Interim Management Statement - May 19, 2011
19 May 2011
Intertek Group plc (“Intertek”), a 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 from 1 January 2011.
At constant exchange rates, organic revenue for the first four months of the year (“the period”) increased by 8% over the corresponding period in 2010. After taking into account revenue from acquisitions made in 2010, partially offset by an unfavourable currency effect, total reported revenue increased by 11% in the same period.
Overall, the Group continued to benefit from improving conditions in many of its markets.
The Commodities division had good revenue growth. Demand for petroleum related cargo inspections and non-inspection related testing in North America increased slightly as clients’ trading, refining and fuel development activities expanded compared to the prior year period. Minerals and Government Services had a strong start to the year with high global demand for minerals driving exploration and mining activity and Government Services benefiting from higher imports into Intertek’s client countries.
The Commercial & Electrical division also experienced good revenue growth. Innovation in renewable energy technologies and energy storage devices continued to generate increased demand, along with the desire of clients in a variety of industries to reduce the energy usage and environmental impact of their products.
In this seasonally slower period, Consumer Goods organic revenue growth was lower than expected mainly as a result of an unusually long new year holiday shut-down period in China. The drive by global retailers to source goods where production costs are lowest continues and Consumer Goods is responding to this ongoing trend.
Industry Services, within the Industry & Assurance division, grew revenue well and has a pipeline of new contract opportunities with demand in both emerging and developed markets where global and local clients are seeking support with infrastructure projects. Systems Certification had a solid start to the year, and this is expected to improve further as new contracts commence. The recently announced Moody acquisition will add considerably to the scale of this division and support its growth profile.
Demand for chemicals and materials analysis in support of European and North American clients’ new product development continued to drive revenue growth in the Chemicals & Pharma division.
Whilst the Group’s activities in Japan and North Africa are modest, the Group has experienced an element of disruption to its activities.
Operating profit increased in the period mainly due to the total reported revenue growth of 11% but on a slightly lower group profit margin compared to the same period last year. Positive margin development in Commodities and Commercial & Electrical was offset by a lower margin and slower growth in the Consumer Goods division.
Intertek's operations are conducted in over 100 countries and 75 different currencies. Approximately three quarters of Intertek's full year reported operating profit is derived from US dollars or currencies linked to the US dollar. The Group's financial results continue to reflect the impact of translating local financial results into sterling. For the year ended 31 December 2010, the average US$ / £ translation rate was $1.55 and for the first four months of 2011 the average rate was $1.60.
The acquisition of Moody International Inc ("Moody"), as announced on 7 March, was completed on 27 April. This was funded from existing and new debt facilities. Following the acquisition the Group’s Net Debt to EBITDA ratio increased to a comfortable level of 1.9 times on a pro-forma basis.
Wolfhart Hauser, Chief Executive Officer, said:
“All of our divisions had positive revenue growth in the first four months of the year, with higher than expected performances in the Commodities and Commercial & Electrical divisions offsetting the slower start for Consumer Goods.
“We are pleased to have closed the Moody acquisition ahead of schedule, and integration is proceeding smoothly, including a number of joint contract bids having already been submitted to clients. The business has developed well over the first four months of the year in line with expectations.
“Looking ahead, we expect to achieve Group organic revenue growth, at constant exchange rates, in the high single digits range for the full year.”
The Annual General Meeting of Intertek will be held tomorrow, 20 May 2011, at 1.00pm at The Westbury Hotel, Conduit Street, London, W1S 2YF. The Group’s half year results to 30 June 2011 will be announced on Monday 1 August 2011.
Contacts
Aston Swift / Sarah Ogilvie
Telephone: +44 (0) 20 7396 3400
aston.swift@intertek.com / sarah.ogilvie@intertek.com
Richard Mountain, Financial Dynamics
Telephone: +44 (0) 20 7269 7291
richard.mountain@fd.com
ABOUT INTERTEK
Intertek is a 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 30,000 people in over 100 countries around the world. Intertek Group plc (LSE: ITRK) is listed on the London Stock Exchange and is a constituent of the FTSE 100 index.