Intertek provides testing services across a broad range of 30 industries, and such diversification is really paying off. The market for its services is being driven by increasing legislation, but with only 20 per cent of testing currently outsourced, there is also huge scope to win new business from manufacturers.
Intertek has over 1,000 laboratories in more than 100 countries and provides a range of services that spans auditing and inspection through to testing and certification. The consumer goods market was the stand out performer in 2009 notching up sales growth of 32 per cent to £320.9m and profits jumped 41 per cent to £105.5m.
New legislation in the US, known as the Consumer Product Safety Improvement Act (CPSIA), led to a surge in testing for children’s products, and the food and textiles markets also proved buoyant. Sales in its oil and chemicals arm increased despite a weak market in the US but margins fell due to pricing pressure.
The automotive and mining markets have proved tough, though. However, Intertek has done well in the renewable power sector. Organic revenue growth was a respectable 3.5 per cent which should be maintained this year. Intertek spent £30.8m on 3 acquisitions. More will probably be spent this year and it remains in talks with Norway-based DNV to buy its systems certification business, which boasts £200m of sales.
Seymour Pierce forecasts pre-tax profits of £199m and EPS of 88.9p.
| INTERTEK (ITRK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,335p | MARKET VALUE: | £2.1bn | |
| TOUCH: | 1,334-1,336p | 12-MONTH HIGH: | 1,368p | LOW: 846p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 202p* | NET DEBT: | 59% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 0.58 | 79.4 | 36.8 | 12.00 |
| 2006 | 0.67 | 91.4 | 40.9 | 14.80 |
| 2007 | 0.78 | 106.0 | 46.7 | 18.00 |
| 2008 | 1.00 | 139.0 | 59.5 | 20.80 |
| 2009 | 1.24 | 169.2 | 72.4 | 25.50 |
| % change | +24 | +22 | +22 | +23 |
Ex-div: 2 Jun Payment:1 8 Jun *Includes intangible assets of £304.7m, or 192p a share | ||||
