Shares in testing giant Intertek (ITRK) have undergone something of a revival under chief executive André Lacroix. Since his appointment in May last year the shares are up almost a third, outperforming the broader market and setting a new all-time high.
Mr Lacroix, previously of Inchcape, took the reins from longstanding incumbent Wolfhart Hauser. The change of leadership has brought a sharper focus on strategy. Mr Lacroix wants to "move the centre of gravity" towards quality assurance, so managing quality, traceability and sustainability in the supply chain. In Mr Lacroix's view, the industry is becoming far more complex than simply the rubber-stamping of an end product.
Vast global supply chains combined with a demand for the highest standards of ethics, quality and sustainability have created a $250bn (£189bn) quality assurance market. Much of the work is still done by companies in-house, so persuading existing customers to outsource will be key.
For now at least, organic revenue growth remains relatively meagre at only 0.5 per cent in the first half. A weak performance in the resources business due to softness in oil and gas markets offset decent growth in product and trade testing.
Analysts at JPMorgan expect full-year pre-tax profit of £368m, giving EPS of 159p, rising to £407m and 174p in 2017 (up from £318m and 140p in 2015).
| INTERTEK (ITRK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,549p | MARKET VALUE: | £5.73bn | |
| TOUCH: | 3,547-3,550p | 12-MONTH HIGH: | 3,706p | LOW: 2,296p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 258p* | NET DEBT: | 195% | |
| Half-year to 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.06 | 139 | 60.6 | 17.0 |
| 2016 | 1.20 | 149 | 70.7 | 19.4 |
| % change | +14 | +7 | +17 | +14 |
*Includes intangible assets of £697m, or 432p a share | ||||
