Global product-testing and certification company Intertek (ITRK) faced the double whammy of currency headwinds and exposure to the weakening oil and gas sector last year. This drove like-for-like operating profits down 11 per cent to £276.6m, while margins slipped 20 basis points to 15.5 per cent.
Its industry and assurance division, which provides services such as technical inspection, exploration and production support, was the poorest performer. Operating profit there fell by more than a fifth to £64.5m, while its operating margin was down 160 basis points. The business has started to expand into other areas, including aerospace and infrastructure, in order to counterbalance its exposure to the oil and gas sector.
During the second half of the year, the group stepped up its restructuring programme to deal with declining project work from oil and gas companies. This related mainly to underperforming assets in Europe, as well as its cargo, minerals, chemicals and pharmaceuticals businesses. This involved 1,100 jobs cut as well as setting up shared service areas and improving the efficiency of its laboratories. As a result, the group incurred £23m in costs.
Broker JPMorgan Cazenove expects adjusted EPS of 140.7p this year, up from 109.5p in 2014.
INTERTEK GROUP (ITRK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,625p | MARKET VALUE: | £4.2bn | |
| TOUCH: | 2,624-2,625p | 12-MONTH HIGH: | 3,111p | LOW: 2,141p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 484p* | NET DEBT: | 79% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.4 | 190.0 | 81.0 | 28.1 |
| 2011 | 1.8 | 213.0 | 87.0 | 33.7 |
| 2012 | 2.1 | 257.0 | 108.0 | 41.0 |
| 2013 | 2.2 | 281.8 | 124.4 | 46.0 |
| 2014 | 2.1 | 252.2 | 109.5 | 49.1 |
| % change | -4 | -11 | -12 | +7 |
Ex-div: 21 May Payment: 5 Jun *Includes intangible assets of £955m, or 592p a share | ||||
