Intertek Group plc., a leading quality solutions provider to industries worldwide, releases its Interim Management Statement for the period since 31 December 2013, where stated, financial results are for the period from 1 January to 30 April 2014 (“period”). All comparative comments in this statement reflect comparisons with the corresponding period during 2013.
The variable market conditions in the second half of 2013 continued into the first four months of 2014, resulting in good growth in our key product-related business lines but weaker than anticipated activity in the energy infrastructure market.
At constant exchange rates, total revenue grew 3.6% in the period comprising organic growth of 0.3% and 3.3% growth from acquisitions made in 2013 and 2014. Excluding the effect of the strategic decision to exit certain low-value Industry contracts, organic revenue growth would have been 1.5%. Sterling appreciated against many of the Group’s currencies and at actual exchange rates total revenue declined by 4.9%. Operating margin improved slightly as expected on the same period in 2013 as the Group benefitted from its on-going restructuring activities.
In the Industry & Assurance division, we made good progress with our strategy to exit low-value contracts, which reduced Group revenue growth by 1.2% in the period. We also saw the deferral of some energy industry capital projects which reduced technical inspection activity during the period. Within the Commodities division the minerals business faced new export restrictions in Indonesia, whilst the cargo business in the US was impacted by the severe weather conditions at the start of the year.
We continued to see good growth in the Consumer Goods and Commercial & Electrical divisions, with positive trading in key industries such as toys, textiles and transportation technologies. The Chemicals & Pharma division reported solid growth.
Investment & Financial Position
Intertek continues to execute its strategy of organic investment and value-enhancing acquisitions to deliver long-term growth in key markets such as China. In the period, new testing laboratories were opened for high-tech lighting (Asia), Food (UK, the Philippines and Germany), consumer and commercial electrical products (Brazil), shale commodities (USA) and textiles (Sri Lanka). The Group also completed the acquisition of Inspec a non-destructive testing company supporting the oil and gas sector for £40 million.
Intertek’s financial position remains strong, with no material change in the financial position since that reported in March.
Wolfhart Hauser, Chief Executive Officer of Intertek, commented, “Market conditions remain variable with good growth in our key product-related business lines but weak demand in certain other markets. We continue to anticipate improvement in growth and profitability in the second half of 2014 as market conditions are expected to improve and comparatives become easier.”