Intertek see higher profits in 2019, but speculate over coronavirus impact

Intertek Group plc (LON:ITRK) have seen their shares in green, following a steady set of final results.

Shares in Intertek Group trade at 5,434p (+2.07%). 3/3/20 12:16BST.

The firm noted that its’ profit was higher in 2019, as divisional growth proved strong and the profits were boosted by an acquisition late in 2019.

The quality assurance firm posted a pretax profit figure of £445.1 million across 2019 – notably this saw a 10% climb from the 2018 figure of £404.5 million.

On a better note, revenues also rose 6.8% to £2.99 billion from £2.8 billion.

Looking at organic revenue, the firm told the market that this increased by 3.3% at constant rates, whilst revenue also rose following the acquisition of Check Safety First Ltd in December 2019 for a £17.1 million consideration.

Breaking down the performance by division, the firm also added that Products, Trade, and Resources all reported higher revenue.

Products revenue jumped 7.1% from £1.68 billion to £1.80 billion, whereas Trade revenue rose 5.8% to £679.4 million compared to the 2018 figure of £642.1 million.

Finally, Resources saw their revenues spike 6.7% to £510.9 million from £478.9 million. On the back of these strong results, the firm lifted its annual dividend to 105.8p from 99.1p – representing a 6.8% climb.

Andre Lacroix, Chief Executive Officer commented: “2019 is the fifth consecutive year of revenue, EPS and cash progression which is a testament to our strong operating platform enabling the group to deliver sustainable value creation for all stakeholders. In the last five years we have made significant progress both on strategy and performance and we are extremely well positioned to seize the exciting growth opportunities ahead capitalising on the core strengths of Intertek: Our Total Quality Assurance (TQA) superior customer service, our powerful portfolio, our high margin and highly cash generative earnings model, our passionate customer-centric organisation and our disciplined performance management.

Our purpose to bring quality, safety and sustainability to life is truly meaningful to our clients given the increased complexity in their operations. We are benefiting from higher demand from our customers for our industry-leading TQA solutions that provides leading Assurance, Testing, Inspection and Certification (ATIC) services that are mission-critical to our customers across multiple industries through our global network of subject-matter experts and over 1,000 state-of-the-art facilities in over 100 countries.”

The firm also speculated going forward about the coronavirus epidemic, where may businesses have suffered.

We are entering the third month where the coronavirus has been haunting global trade, however Intertek remained confident but realized that the firm may face some hardship going forward.

The CEO added: “Prior to the outbreak of the Novel Coronavirus, we were targeting the Group to deliver continuous progress in 2020 with broad based good organic revenue growth at constant currency, good organic growth in Products and Trade and robust growth in Resources, moderate margin progression and strong cash conversion. However, Intertek is not immune to the impact of the Novel Coronavirus and our 2020 performance will be affected by the temporary disruption to the supply chains of our clients in China and any impact it might have on global trade activities.  It is too early to quantify the impact of the Novel Coronavirus.

Moving forward, we are well positioned to seize these attractive growth opportunities, underpinned by the increased complexities of corporate supply chains and the associated challenges of maintaining a high level of quality assurance end-to-end.

We are on track on our ‘good-to-great’ journey, making progress on both performance and strategy and I am excited about the Group’s growth prospects ahead, both organically and inorganically.”

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