LONDON (Alliance News) - Intertek Group PLC on Wednesday said it achieved good revenue growth in the first four months of 2016, though its resource industry-facing businesses continued to see challenging market conditions.
The FTSE 100-listed testing, inspection and certification company said group revenue for the four months to the end of April was GBP774.0 million, up 13% year-on-year and growing 11% in constant currencies. Organic revenue, stripping out acquisition contributions, grew 2.3% in the period, while constant currency growth was 0.5%.
"The group has started the year well with double-digit revenue growth. Our product-related businesses, which contribute over two-thirds of our earnings, delivered good organic growth performance; our trade activities reported solid organic growth, while market conditions remained challenging in our resource related businesses," said Chief Executive Andre Lacroix.
"We are on track to deliver robust full-year revenue growth at constant currency. As stated at our full-year results presentation in March, we continue to expect to deliver solid organic growth performance in 2016 with group margins broadly stable year on year," Lacroix added.
The group's product-related businesses delivered strong revenue growth, with good performances on an organic basis and from the acquisitions the group has made.
Intertek said its softlines business - which tests textiles, footwear and clothing - performed well, helped by a supply chain expansion in Vietnam, Cambodia and India and by a good performance in the footwear segment.
The group's hardline testing unit - covering hardware such as phones, medical devices and toys - delivered good organic growth. Solid revenue rises also were seen in Intertek's food, chemicals and pharmaceuticals and electrical and wireless units, while good demand in the US helped its building-products business.
Trade-related businesses delivered solid organic revenue growth, with decent performances in Intertek's cargo and agriculture units, though sales in its government and trade services arm were hit by reduced demand in the Middle East and Africa.
Revenue for the resource-related businesses fell in line with Intertek's expectations. Demand for inspection services paid for with capital expenditure was hit by a downturn in capital spending in the oil and gas industry, though maintenance services paid for with operating expenditure remained flat.
Intertek said it continues to expect good growth from its product business and solid revenue from its trade arm, but market conditions will continue to prove challenging in resources.
The longer-term outlook remains good, the company said. Intertek said the assurance, testing, inspection and certification industry should continue to benefit from an increased focus by companies worldwide on risk management, expanding regulation, more complex supply chains and technological innovation.
Intertek shares were down 4.9% to 3,134.00 pence, one of the worst performers in the FTSE 100 Wednesday.
Societe Generale noted Intertek shares were up 14% in the three months prior to the trading update being released, so the fall in the share price may be no more than some profit taking, plus a little disappointment at the growth rate for the first four months.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Intertek Group (ITRK)