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Intertek sees opportunities in post-Covid-19 world

The quality assurance specialist has been hit by the global pandemic, but was more resilient than analysts expected
May 21, 2020

Testing, inspection and certification specialist Intertek (ITRK) saw revenue dip 4.6 per cent year on year to £882m in the four months to 30 April. Organic sales fell by 4.9 per cent at constant currencies, exceeding consensus analyst expectations of a 10.7 per cent decline, according to broker Jefferies.

IC TIP: Buy at 5,146p

The impact was most severe in the core products division, where like-for-like sales tumbled by 6.6 per cent. Supply chain disruption in China spurred double-digit decreases in the ‘softlines’ business – which deals with textiles – and ‘hardlines’, which tests items such as luggage and furniture.

Having finished 2019 with £629m of net debt – equivalent to 1.0 times cash profits (Ebitda) – the group intends to pay a 71.6p final dividend. Net debt is currently guided to come in between £650m-£700m this year.