Interim Management Statement - November 2009
17 Nov 2009
Intertek Group plc (“Intertek”), the leading provider of quality and safety services to a wide range of industries around the world, today releases its Interim Management Statement for the period 1 January 2009 to date. The full year results to 31 December 2009 will be announced on Monday 8 March 2010.
Overview
Total revenue growth for the ten month period to 31 October 2009 was 28% against the same period last year. At constant exchange rates, revenue growth was 8%, of which 4% was organic. Margins in each of the six divisions were stable compared to the half year reported margins. The weakness of sterling against many currencies, including the US dollar, Hong Kong dollar and Chinese renminbi, which comprise over half of group revenue, provided favourable exchange movement.
As expected, Intertek’s rate of organic revenue growth is slowing in the second half against the first half of 2009. This is mainly due to the spike in testing of children’s products, which peaked at the end of 2008 and beginning of 2009, when inventory had to be tested to comply with the US toys legislation. Reduced demand for volume related inspection services continued in the Oil, Chemical & Agri division and there was sustained lower demand in the Minerals market.
Three transactions for a total consideration of £29 million were completed to date as detailed in the half year accounts. The Group continues to explore opportunities for small and medium sized acquisitions in markets where the growth drivers are strong.
The year-to-date performance by division to 31 October 2009 is summarised below.
Consumer Goods continued to report high revenue growth of 40%. At constant exchange rates revenue growth was 15%, of which 11% was organic. As anticipated, as the year progressed, the growth rate reduced. This was due to the step up in growth that started in the second half of 2008 and ended in the first half of 2009, following the enactment of the Consumer Product Safety Improvement Act in the US, in which a high number of children’s products in inventory were tested. This slowdown in the growth rate will continue through to the end of the first quarter of 2010.
Commercial & Electrical revenue grew by 25%. At constant exchange rates revenue growth was 2%, which was all from acquisitions made in the previous two calendar years. Organic revenue growth is improving from the first half due to growth in some industries.
Oil, Chemical & Agri revenue grew by 23%. At constant exchange rates revenue growth was 2%, all of which was organic. The division’s growth rate continues to be impacted by reduced volumes of oil cargoes inspected as well as reduced volumes of cargoes inspected for Government contracts. Without the negative effect of the Government Services segment, the division would have grown by 5% organically at constant exchange rates, in line with the half year organic revenue growth. Laboratories that continue to face slower demand will be restructured.
The three smaller divisions reported high total growth largely due to the acquisitions made in the previous two calendar years. Analytical Services, grew by 17%, of which around 4% was organic at constant exchange rates. Industrial Services, grew by 91%, of which around 9% was organic at constant exchange rates. Minerals, grew by 7%, although it declined by 7% organically at constant exchange rates.
Commenting, Wolfhart Hauser, CEO Intertek, said:
“We continue to demonstrate our resilience in the face of challenging markets by growing organic revenue and operating profit year to date. This is despite the high comparables due to one-off testing in the Consumer Goods division and no improvement so far in the volume related business, which accounts for approximately 30% of the Group’s revenue.
“Our long term structural drivers remain intact and we expect these to continue to drive good revenue growth next year.”
Contacts
Aston Swift / Sarah Ogilvie
Telephone: +44 (0) 20 7396 3400
aston.swift@intertek.com / sarah.ogilvie@intertek.com
Richard Mountain / Sophie Kernon, Financial Dynamics
Telephone: +44 (0) 20 7831 3113
richard.mountain@fd.com / sophie.kernon@fd.com
About Intertek
Intertek is the leading provider of quality and safety solutions serving a wide range of industries around the world. From auditing and inspection, to testing, quality assurance and certification, Intertek people are dedicated to adding value to customers' products and processes, supporting their success in the global marketplace. Intertek has the expertise, resources and global reach to support its customers through its network of more than 1,000 laboratories and offices and over 24,000 people in more than 100 countries around the world.
Intertek is a FTSE 100 company listed on the London Stock Exchange. Ticker: ITRK
This Interim Management Statement is prepared for and addressed only to the Company’s shareholders as a whole and to no other person. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this Interim Management Statement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. Statements contained in this Interim Management Statement are based on the knowledge and information available to the Company’s Directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Interim Management Statement involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Interim Management Statement contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward-looking statements.