Interim Management Statement

RNS Number : 2892S

Intertek Group PLC

15 May 2009

 



Intertek Group plc

Interim Management Statement

Intertek Group plc ('Intertek'), the leading provider of quality and safety services to a wide range of industries around the world, today releases its Interim Management Statement for the period 1 January 2009 to date. The Annual General Meeting of Intertek will be held today at 11.30am at The Westbury Hotel, Conduit Street, London, W1S 2YF. The half year results to 30 June 2009 will be announced on Monday 3 August 2009.

Overview

Intertek has made a good start to the financial year with trading in line with management's expectations. Total revenue for the first four months of 2009 compared to the same period last year ('the period') increased by 42% at actual exchange rates. This comprised 7% organic revenue growth at constant exchange rates; 5% revenue growth from acquisitions made in 2008 and 2009; and 30% positive exchange rate movements. The Group continues to benefit from favourable exchange rates when translating foreign currency revenues into sterling, in particular the US dollar, HK dollar, and Chinese renminbi.
 

The key growth drivers behind Intertek's business model remain robust as the business is only partially dependent on volumes of global trade. These drivers include:

• product variety and supply chain complexity;

• demand for safe, environmentally-friendly and quality products driven by ongoing regulation and end-customers; and

• outsourcing of in-house testing laboratories and services. 

These resilient drivers, coupled with high geographic, industry and customer diversification are expected to continue producing good organic revenue growth.

In some areas Intertek has reduced its cost base to match the level of organic growth, for example in the trade related volume businesses and where there has been a significant decline in industry lines. Ongoing back-office consolidation and cross-selling initiatives under the Intertek as One programme continue to deliver cost saving opportunities and will also help to offset the impact of weaker market conditions.  

Divisional Performance

Oil, Chemical & Agri (34% of group revenue) has started the year well despite the significantly weaker global oil and petrochemical trading market. Organic revenue grew by 5% for the period at constant exchange rates, driven largely by Latin America, the Caribbean, Europe, the Middle East and Asia and improvements in under-performing laboratories. Business in the USA and Canada was flat due to the effect of reduced imports of oil and petrochemicals, lower bio-fuel activity and lower refinery volumes. 

The Government Services business is now integrated into the Oil, Chemical & Agri division and accounts for approximately 11% of divisional revenue. The decline in revenue in 2008 has continued into the first four months of 2009. 

Excluding Government Services divisional organic revenue growth at constant exchange rates was 7%.

Consumer Goods (26% of group revenue) recorded excellent organic revenue growth of 18% for the period at constant exchange rates. Textiles and Footwear, the division's largest business stream, continued to grow well particularly in China and India. The Toys and Hardlines business stream was the strongest performer. Increased demand from retailers and manufacturers of children's products for safety and support services on the recently introduced US CPSIA regulation (US Consumer Product Safety Improvement Act) continues. Inspection, which accounts for approximately 10% of the division's revenue, and is the part linked to volumes, declined in the period due to the slowing of global trade flows.

Commercial & Electrical (20% of group revenue) produced broadly flat organic revenue for the first four months of 2009 at constant exchange rates. In all regions the industrial electrical product business held up well in the face of the wider economic downturn. In Asia, the business was impacted by a weaker electrical home appliance market. North America was impacted by lower global demand in automotive components, wireless products and building products. There was a reduction and delay of some new product development in the period in these industries where the cost of development and R&D is high. However growth from new areas such as alternative energy, is supporting management's view that performance will improve for the rest of the year.

Analytical Services (11% of group revenue) had 5% organic revenue growth for the period at constant exchange rates. Upstream oil and gas production has remained resilient and lubricant testing has been strong in advance of the introduction of new standards in the US. The downstream chemicals, materials and pharmaceutical markets have continued to experience delays and cancellations in contract orders. 

Industrial Services (6% of group revenue) had excellent organic revenue growth for the period of 15% at constant exchange rates. Despite some delays in new infrastructure projects and reduced demand in systems certification, the division is performing well. Asset Integrity Management and maintenance services offer cost and time savings to the oil and power generation industries and remain in demand in the current market.

Minerals (3% of group revenue) has increased organic revenue by 12% for the period at constant exchange rates. Low commodity prices and the reduced level of funding for new exploration continue to suppress the minerals testing activity. 

Wolfhart Hauser, Chief Executive Officer of Intertek, said:

'We have made a good start to the year with trading in line with our expectations despite the challenging global market conditions. Our key business drivers remain robust and are expected to continue to produce good organic revenue growth throughout the year. Supporting our customers as they strive to be more competitive and cost effective in the face of slower markets, will underpin this growth. 

We expect to maintain a stable margin at prior year levels and to grow well for the remainder of 2009.' 

Contacts 

Aston Swift / Sarah Ogilvie

Telephone:    [phone]     

[e-mail] / [e-mail]

Richard Mountain / Sophie Kernon, Financial Dynamics

Telephone:    [phone]    

[e-mail] / [e-mail]

Notes to Editors

ABOUT INTERTEK

Intertek is the leading provider of quality and safety solutions serving a wide range of industries around the world. From auditing and inspection, to testing, quality assurance and certification, Intertek people are dedicated to adding value to customers' products and processes, supporting their success in the global marketplace. Intertek has the expertise, resources and global reach to support its customers through its network of more than 1,000 laboratories and offices and over 23,000 people in 110 countries around the world. 

Intertek is a FTSE 100 company listed on the London Stock Exchange. Ticker: ITRK

www.intertek.com 

This Interim Management Statement is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this Interim Management Statement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. Statements contained in this Interim Management Statement are based on the knowledge and information available to the Company's Directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Interim Management Statement involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Interim Management Statement contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward-looking statements.

 

END

 

 

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