Intertek (LSE: ITRK) — the multinational inspection, product testing and certification company — has risen 1% so far this morning, following publication of its half year results to the 30 June 2014.
Revenue fell 6.9% on a reported basis, although on a constant-currency basis adjusted revenue was up 2.9%, at £1,024.3m. Similarly, reported pre-tax profit fell 6.3%, but rose 6.7% on an adjusted constant-currency basis, to £140.9m. Intertek’s operating margin firmed-up 30 basis points, to 14.9%.
A fall in both revenue and profit, however measures, in the company’s ‘Industry & Assurance’ division was attributed to the decision to exit certain low value contracts, together with the phasing of work on customers’ energy capital projects.
Intertek reported “good growth” in both its ‘Commercial & Electrical’ and ‘Consumer Goods’ divisions, with “particularly strong growth” seen in the latter division’s newer sourcing markets, such as India and Turkey.
The company’s “Commodities” business reported “good progress” in in oil cargo in Asia and US shale activities, but saw a double-digit decline in minerals, mainly owing to the Indonesian ore export ban. Intertek says it expects the mineral market to remain challenging for the rest of 2014.
On a constant-currency basis, diluted earnings per share were up 8.6%, at 61.2p, and the board is recommending an interim dividend of 16p per share, an increase of 6.7% over last year’s.
Commenting on the results, CEO Wolfhart Hauser said
“Intertek delivered good growth in our product-related divisions, but continued to see headwinds in our minerals and energy-related businesses.
“Looking further ahead, our strategic choice of portfolio positions Intertek to benefit from attractive long term structural growth drivers. Our product divisions are strongly leveraged to increasing middle class demand for quality in emerging markets, expanding regulation and product variety. Our energy products and infrastructure businesses enable Intertek to take advantage of the long-term growth in energy demand. Through these strategic positions and long-term trends Intertek is well placed to deliver high single digit organic revenue growth over the coming years.”
Newer shareholders will be hoping that Hauser is right. At 2,558p, Intertek’s share price is almost 20% down so far in 2014, in which time the FTSE 100 has declined less than 1%. But those who’ve been holding over the longer term have seen the company’s share price soar by 145% over the past five years, compared with a 45% gain by the FTSE 100 index.
