Intertek Group shares traded down 0.1% at 5,378p after decent results on Tuesday morning.
Intertek Group saw revenue grow 6.5% at constant rates to £2.7bn in 2021. Revenue excludes the past impact of any business disposals or closures, but includes acquisitions after their 12-months of ownership.
Two acquisitions were completed in 2021 which had a consideration of £480.9m. The companies acquired were, JLA Brasil Laboratório de Análises de Alimentos S.A., and SAI Global Assurance.
Laboratory, technology and equipment upgrades received an investment of £97.1m reflecting 3.5% of revenue.
Product division revenues grew 9.1% to £1.7bn in 2021. There was a 2.8% rise in revenue to £575.4m in the trade division. Resources revenue was £455.6m after a 1.6% rise.
Operating profit rose 15.4% to £473.9m in 2021, with highest contributions coming from the product division with £399.7m. The Group’s profit before tax increased by 18.7% to £445.5m.
The Group expects their clientele to increase investments in 3 areas, resilient supply chains, product and service innovation, and sustainability.
“Our free cash flow performance was excellent, driven by further improvements in working capital providing the Group with a strong balance sheet and the flexibility to invest in growth. Our ROIC was strong at 18.2% with an excellent organic ROIC of 24.4%, up 350bps year on year at constant rates,” commented Andr é Lacroix, Chief Executive Office, Intertek.
“The supply chain disruption being experienced by corporations across multiple industries has made the need for comprehensive risk-based quality, safety and sustainability assurance more critical than ever.”
Steve Clayton, fund manager of the HL Select UK Growth Shares fund, further highlighted the importance of supply chain solutions currently.
“Intertek provides Assurance, Testing, Inspection and Certification services that help global corporations manage their complex supply chains. No surprise then to see the group growing strongly at a time when keeping track of every leg in the supply chain has never been more important.”
“The business generates high returns, and these jumped a further 350bps in the year, to almost 25% before the impact of acquisitions in the year. We see the group maintaining and building this.”
The HL Select UK Growth Shares fund has a position in Intertek.
Dividend remained unaltered at 105.8p, same as it was for 2019 and 2020.