TIDMITRK
RNS Number : 6050U
Intertek Group PLC
26 November 2019
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TRADING STATEMENT
26 November 2019
Intertek Group plc ("Intertek" or "the Group"), a leading Total
Quality Assurance provider to industries worldwide, today releases
its November Trading Update for the period from 1 January to 31
October 2019 ("period"). All comparative comments in this statement
reflect comparisons with the corresponding period during 2018. The
Group's full year results to 31 December 2019 will be announced on
3 March 2020.
Improved Organic Revenue Growth Momentum: + 3.6% in July-October(1)
-- Group revenue YTD: GBP2,487m, up 4.7% at constant rates and 7.4% at actual rates
-- Organic revenue(1) growth momentum improvement driven by Products and Resources:
YTD H1 July-Oct
- Group +3.3% +3.0% +3.6%
- Products +2.3% +2.1% +2.6%
- Trade +4.4% +5.1% +3.5%
- Resources +5.2% +3.5% +7.6%
-- 1.4% revenue(1) growth from Acquisitions in attractive growth and margin sectors
-- Continuing operational discipline on margin and cash management
-- 2019 will mark another year of consistent progress on Revenue, Margin and Cash
(1)at CCY
André Lacroix: Chief Executive Officer statement
"Our purpose to bring quality, safety and sustainability to life
is truly meaningful to our clients given the increased complexity
in their operations. We are benefiting from higher demand from our
customers for our industry leading Total Quality Assurance (TQA)
solutions in our Products, Trade and Resources divisions.
Intertek is going from strength to strength. In the first 10
months of the year, the Group has delivered revenue of GBP2,487m,
up 7.4% year on year at actual rates and 4.7% 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 270bps benefit due to foreign
exchange translation.
2019 will mark another year of continuous progress in revenue,
margin and cash as we expect to deliver good organic revenue growth
with solid margin progression at constant rates and strong cash
conversion. Our good organic revenue growth at constant currency at
the Group level in 2019 will be driven by good organic growth in
our Products division, good organic growth in our Trade division
and by robust organic growth in our Resources 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 innovative TQA approach. We provide leading
Assurance, Testing, Inspection and Certification (ATIC) solutions
that are mission-critical to our customers across multiple
industries through our global network of subject-matter experts.
Two examples of recent innovative ATIC solutions, helping our
clients to thrive in a complex world and providing growth
opportunities, are Intertek Total Sustainability Assurance and
Intertek Cyber Assured. www.intertek.com
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."
Revenue Performance
10 months - January to October 4 months - July to October
2019 2018 Change Change 2019 2018 Change Change
GBPm GBPm at actual at constant GBPm GBPm at at constant
actual
======== ======== =========== ============= ======== ====== ======== =============
Group
Revenue 2,487.5 2,315.7 7.4% 4.7% 1,044.9 968.0 7.9% 4.5%
======== ======== =========== ============= ======== ====== ======== =============
Organic revenue 2,438.0 2,301.5 5.9% 3.3% 1,023.0 955.5 7.1% 3.6%
======== ======== =========== ============= ======== ====== ======== =============
Products
Revenue 1,499.7 1,392.5 7.7% 4.5% 632.9 586.9 7.8% 3.9%
======== ======== =========== ============= ======== ====== ======== =============
Organic revenue 1,457.0 1,382.5 5.4% 2.3% 613.9 577.1 6.4% 2.6%
======== ======== =========== ============= ======== ====== ======== =============
Trade
Revenue 565.9 529.0 7.0% 4.9% 233.2 218.5 6.7% 3.6%
======== ======== =========== ============= ======== ====== ======== =============
Organic revenue 559.1 524.8 6.5% 4.4% 230.3 215.8 6.7% 3.5%
======== ======== =========== ============= ======== ====== ======== =============
Resources
Revenue 421.9 394.2 7.0% 5.2% 178.8 162.6 10.0% 7.6%
======== ======== =========== ============= ======== ====== ======== =============
Organic revenue 421.9 394.2 7.0% 5.2% 178.8 162.6 10.0% 7.6%
======== ======== =========== ============= ======== ====== ======== =============
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 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.
Intertek Total Quality Assurance expertise, delivered
consistently, with precision, pace and passion, enabling our
customers to power ahead safely.
intertek.com
Products Divisional Review
In the first 10 months of 2019, our Products business benefited
from improved revenue momentum in the July-Oct period and delivered
revenue growth of 4.5% at constant currency rates, driven by
organic growth of 2.3% at constant rates and the benefits of
acquisitions recently made in high growth and high margin
sectors.
-- Our Softlines business reported an organic growth performance slightly below last year. We are benefiting
from the
investments we have made to support the expansion of our customers into new markets, seizing the exciting
growth opportunities
in the footwear sector and continuing to leverage the strong demand from our customers for chemical
testing. However,
the lack of visibility around the outcome of negotiations on tariffs has resulted in a delay in the launch
of new
products in the second half.
-- 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 Greater China, India and Vietnam.
-- We delivered good 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 good organic revenue growth.
-- Our Transportation Technologies 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 good organic
revenue
growth in our Food business.
-- We delivered an organic revenue performance slightly below last year in our Chemicals & Pharma business due
to a base
line effect in 2018 driven by the 1 June 2018 REACH registration deadline.
Full Year growth outlook
In 2019, we continue to expect to deliver good organic revenue
growth at constant currency in our Products division.
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 4.4% organic revenue
growth at constant currency rates on a YTD basis, driven by
broad-based revenue growth across business lines and
geographies.
-- Our Caleb Brett business reported good organic revenue growth, reflecting the structural growth drivers in
the Crude
Oil and Refined Product global trading market.
-- Our Government & Trade Services business delivered double digit organic revenue growth driven by growth
from existing
contracts and the benefits of new contracts.
-- Our AgriWorld business delivered good organic revenue growth driven by a broad based growth performance
across our
global inspection businesses.
Full Year growth outlook
In 2019, we continue to expect our Trade division to deliver
good organic revenue growth at constant currency.
Mid- to long- term growth outlook
Our Trade division will continue to benefit from 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 benefited from improved revenue
momentum in the July-Oct period and delivered a robust organic
revenue growth of 5.2% at constant rates on a YTD basis.
-- We delivered robust organic revenue growth in our Capex Inspection Services business which benefited from
the increased
investment of our customers in exploration and production activity as well as the wins of new clients in
several geographies.
The demand for Opex Maintenance Services remained stable.
-- We benefited from robust organic revenue growth in our Minerals business driven by stronger demand for
testing and
inspection across most geographies.
Full Year growth outlook
In 2019, we expect our Resources related businesses to deliver a
robust revenue performance at constant currency.
Mid- to long- term growth outlook
Our Resources division will grow in the mid to long-term as we
benefit from investments in Exploration and Production of Oil and
Minerals as well as in renewable energy, to meet the demand of the
growing population around the world.
Innovation
Intertek operates in an exciting market with attractive
structural growth drivers. With corporations facing increasing
complexity, our approach to innovation is supporting our clients to
thrive, while creating growth opportunities for the Group.
Through the insights generated from our Total Quality Assurance
(TQA) Experts and from our 7,000+ monthly NPS interviews with
customers, Intertek services are mission-critical for our clients
in helping them to address their needs for increased support across
quality, safety and sustainability.
We pursue a 3-tiered approach to innovation: innovation from the
Core; developing new products and services in Adjacent fast-growing
and high-margin markets; and developing new Breakthrough products
and services. Two recent examples of Breakthrough innovation
are:
-- Intertek Total Sustainability Assurance, a pioneering initiative that provides an end-to-end, independent,
systemic
sustainability programme from both an Operational and Corporate perspective.
Intertek has been supporting the needs of its clients over the years with a real depth and breadth of
Operational
Sustainability Solutions that address the important operational areas of every company covering
environment, products,
processes, facilities, assets and systems. Now we have extended our sustainability offering with the launch
of Intertek
Corporate Sustainability Certification, which is a holistic assurance programme that audits and certifies
the quality
of processes in place based on 10 Intertek proprietary standards, benchmarking the end-to-end approach of
any company
on all aspects of its corporate activities. https://www.intertek.com/sustainability/
-- Yesterday, we launched Intertek Cyber Assured Certification, the first comprehensive, robust product
cybersecurity
testing and certification programme that provides continuous vulnerability monitoring for IoT connected
consumer products.
For more than 30 years, Intertek has been a pioneer in cybersecurity and cellular connectivity testing.
This breakthrough
innovation is the very first end-to-end Assurance solution that covers the entirety of IoT networks,
enabling customers
to launch secure, connected products, monitoring their security over the full lifecycle.
https://www.intertek.com/news/2019/11-25-intertek-launches-cyber-assured/
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, having contributed 1.4% revenue growth
at constant rates in the first 10 months of 2019:
-- 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
2019 will be another year of consistent progress in revenue,
margin and cash as we expect to deliver good organic revenue growth
with solid margin expansion at constant currency and strong cash
conversion.
We expect good organic revenue growth at constant currency rates
in our Products and Trade divisions while our Resources division is
expected to deliver robust organic revenue growth at constant
currency.
We will continue to benefit from the acquisitions made since
January 2018.
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 November Trading Statement Audiocast CEO Script will be
available after the call at www.intertek.com/investors/
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END
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