Following a £284m operating loss in 2015, quality assurance group Intertek (ITRK) has bounced right back into positive territory, posting an operating profit of £370m for 2016. The previous loss owed to a £577m impairment charge in the resources division to reflect weaker oil and gas markets. But its problems aren't over. Organic revenues in the division dropped by 13 per cent in the reported period, and management said "the trough" had yet to be reached.
Elsewhere in the group the story was much better. The products division, which provides testing, inspection and certification services and accounts for 57 per cent of revenues, grew the top line by a fifth at constant rates. Demand for chemical testing and business assurance remains strong. Trade services, which generates just under a quarter of revenues, grew 1.6 per cent at constant rates.
The group outlined a number of strategic goals. These include investing 5 per cent of revenues in capital expenditure, paying 40 per cent of earnings out as dividends and keeping net debt to cash profits in the 1.5-two times range - it is currently at the bottom end.
Analysts at Numis expect pre-tax profits of £423m and EPS of 181p in 2017, compared with £387m and 168p in 2016.
INTERTEK (ITRK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,718p | MARKET VALUE: | £6.0bn | |
| TOUCH: | 3,716-3,719p | 12-MONTH HIGH: | 3,806p | LOW: 2,992p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 352p* | NET DEBT: | 123% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 2.10 | 257 | 108 | 41.0 |
| 2013 | 2.20 | 282 | 124 | 46.0 |
| 2014 | 2.09 | 252 | 110 | 49.1 |
| 2015 | 2.17 | -308 | -224 | 52.3 |
| 2016 | 2.57 | 347 | 159 | 62.4 |
| % change | +18 | - | - | +19 |
Ex-div: 18 May Payment: 2 Jun *Includes intangible assets of £786m, or 486p a share | ||||
