network of more than 1,000 laboratories
and offices and over 42,000 people in more than 100 countries,
delivers innovative and bespoke Assurance, Testing, Inspection and
Certification solutions for our customers' operations and supply
chains. Intertek Total Quality Assurance expertise, delivered
consistently, with precision, pace and passion, enabling our
customers to power ahead safely.
Visit www.intertek.com
This information is provided by RNS
The company news service from the London Stock Exchange
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