Intertek Group plc (Intertek or Group), a leading quality solutions provider to industries worldwide, today releases its AGM Trading Update for the period since 31 December 2014. Where stated, financial results are for the period from 1 January to 30 April 2015 ("period"). All comparative comments in this statement reflect comparisons with the corresponding period during 2014.
In the first four months of 2015 performance was in line with the Group's expectations, experiencing good growth in most businesses and geographies and continued challenging conditions in its oil and gas capex and minerals businesses.
Total reported revenue grew 3.3% in the period, comprising constant currency organic growth of 0.3%, a contribution of 0.6% from acquisitions made in 2014 and 2015 and an increase of 2.4% from foreign exchange, due to sterling depreciating against many of the Group's currencies. Excluding the effect of the strategic decision to exit certain low-value Industry contracts, constant currency organic revenue growth was 1.9%.
As expected, the Group's operating margin was broadly similar to the same period in 2014.
In the Industry & Assurance division, the strategic exit from low-value contracts continued, reducing revenue growth in the period. Lower demand for services for oil and gas capital projects, with price pressure from clients, continued in line with our expectations. This primarily affected our oil and gas capex business within Industry Services, which represented around 13% of Group revenue in the full year 2014. Our Business Assurance and Food & Agri business lines grew strongly, driven by global customer demand.
The Commodities division grew in the period. The Cargo business line, which supports downstream oil and gas trade flows, delivered good growth. The Government Services business line reported strong growth, from our wide portfolio of contracts. As anticipated, Minerals revenue declined following the effect of the ore export ban in Indonesia and weak minerals market conditions overall. The effect of the ban in Indonesia will annualise in the second quarter.
We continued to see good growth in the product divisions of Consumer Goods and Commercial & Electrical. Strong demand for textiles testing was driven by global customers' desire to reduce chemicals in their products and in the supply chain. Building Products and Transportation Technologies business lines reported good growth as customers develop new technologies, materials and products. The Chemicals & Pharma division grew modestly.
Investment & Financial Position
Intertek continues to invest both organically and in value-enhancing acquisitions to deliver long-term growth across key regions and global industries. In the period, new laboratories were completed to support demand growth, including: building products and transport technologies (North America), consumer products (Bangladesh and India), industrial infrastructure (UK), downstream oil and gas products (Singapore, Australia and the Caribbean). The company sees good opportunities for organic growth investment.
In the period new service-lines were launched in Europe for the opex-driven industrial infrastructure market, in Asia for downstream oil products and in the toy industry where Intertek gained new accreditations for certification services for products entering the Middle East. These investments and service developments will capture demand and growth opportunities with existing and new customers. The Group also completed the acquisition of Adelaide Inspection Services, a provider of opex-driven services to the power generation market in Australia for £6.5m in February, and maintains a good pipeline of future acquisitions.
Intertek's financial position remains strong, with no material changes since that reported in March.
Intertek's full year organic revenue growth expectations remain unchanged and the Group continues to expect a full year margin broadly similar to 2014.
Across the medium term the Company continues to expect to deliver mid-single digit organic revenue growth, as oil and gas capex headwinds ease and with its strong exposure to long-term structural growth markets.
Wolfhart Hauser, Chief Executive Officer of Intertek, commented:
"In the first four months of 2015, the Group performed in line with our expectations. We continued to see good growth in our key product-related business lines, as well as a number of other areas including our cargo trade flow business and food & agri. As anticipated, market conditions in oil and gas capex and minerals remained weak, reducing the overall growth rate in the period."
In commenting on his retirement, he said; "After ten years as CEO, and more than 30 years in the industry, I would like to thank the employees and shareholders of Intertek for their support. I am confident in the positive long term growth opportunities for Intertek and the 'TIC' industry."
AGM & Half Year Results
The Annual General Meeting of Intertek is held today 15 May 2015, at 12 noon at The Westbury Hotel, Conduit Street, London W1S 2YF.
The Group's half year results to 30 June 2015 will be announced on Monday 3 August 2015.
As previously announced, after ten years of service Wolfhart Hauser will retire as CEO and from the Board today, 15 May 2015. André Lacroix will join the Company as CEO and as a member of the Board as an Executive Director from 16 May 2015.
Christopher Knight will retire as Chairman of the Remuneration Committee and as a Non-Executive Director on 15 May 2015 after nine years of service. Please refer to the separate Directorate Change disclosure announcement today.
Investor Relations, Intertek Group plc - Telephone: +44 (0) 20 7396 3400
Richard Mountain, FTI Consulting - Telephone: +44 (0) 20 3727 1340
Intertek is a leading quality solutions provider to industries worldwide. From auditing and inspection, to testing, training, advisory, quality assurance and certification, Intertek adds value to customers' products, processes and assets. With a network of more than 1,000 laboratories and offices and over 38,000 people in more than 100 countries, Intertek supports companies' success in a global marketplace. Intertek helps its customers to meet end users' expectations for safety, sustainability, performance, integrity and desirability in virtually any market worldwide. Intertek Group plc (LSE: ITRK) is listed on the London Stock Exchange. Visit www.intertek.com