Intertek’s (ITRK) shares flew up 9 per cent following the release of its half year results, as investors responded to news that the company intended to hike the dividend by a fifth. The shares have been on an upward trajectory since the start of 2015, and this latest set of figures are likely to add to the momentum.
The products and trade divisions continue to generate growth, pushing organic revenue up 1.7 per cent for the year. Profitability has also been improving, with cost discipline driving the operating margin up 110 basis points at constant currencies to 16.3 per cent. However, the resources division continues to face severe challenges, with revenues shrinking 12.3 per cent. This is attributed to the sector being in a challenging part of the cycle, though management expects GDP and population growth will ultimately support increasing demand for energy. The division accounts for less than 10 per cent of profits, so the negative impact on group performance has been limited.
The group’s “5x5” growth strategy, announced in March last year, is progressing steadily. The strategy includes priorities such as increasing productivity and service levels. The group recently carried out a review in line with the strategy and is undergoing a £6.9m restructuring that will see 300 positions shed.
Analysts at J.P. Morgan Cazenove are forecasting adjusted pre tax profits of £427m, giving EPS of 184p this year (from £387m and 168p in FY2016).
| INTERTEK (ITRK) | ||||
| ORD PRICE: | 4,674p | MARKET VALUE: | £ 7.5bn | |
| TOUCH: | 4,668-4,674p | 12-MONTH HIGH: | 4,719p | LOW: 3,038p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 379p* | NET DEBT: | 107% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.20 | 149 | 70.7 | 19.4 |
| 2017 | 1.37 | 191 | 83.5 | 23.5 |
| % change | +14 | +28 | +18 | +21 |
| Ex-div: | 28 Sep | |||
| Payment: | 13 Oct | |||
| *Includes intangible assets of £757m, or 469p a share | ||||
