Company Report Library

Stocks in Focus: Intertek

This week I am looking at Intertek, a company that provides quality and safety solutions including Assurance, Testing, Inspection and Certification services to various industries worldwide. The company recently released its 2018 full year results.

The results were positive, showing steady revenue and profit growth, with pre tax profit rising 4% at actual currency rates, or 8.3% at constant rates during the year. We were also told that the company is continuing to benefit from higher demand from its existing customers for Total Quality Assurance solutions in the Products, Trade and Resources divisions.

The company continues to look for growth opportunities and in the last year has made four acquisitions in high growth, high margin segments. However, the cost of these acquisitions has contributed to the significant increase of £234m in net debt, which now stands at £778m.

In 2018, the largest acquisition was the £378m purchase of US-based firm Alchemy.  Alchemy offers training software and resources that encourage food and retail companies to drive productivity and safety, and its resources have been used by companies such as Kellogg’s. Management at Intertek hope that this addition to the company will further accelerate the growth momentum of its high-margin and capital-light Assurance business.

Management have also announced a new dividend policy, which targets a pay-out ratio of around 50%. The proposed final dividend is 67.2p per share, a substantial increase of 41% from the previous year.

Overall, management remain confident that Intertek is well positioned to take advantage of the growth opportunities in its markets.

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