TIDMITRK
RNS Number : 3382T
Intertek Group PLC
24 November 2021
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TRADING STATEMENT
24 November 2021
Intertek Group plc ("Intertek" or "the Group"), a leading Total
Quality Assurance provider to industries worldwide, today releases
its November Trading Update for the period from 1 January to 31
October 2021 ("period"). All comparative comments in this statement
reflect comparisons with the corresponding period during 2020. The
Group's full year results to 31 December 2021 will be announced on
1 March 2022.
Strong Progress in H2 - On Track to Deliver FY Targets
-- 6.7%(1) revenue growth in July-October, 4.8%(1) in July/August, 8.5%(1) in September/October
-- July-October LfL revenue growth 5.0%(1); trading days adjusted LfL revenue growth 6.2%(1)
-- All Divisions delivered LfL revenue growth, Products 5.5%(1),
Trade 3.7%(1), Resources 4.7%(1)
-- SAI and JLA acquisitions are performing well in revenue, margin and cash
-- Operational leverage and productivity management delivering
an improved margin in H2 versus H1
-- Day to day performance management discipline delivering a strong cash performance in H2
-- On track to deliver robust LfL revenue growth(1), year on
year margin progression and strong free cash flow
André Lacroix: Chief Executive Officer statement
"The Group has made strong progress in the second half of the
year, delivering total revenue growth of 6.7% at constant currency
in the July - October period, driven by a robust like-for-like
revenue performance and the benefits of acquisitions we recently
made, while benefiting from positive momentum on margin and
cash.
Looking to the full year, we are on track to deliver robust
like-for-like revenue growth at constant currency, year on year
margin progression and a strong free cash flow performance,
notwithstanding the lockdown restrictions still in place across
some of our global markets and the supply chain challenges that our
clients are facing.
Moving forward, all stakeholders in society expect governments
and corporations to build back a better world with a sharper focus
on end-to-end Quality Assurance. The Covid-19 global pandemic has
made the case for Total Quality Assurance clearer and stronger for
our clients and we expect the $250 billion global Quality Assurance
market to grow faster post-Covid.
The supply chain disruption being experienced by corporations
across multiple industries has made the need for comprehensive
risk-based quality, safety and sustainability assurance more
critical than ever. Companies are investing in Quality Assurance to
build greater resilience and safety, whilst innovating to deliver
new high-quality products and services as consumer expectations
rapidly evolve. The sprint to Net Zero emissions also means that
corporations are having to reinvent the way they reduce their
carbon footprints across the entirety of their operations, through
verified disclosures, transparency and greater accountability.
Thanks to our leading ATIC (Assurance, Testing, Inspection and
Certification) capability and expertise, innovation and insight,
Intertek is uniquely positioned to seize the highly attractive
growth opportunities and to benefit from the GDP+, like-for-like
revenue growth prospects in the Quality Assurance industry in the
medium- to long-term, leveraging our purpose-led role as a force
for good in society.
We are investing organically and inorganically to seize the
sustained long-term growth opportunities in our industry through a
disciplined approach to capital allocation and performance
management, targeting high-margin and high-growth areas that in
turn accelerate margin accretive revenue growth. The acquisitions
earlier this year of SAI Global Assurance and JLA are performing
well with both businesses delivering strong margin growth and
strengthening our existing operations."
(1)Constant currency
Revenue Performance
10 months - January to October 4 months - July to October
2021 2020 Change Change 2021 2020 Change Change
GBPm GBPm at actual at constant GBPm GBPm at at constant
actual
======== ====== ====== ======== =============
Group
Revenue 2,279.1 2,271.6 0.3% 5.6% 961.5 941.0 2.2% 6.7%
======== ======== =========== ============= ====== ====== ======== =============
Like-for-like
revenue 2,257.7 2,253.9 0.2% 5.4% 940.1 935.0 0.5% 5.0%
======== ======== =========== ============= ====== ====== ======== =============
Products
Revenue 1,432.0 1,389.9 3.0% 8.3% 612.5 589.5 3.9% 8.3%
======== ======== =========== ============= ====== ====== ======== =============
Like-for-like
revenue 1,410.9 1,374.1 2.7% 7.9% 591.4 584.2 1.2% 5.5%
======== ======== =========== ============= ====== ====== ======== =============
Trade
Revenue 472.4 492.1 (4.0%) 1.9% 194.2 197.5 (1.7%) 3.5%
======== ======== =========== ============= ====== ====== ======== =============
Like-for-like
revenue 472.1 490.8 (3.8%) 2.2% 193.9 196.8 (1.5%) 3.7%
======== ======== =========== ============= ====== ====== ======== =============
Resources
Revenue 374.7 389.6 (3.8%) 0.7% 154.8 154.0 0.5% 4.6%
======== ======== =========== ============= ====== ====== ======== =============
Like-for-like
revenue 374.7 389.0 (3.7%) 0.9% 154.8 154.0 0.5% 4.7%
======== ======== =========== ============= ====== ====== ======== =============
Contacts
For further information, please contact:
Denis Moreau, Investor Relations
Telephone: +44 (0) 20 7396 3415 investor@intertek.com
Ed Bridges, FTI Consulting LLP
Telephone: +44 (0) 20 3727 1000 scintertek@fticonsulting.com
Analysts' Call
A live audiocast for analysts and investors will be held today
at 7.45am UK time; +44 (0) 33 0551 0200 ( Link to audiocast ).
Details can be found at http://www.intertek.com/investors/ together
with a pdf copy of this report. A recording of the audiocast will
be available later in the day.
Intertek is a leading Total Quality Assurance provider to
industries worldwide.
Our network of more than 1,000 laboratories and offices in more
than 100 countries, delivers innovative and bespoke Assurance,
Testing, Inspection and Certification solutions for our customers'
operations and supply chains.
Intertek is a purpose-led company to Bring Quality, Safety and
Sustainability to Life. We provide 24/7 mission-critical quality
assurance solutions to our clients to ensure that they can operate
with well-functioning supply chains in each of their
operations.
Our Customer Promise is: Intertek Total Quality Assurance
expertise, delivered consistently, with precision, pace and
passion, enabling our customers to power ahead safely.
intertek.com
Products Divisional Review
In the last four months, our Products business delivered a LfL
revenue growth of 5.5% at constant rates, resulting in a YTD LfL
revenue growth of 7.9%.
-- In the July-October period, our Softlines business delivered
a mid-single digit LfL revenue growth, resulting in a double-digit
growth in LfL revenue on a YTD basis. Our global Softlines business
benefited from continuous growth in e-commerce, increased demand
for testing protective equipment and the reduction in the lockdown
activities in some of our markets while we continue to see store
closures in Western Europe and North America.
-- Our Hardlines business delivered a high-single digit LfL
revenue growth in the four-month period July-October, resulting in
a double-digit YTD growth in LfL revenue. Our Hardlines business
benefited from continuous growth in e-commerce, increased consumer
demand for home furniture and toys as well as from the reduction in
the lockdown activities in some of our markets, while closures of
stores in Western Europe and North America continued.
-- Our Electrical & Connected World business delivered
mid-single LfL revenue growth in the July-October period resulting
in a high-single digit LfL revenue performance YTD. Our Electrical
and Connected World business benefited from an increased level of
ATIC activities driven by increased regulatory standards in energy
efficiency, the higher demand for testing and certification of
medical devices, the increased testing requirements for 5G and
greater corporate focus on Cyber security.
-- Our Business Assurance business delivered a high-single digit
LfL revenue growth in the July-October period resulting in
double-digit LfL revenue growth on a YTD basis. The reduction of
lockdown activities has driven a rebound in the number of ISO
audits in some of our operations, while we continue to benefit from
the attractive growth in supply chain assurance, the continuous
focus on ethical supply, the increased needs of corporations for
sustainability assurance and the strong growth in our People
Assurance segment.
-- Our Building & Construction business delivered stable
revenue in the last four months, resulting in low-single digit LfL
revenue reduction on a YTD basis. We continue to benefit from the
growing demand for more environmentally friendly and higher quality
buildings while large infrastructure projects continue to be below
last year.
-- Our Transportation Technology business delivered a
high-single digit LfL revenue growth in the last four-month period
to October, resulting in stable YTD LfL revenue. Following the
lower demand for testing activities we saw in Western Europe and
North America in H1, we saw in July-October increased investments
of our clients in new powertrains to lower CO2/NOx emissions and
increase fuel efficiency.
-- Our Food business delivered a high-single digit LfL revenue
growth in the last four months resulting in a double-digit LfL
revenue growth YTD. We are benefiting from the resumption of the
supply operations from our clients in most markets, from the
sustained demand for food safety testing activities and the
increased demand for hygiene and safety audits in factories.
-- In the last four months, we saw double-digit LfL revenue
growth in our Chemical & Pharma business, resulting in
double-digit LfL growth in revenue on YTD basis. We benefited from
an improvement of demand for regulatory assurance and chemical
testing in some of our operations in North America and Western
Europe and from the increased R&D investments of the pharma
industry.
Full Year growth outlook
The full year outlook for our Products division remains
unchanged and we continue to expect to deliver robust organic
revenue growth at constant currency.
Mid to long- term growth outlook
Our Products division will benefit from mid to long-term
structural growth drivers including product variety, brand and
supply chain expansion, product innovation and regulation, the
growing demand for quality and sustainability from developed and
emerging economies, the acceleration of e-commerce as a sales
channel, and the increased corporate focus on risk.
Trade Divisional Review
In the last four months, our Trade business delivered a LfL
revenue growth of 3.7% at constant rates, resulting in a YTD LfL
revenue growth of 2.2%.
-- Our Caleb Brett business, the global leader in the Crude Oil
and refined Products global trading markets, benefited from an
improved momentum driven by an increase in global mobility in the
four month period July-October with a mid-single digit growth in
LfL revenue, resulting in stable LfL revenue on a YTD basis.
-- Our Government & Trade Services business provides
certification services to governments in the Middle East and Africa
to facilitate the import of goods in their markets, based on
acceptable quality and safety standards. We saw stable LfL revenue
in the four month period to October, resulting in a mid-single
digit revenue growth YTD.
-- Our AgriWorld business delivered double-digit LfL revenue
growth in the last four months resulting in double-digit LfL
revenue growth YTD. We continue to benefit from an increase in
demand for inspection activities driven by the strong growth in the
global food industry. AgriWorld provides inspection activities to
ensure that the global food supply chain operates fully and
safely.
Full Year growth outlook
The full year outlook for our Trade division remains unchanged
and we continue to expect to deliver good organic revenue growth at
constant currency.
Mid to long- term growth outlook
Our Trade division will continue to benefit from both regional
and global trade-flow growth, as well as the increased customer
focus on quality, quantity controls and supply chain risk
management.
Resources Divisional Review
In the last four months, our Resources business delivered a LfL
revenue growth of 4.7% at constant rates, resulting in a YTD LfL
revenue growth of 0.9%.
-- In our Exploration and Production operations, our Capex
Inspection services business delivered stable LfL revenue in the
last four months, resulting in a low-single digit LfL revenue
reduction on a YTD basis.
-- We delivered mid-single digit LfL revenue growth in Opex
Maintenance services in the four-month period to October, resulting
in low-single digit LfL revenue growth YTD.
-- We delivered double-digit LfL revenue growth in our Minerals
business in the four month period to October resulting in
high-single digit YTD revenue growth, as we saw increased demand
for testing and inspection activities.
Full Year growth outlook
Overall, we continue to expect our Resources related businesses
to deliver a good revenue performance at constant currency.
Mid to long- term growth outlook
Our Resources division will grow in the mid to long-term as we
benefit from investments in Energy, to meet the demands of the
growing population around the world.
Innovation
Increasing corporate complexity is presenting opportunities to
us to accelerate our growth in high-growth, high-margin sectors by
seizing the industry evolution towards risk-based Quality Assurance
and delivering pioneering solutions to our customers. We have a
focused approach to innovation using a three-tiered method: 'Core',
building on strengths of existing products and services;
'Adjacent', expanding into fast-growing and high-margin markets;
and 'Breakthrough', developing innovative products and
services.
Examples of 'Core' innovations
-- The launch of POSI-CHECK, part of our Protek(TM) offering,
which focuses on health, hygiene, safety and risk management.
Protek POSI-CHECK is an audit solution to help in the Prevention of
the Spread of Infection ('POSI') in restaurants, supermarkets,
schools and other facilities.
-- We added new and enhanced features to our market-leading
supply chain compliance solution Inlight 2.0, enabling
organisations to manage increasingly complex supply chain risks.
The platform enables organisations to bring visibility to the
workings of their vendor partners and turn potential disruptions
and compliance irregularities to their competitive advantage with
captured market share and operational efficiencies.
-- Recently opened in Perth, Western Australia, our new Minerals
Global Centre of Excellence is located in a key hub for the
minerals and mining industry. With over 500 employees, this
state-of-the-art laboratory gives our customers access to trusted
expertise in mineral testing, inspection and analysis. The new
facility was established to inspire innovation and sustainability
across the minerals supply chain, with advanced technology,
automation and robotics.
Examples of 'Adjacent' innovations
-- Our Intertek Maison Centre of Excellence in Italy, the new
innovative experiential space 'where science meets luxury' and
brings together - virtually and face-to-face - forward-thinking
fashion brands, industry leaders, academics and textile industry
experts to collaborate and to take bold new ideas and turn them
into reality.
-- At the beginning of the year, we launched an actionable data
mining SaaS platform WindAware, a data intelligence solution that
helps wind asset owners and operators make informed and real-time
decisions to optimize performance and maximize their asset life
cycle.
-- Tomorrow, 25 November, we will formally open our new Electric
Vehicle Centre of Excellence for high voltage EV propulsion systems
in Milton Keynes, UK. The state-of-the-art testing centre will
further enhance Intertek's offering for customers in the automotive
sector, powered by the latest innovative technology, helping
manufacturers accelerate their equipment and systems capabilities
in the fast-developing world of electric and hybrid vehicles.
Examples of 'Breakthrough' innovations
-- CarbonClear(TM), the world's first independent carbon-intensity certification programme, and SourceClear(TM), a new technology platform that provides visibility and traceability across the full range of supply chain relationships.
-- In April 2021, we announced the launch of Intertek
CarbonZero, our new independent carbon neutral certification for
products and services and have issued the first Intertek CarbonZero
Verified certification to Lundin Energy, representing the world's
first certified carbon neutral oil trade.
Sustainability
Sustainability is central to everything we do at Intertek and as
a purpose-led company it is anchored in our Purpose, Vision and
Values.
We are proud to have been recognised for our leading
sustainability credentials with the highest possible 'AAA' ESG
rating from the world's largest provider of Environmental, Social
and Governance (ESG) Indexes, MSCI. The MSCI ESG Ratings assessment
provides external validation for the incredible work that our
colleagues do every day to support our clients with their own
sustainability agendas, as well as being focused on sustainability
excellence in every operation internally.
We were proud to win the Gold Award for our 2020 Sustainability
Report in the 'Best CSR/ESG report' category at the 2021 Corporate
and Financial Awards.
We recently announced our participation in the LEAF (Lowering
Emissions by Accelerating Forest Finance) Coalition, furthering our
commitment to a Net-Zero future. LEAF is a new public-private
initiative designed to accelerate climate action by providing
results-based finance to countries committed to protecting their
tropical forests.
Offering innovative sustainability services to our clients is
core to our value proposition and we are committed to pioneering
new solutions that will help our clients, and indeed the world,
Build Back Ever Better.
What our clients are looking for today is systematic,
independent end-to-end assurance on all aspects of their
sustainability journey. Our answer is Intertek Total Sustainability
Assurance, a holistic programme empowering our customers to achieve
sustainability excellence across all aspects of their business and
communicate results with confidence.
Intertek Total Sustainability Assurance is comprised of three
parts:
-- Intertek Operational Sustainability Solutions
-- Intertek ESG Assurance; and
-- Intertek Sustainability Certification
Intertek Total Sustainability Assurance is a global programme,
leveraging our footprint in over 100 countries and covering all
industries. We have built a team of sustainability experts in every
major region, who can help with both a global and local
perspective. Thought leadership and innovation is what sets us
apart.
Intertek Operational Sustainability Solutions
Operational Sustainability Solutions are designed to help our
customers achieve sustainability excellence in all parts of their
operations, across supply chain. We have a large and broad
portfolio of industry-specific and industry-agnostic solutions
which we are continuously evolving.
Recently launched breakthrough innovations include CarbonClear,
CarbonZero and SourceClear. SourceClear is a digital supply chain
platform that helps organisations track sustainable material claims
across all stages of the trade and production supply chain. We
provide independent certification of product sustainability claims
against accredited Textile Exchange Standards, enabling our
customers to make sustainability commitments with confidence.
Intertek ESG Assurance
With Intertek's leading ESG Assurance programme, we support our
clients on all aspects of their ESG reporting journey and
non-financial data needs, from strategy setting to report
preparation and providing independent verification of
sustainability disclosures and reporting. This allows our customers
to communicate with their stakeholders with total peace of mind on
all aspects of their ESG journey.
The trend towards independent ESG Assurance is unstoppable, in
our view and our clients appreciate the unique sustainability and
industry insights we bring, leveraging our heritage as a Total
Quality Assurance provider to industries worldwide.
Intertek Sustainability Certification
Launched in 2019, Intertek Total Sustainability Assurance
("TSA") is the world's first independently verified corporate
sustainability audit and certification programme based on the ten
standards that we believe define a truly sustainable organisation.
They go beyond the criteria that are commonly looked at by ESG
rating agencies to include other factors that stakeholders and
investors should consider, including business resilience, risk
appetite, enterprise security and sustainability of growth and
earnings. Our TSA approach uses our ten standards to evaluate our
clients' sustainability from a company strategy and corporate
governance perspective.
Our unrivalled expertise in Total Quality Assurance ('TQA')
providing assurance solutions across all points of our clients'
operations - means we are uniquely positioned to support the needs
of our clients in operating sustainably.
Today, the expectations of all stakeholders - employees,
customers, consumers, investors, suppliers, communities and wider
society, governments and regulators - continue to rise.
All stakeholders are demanding that corporations demonstrate
their commitment to sustainability with clear goals, robust action
plans and transparent reporting - and we continue to innovate with
our sustainability solutions to help our clients to deliver on this
agenda.
M&A
We are investing organically and inorganically to seize the
attractive growth opportunities in the global quality assurance
market which we expect to grow faster in the post-Covid world, as
companies have realised that they need to increase their
investments to reduce the quality, safety and sustainability risks
in their supply chains.
With its strong balance sheet, Intertek is well positioned to
seize the attractive external growth opportunities in a highly
fragmented industry and we continue to make progress with our
M&A strategy.
On 7 September 2021, we completed the A$855m acquisition of SAI
Global Assurance, which expands our global industry leading
assurance offering and enables us to seize the attractive growth
opportunities in the high margin and capital light assurance
market.
SAI Global Assurance further strengthens our Assurance offering
by providing additional scale, enhanced geographic coverage and new
capabilities. We are benefitting post acquisition from a stronger
market position in Australia, the USA, Canada, the UK and China,
and an expanded service capability in the Food, AgriWorld, Quick
Service Restaurants, Sustainability and Global Market Access
sectors.
On 19 July 2021, Intertek acquired JLA Brasil Laboratório de
Análises de Alimentos S.A. ("JLA"), a market-leading independent
provider of Food, Agri and Environmental testing solutions based in
Brazil. The acquisition of JLA presents a compelling opportunity to
enter the fast growing and highly attractive food testing sector in
Brazil, which is one of the largest markets globally in terms of
agri-food and beverage production value.
Established in 1990, JLA serves as a trusted partner to
approximately 800 customers including some of the world's leading
Fast Moving Consumer Goods (FMCG) companies, providing a range of
microbiological, chemical testing and inspection services from its
laboratories and sample collection points in Sao Paulo State.
Both acquisitions are performing well since becoming part of the
Group, delivering a strong margin ahead of the Group average.
We will continue to look at M&A opportunities in attractive
high-margin and high-growth areas to broaden our ATIC portfolio of
solutions with new services we can offer to our clients and to
expand our regional coverage with our current ATIC portfolio.
Outlook 2021
We are confident that the Group will deliver robust
like-for-like revenue growth at constant currency in 2021,
notwithstanding the lockdown restrictions in some of our global
markets and the supply chain challenges that our clients are
facing.
We continue to expect our Products division to deliver robust
like-for-like revenue growth, with Trade and Resources both
expected to report good like-for-like revenue growth.
We continue to expect to deliver margin progression year on year
and a strong free cash flow performance.
Before any material change in FX rates or M&A, we expect our
financial net debt to be between GBP835-GBP885m at year end.
Looking Ahead
Society has changed. We are in the 'new normal' and are
observing new trends and behaviours and demands for products and
services that didn't exist prior to the pandemic. Consumers want
more sustainable products, supply chain simplicity, visibility and
traceability of goods, new solutions for hygiene, health and
wellbeing, as well as lower carbon emissions. Employers are being
tasked with developing and providing new tech and virtual
remote-working solutions.
The world needs Intertek more than ever, with the unrivalled
expertise of our people, our focus on delivering risk-based Total
Quality Assurance solutions, and our proven track record of
innovating and anticipating the growing needs of our clients as the
world around them grows more complex. We provide mission critical
ATIC solutions to enable the world's supply chains to operate fully
and safely, given the increased expectations from all stakeholders
to live in a better and safer society.
Our track record illustrates the heightened relevance of our
purpose, the underlying strength of our strategy and the resilience
of our high-quality and cash-generative compounder earnings
model.
Looking ahead, we are well positioned to benefit from the growth
acceleration in Quality Assurance given the excellent relationships
we have with our clients, who are investing more into their quality
assurance activities, our portfolio of strong ATIC solutions
offering risk-based quality assurance to our customers, and the
investments we are making, both in innovations and acquisitions, in
the high-margin and high-growth sectors of our industry.
-ENDS-
The 2021 November Trading Statement Audiocast CEO Script will be
available after the call at www.intertek.com/investors/
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