REG - Intertek Group Plc - Trading Statement
23/11/2023 07:00
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RNS Number : 3900U Intertek Group PLC 23 November 2023
TRADING STATEMENT
23 November 2023
ROBUST DEMAND FOR INTERTEK ATIC SOLUTIONS - ON TRACK TO DELIVER 2023 TARGETS
• YTD revenue of £2.77bn, growth of 7.3% at CCY with broad-based
LFL revenue growth of 6.3%
• 5.2% LFL revenue growth at CCY in July-Oct: LFL of 6.9% in
Corporate Assurance, Health and Safety, Industry and Infrastructure, and World
of Energy combined; Consumer Products LFL of 1%
• Recent acquisitions in high growth, high margin segments
performing well; YTD revenue contribution of £26m
• Margin progression driven by pricing initiatives, good operating
leverage and disciplined cost controls
• Disciplined performance management delivering strong cash flow
and a robust balance sheet
• Investing in organic and inorganic growth opportunities with an
accretive capital allocation policy
• Confirming 2023 outlook: Mid-single digit LFL revenue growth at
CCY, margin progression and strong free cash flow
• Intertek AAA differentiated growth strategy in place to unlock the
significant value growth opportunity ahead
Revenue Growth LFL Revenue Growth
YTD 23 YTD 23 Jul-Oct23 YTD 23
Change at CCY(1) Change at AR(2) Change at CCY(1) Change at CCY(1)
Group 7.3% 5.1% 5.2% 6.3%
Consumer Products 1.1% (2.7%) 1.0% 1.1%
Corporate Assurance 10.5% 7.6% 6.6% 10.0%
Health and Safety 8.5% 7.8% 6.5% 6.5%
Industry and Infrastructure 8.5% 7.1% 5.7% 8.5%
World of Energy 12.1% 11.1% 8.7% 8.5%
( )
(1. Constant currency 2. Actual rates)
André Lacroix: Chief Executive Officer statement
"The Group has delivered 7.3% revenue growth on a YTD basis at CCY, driven by
8.5% LFL revenue growth in Corporate Assurance, Health and Safety, Industry
and Infrastructure, and the World of Energy combined, while LFL for Consumer
Products was 1.1%. Recent acquisitions in high-growth, high-margin segments
are performing well, benefitting from the scale-up opportunities in our global
network. We are on-track to deliver our 2023 FY target of mid-single digit LFL
revenue growth at CCY, with margin accretion and strong free cash flow
performance enabling us to deliver an excellent ROIC.
I would like to recognise my colleagues for their passion, commitment and
innovation, delivering a robust financial performance in the first ten months
of the year. We have delivered the highest LFL revenue growth in the last 10
years at CCY, benefitting from the robust demand for our ATIC solutions. We
have seen margin progression driven by our pricing initiatives, good operating
leverage and our disciplined cost approach. Our strong free cash flow combined
with our robust balance sheet enables us to invest in growth and accelerate
performance.
Our clients are increasing their focus on Risk-based Quality Assurance to
operate with higher standards on quality, safety and sustainability in each
part of their value chain, triggering a higher demand for our ATIC solutions
which are powered by our Science-based Customer Excellence ATIC advantage. We
have made significant progress on our portfolio, which is poised for faster
growth with all our global business lines expected to benefit from attractive
structural growth drivers while the majority of our local businesses are
exposed to fast growth opportunities.
Earlier this year, we unveiled our Intertek AAA differentiated growth strategy
to capitalise on the best-in-class operating platform we have built and target
the areas where we have opportunities to get better. Our passionate,
innovative, and customer-centric organisation is laser-focused to take
Intertek to greater heights putting our AAA strategy in action and deliver
sustainable growth and value for all stakeholders. We are targeting mid-single
digit LFL revenue growth, margin accretion to go back to our 17.5% peak margin
and beyond, and strong cash generation, while pursuing disciplined investments
in attractive growth and margin sectors.
We operate a differentiated, high-quality growth business with excellent
fundamentals and intrinsic defensive characteristics, giving our customers the
Intertek Science-based ATIC advantage to strengthen their businesses. Our
leading ATIC solutions are mission-critical for the world to operate safely
and the growth in our end-markets is accelerating. The implementation of our
Intertek AAA differentiated growth strategy will capitalise on our
high-quality earnings and cash compounder model to unlock the significant
value growth opportunity ahead."
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 2023 ("period").
All comparative comments in this statement reflect comparisons with the
corresponding period during 2022. The Group's full year results to 31 December
2023 will be announced on 5 March 2024.
Revenue Performance - 5 divisions
10 months - January to October 4 months - July to October
2023 2022 Change at Change at constant currency 2023 2022 Change at Change at constant currency
£m £m actual rates £m £m actual rates
Group
Revenue 2,765.7 2,632.4 5.1% 7.3% 1,125.7 1,140.7 (1.3%) 5.9%
Like-for-like revenue 2,739.8 2,632.4 4.1% 6.3% 1,118.1 1,140.7 (2.0%) 5.2%
Consumer products
Revenue 779.5 801.3 (2.7%) 1.1% 311.6 338.4 (7.9%) 1.0%
Like-for-like revenue 779.5 801.3 (2.7%) 1.1% 311.6 338.4 (7.9%) 1.0%
Corporate Assurance
Revenue 391.9 364.3 7.6% 10.5% 160.1 160.1 - 7.6%
Like-for-like revenue 390.4 364.3 7.2% 10.0% 158.6 160.1 (0.9%) 6.6%
Health and Safety
Revenue 269.6 250.1 7.8% 8.5% 112.9 107.7 4.8% 9.3%
Like-for-like revenue 264.6 250.1 5.8% 6.5% 110.0 107.7 2.1% 6.5%
Industry and infrastructure
Revenue 721.8 674.2 7.1% 8.5% 294.8 299.0 (1.4%) 5.7%
Like-for-like revenue 721.8 674.2 7.1% 8.5% 294.8 299.0 (1.4%) 5.7%
World of Energy
Revenue 602.9 542.5 11.1% 12.1% 246.3 235.5 4.6% 10.2%
Like-for-like revenue 583.5 542.5 7.6% 8.5% 243.1 235.5 3.2% 8.7%
Revenue Performance - PTR
10 months - January to October 4 months - July to October
2023 2022 Change at Change at constant currency 2023 2022 Change at Change at constant currency
£m £m actual rates £m £m actual rates
Group
Revenue 2,765.7 2,632.4 5.1% 7.3% 1,125.7 1,140.7 (1.3%) 5.9%
Like-for-like revenue 2,739.8 2,632.4 4.1% 6.3% 1,118.1 1,140.7 (2.0%) 5.2%
Products
Revenue 1,721.4 1,674.6 2.8% 5.0% 698.4 723.6 (3.5%) 3.8%
Like-for-like revenue 1,719.9 1,674.6 2.7% 5.0% 696.9 723.6 (3.7%) 3.5%
Trade
Revenue 550.6 523.9 5.1% 6.8% 224.9 224.3 0.3% 6.6%
Like-for-like revenue 545.6 523.9 4.1% 5.8% 222.0 224.3 (1.0%) 5.3%
Resources
Revenue 493.7 433.9 13.8% 16.7% 202.4 192.8 5.0% 13.0%
Like-for-like revenue 474.3 433.9 9.3% 12.1% 199.2 192.8 3.3% 11.2%
Contacts
For further information, please contact:
Denis Moreau, Investor Relations
Telephone: +44 (0) 20 7396 3415
investor@intertek.com (mailto:investor@intertek.com)
Jonathon Brill/James Styles, Dentons Global Advisors
Telephone: +44 (0)7510 385 554
intertek@dentonsglobaladvisors.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
(https://broadcaster-audience.mediaplatform.com/#/event/63501bce10103e7e3fafb55a/registration)
). Details can be found at http://www.intertek.com/investors/
(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
Consumer Products Division
In the four-month period to end October 2023, our Consumer Products-related
business delivered LFL revenue of £311.6m, up YoY by 1% at CCY enabling us to
deliver a LFL revenue of £779.5m on YTD basis, up YoY at CCY by 1.1% and down
YoY by 2.7% at actual rates.
· Our Softlines business delivered a low-single digit negative LFL
revenue in the period resulting in a stable LFL revenue performance YTD as
ATIC investments by our clients in e-commerce, risk-based Quality Assurance
and end-to-end sustainability have been offset by a slow-down in new product
development given that most retailers in North America and Europe remain
focused on reducing inventory.
· Hardlines reported a low-single digit negative revenue performance in
the period and stable LFL revenue growth on a YTD basis as ATIC investments by
our clients in e-commerce and sustainability have been offset by lower
investments in new product development from our major customers in North
America and Europe
· With increased ATIC activities driven by greater regulatory standards
in energy efficiency, more demand for medical devices and 5G investments, our
Electrical & Connected World business delivered high-single digit LFL
revenue growth in the period resulting in a mid-single digit LFL revenue
growth YTD.
· 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.
The business reported double-digit negative LFL revenue growth both in the
period and YTD as increasing client supply chain activities were offset by the
non-renewal of two major contracts last year.
Full Year growth outlook
In 2023, we expect our Consumer Products division to deliver low-single digit
LFL revenue growth at constant currency.
Mid to long-term growth outlook
Our Consumer Products division will benefit from growth in new brands, SKUs
& ecommerce, increased regulation, a greater focus on sustainability and
technology, as well as a growing middle class.
Our mid to long-term guidance at CCY for Consumer Products is low to
mid-single digit.
Corporate Assurance Division
In the four-month period to end October 2023, our Corporate Assurance-related
business delivered a LFL revenue of £158.6m, up YoY by 6.6% at CCY enabling
us to deliver a LFL revenue of £390.4m on a YTD basis, up YoY at CCY by 10.0%
and up by 7.2% YoY at actual rates.
Business Assurance delivered high-single digit LFL revenue growth in the
period and double-digit LFL revenue growth on YTD basis driven by increased
investments by our clients to improve the resilience of their supply chains,
the continuous focus on ethical supply and the greater need for sustainability
assurance.
The Assuris business reported negative mid-single digit LFL revenue
performance in the period due a base-line effect in 2022. However, LFL revenue
is stable on a YTD basis as we continue to benefit from improved demand for
our regulatory assurance solutions and from increased corporate investment in
ESG.
Full Year growth outlook
In 2023, we expect our Corporate Assurance division to deliver high-single
digit LFL revenue growth at constant currency.
Mid to long-term growth outlook
Our Corporate Assurance division will benefit from a greater corporate focus
on sustainability, the need for increased supply chain resilience, enterprise
cyber-security, People Assurance services and regulatory assurance.
Our mid to long-term LFL guidance at CCY for Corporate Assurance is
high-single digit to double-digit.
Health and Safety Division
In the four-month period to end October 2023, our Health and Safety-related
business delivered LFL revenue of £110.0m, up YoY by 6.5% at CCY. YTD LFL
revenue of £264.6m is up YoY at CCY by 6.5% and up YoY by 5.8% at actual
rates.
· AgriWorld provides inspection activities to ensure that the global
food supply chain operates fully and safely. The business reported mid-single
digit LFL revenue growth both in the period and on YTD basis as we continue to
see an increase in demand for inspection activities driven by sustained growth
in the global food industry.
· Our Food business registered mid-single digit LFL revenue growth in
the period and high-single digit LFL revenue growth on YTD basis as we
continue to benefit from higher demand for food safety testing activities as
well as hygiene and safety audits in factories.
· In Chemicals & Pharma we saw mid-single digit LFL revenue growth in
the period and on YTD basis reflecting improved demand for regulatory
assurance and chemical testing and from the increased R&D investments of
the pharma industry.
Full Year growth outlook
In 2023, we expect our Health and Safety division to deliver mid-single digit
LFL revenue growth.
Mid to long-term growth outlook
Our Health and Safety division will benefit from the demand for healthier and
more sustainable food to support a growing global population, increased
regulation, and new R&D investments in the pharma industry.
Our mid to long-term LFL guidance at CCY for Health and Safety division is mid
to high-single digit.
Industry and Infrastructure Division
In the four-month period to end October 2023, our Industry and
Infrastructure-related business delivered LFL revenue of £294.8m, YoY growth
of 5.7% at CCY enabling us to deliver a LFL revenue of £721.8m on YTD basis,
up YoY at CCY by 8.5% and up YoY by 7.1% at actual rates.
Industry Services includes our Capex Inspection services and Opex Maintenance
services. The Capex Inspection business delivered double-digit LFL revenue
growth in the period and on YTD basis as we benefitted from increased capex
investment in traditional Oil and Gas exploration and production as well as in
renewables. With our clients increasing their maintenance efforts to increase
the productivity of existing production assets, we delivered double-digit LFL
revenue growth in the period and on YTD basis in Opex Maintenance.
The continuing high demand for testing and inspection activities drove
high-single digit LFL revenue growth in the period and double-digit LFL
revenue growth on YTD basis in our Minerals business.
Growing demand for more environmentally friendly buildings and the increased
number of infrastructure projects in North America produced low-single digit
LFL revenue growth in the period and on YTD basis for our Building &
Construction business.
Full Year growth outlook
In 2023, we expect our Industry & Infrastructure related businesses to
deliver high-single digit LFL revenue performance at constant currency.
Mid to long-term growth outlook
Our Industry & Infrastructure division will grow in the mid to long-term,
benefitting from increased global energy consumption, the transition to
greener energy, population growth, large scale infrastructure investment, and
demand for Greener buildings.
Our mid to long-term LFL guidance at CCY for Industry and Infrastructure is
mid to high-single digit.
World of Energy Division
In the four-month period to end October 2023, our World of Energy-related
business delivered LFL revenue of £243.1m, up YoY by 8.7% at CCY. YTD LFL
revenue of £583.5m is up YoY at CCY by 8.5% and up 7.6% at actual rates.
Caleb Brett, the global leader in the Crude Oil and Refined products global
trading markets, benefitted from improved momentum driven by increased global
mobility and higher testing activities for biofuels with double-digit LFL
revenue growth in the period and on a YTD basis.
Transportation Technologies delivered a low-single digit LFL revenue growth in
the period and mid-single digit LfL revenue growth on YTD basis driven by
increased investment in new powertrains to lower CO2/NOx emissions and in
traditional combustion engines to improve fuel efficiency.
Our CEA business continued to benefit from the increased investments in solar
panels which is the fastest growing form of renewable energy and delivered a
double-digit LFL revenue growth in the period and YTD.
Full Year growth outlook
In 2023, we expect our World of Energy division to deliver high-single digit
LFL revenue growth at constant currency.
Mid to long-term growth outlook
The World of Energy division will benefit from increased investment from
energy companies to meet growing demand and consumption of energy from the
growing global population, the scaling up of Renewables, increase R&D
investments that OEMs are making in EV/Hybrid vehicles and from the
development greener fuels.
Our mid to long-term LFL guidance at CCY for the World of Energy division is
low to mid-single digit.
Innovation
True to our pioneering spirit, we continue to lead the industry and innovate
to meet the emerging needs of our customers with winning ATIC solutions.
We are constantly learning from our customers, using extensive feedback they
provide us every month with our extensive NPS research programme to help us
deliver ever better solutions to their evolving requirements.
We believe that successful innovation starts with investing in the insight
advantage, which means having a deep understanding of what our customers need
and want. With the ability to access world-class customer intelligence
site-by-site from anywhere across our global network, we have a continuous
stream of data that enables us to build on our insights and use this to
develop new ATIC solutions.
Recently we launched a new certification mark that aims to give consumers
transparency regarding the claims made by the manufacturers and marketers of
vegan foods. This is a timely introduction given the exponential global growth
in the number of consumers who are exploring a plant-based diet as part of a
healthier lifestyle with a reduced environmental impact.
Sustainability-related innovations include Intertek EcoCheck, a tourism
solution that audits management systems and is supported by our capabilites to
deliver accessibility, circularity and carbon emission accounting services.
Launched earlier this year, Global Market Access (GMA) is designed to help
retailers and brands of soft goods, hard goods and personal protective
equipment to understand and comply with the different regulations in force in
different markets across the world. GMA is a one-stop digital knowledge
portal, developed with the aim of increasing compliance for improved consumer
safety and protecting corporate reputations in today's interconnected world.
Earlier this month, we launched an exciting digital innovation iCare in
Turkey. This new pioneering one-stop digital platform delivers customer
excellence to fashion manufacturers in a few clicks. In today's increasingly
digital world, manufacturers expect seamless and efficient communication with
testing service providers. iCare fulfils this expectation by providing
customers with full transparency and real-time information about the status
and progress of their submitted samples. Through iCare, customers can
effortlessly manage all their testing projects on one centralised platform,
accessible 24/7.
Sustainability
Sustainability is the movement of our time and is central to everything we do
at Intertek, anchored in our Purpose, our Vision, our Values and our strategy.
Sustainability is important to all stakeholders in society who are
consistently demanding faster progress and greater transparency in
sustainability reporting. Companies everywhere therefore continuously need to
upgrade and reinvent how they manage their sustainability agenda, particularly
with regard to how they disclose their performance.
This is why, under our global Total Sustainability Assurance (TSA) programme,
we provide our clients with proven independent, systemic and end-to-end
assurance on all aspects of their sustainability strategies, activities and
operations.
The TSA programme comprises three elements:
• Intertek Operational Sustainability Solutions
• Intertek ESG Assurance
• Intertek Corporate Sustainability Certification
For ourselves at Intertek, we focus on 10 highly demanding TSA sustainability
standards which are truly end-to-end and systemic.
You can read in detail about our Sustainability Excellence agenda and results
in our 2022 Sustainability Report, which included:
• Continuous progress on Health and Safety with a reduction of 7bps
in our Total Recordable Incident Rate vs 2021.
• Since 2015, we have used the Net Promoter Score ('NPS') process to
listen to our customers that has enabled us to improve our customer service
over the years consistently.
• We are driving environmental performance across our operations
through new science-based reduction targets to 2030 as well as site-by-site
action plans. Our rigorous monthly performance management of our net zero
plans against emission reduction targets has delivered total CO2e emissions
(market-based) reductions of 7.8% vs 2021.
• We recognise the importance of employee engagement in driving
sustainable performance for all stakeholders, and we measure employee
engagement against our Intertek ATIC Engagement Index. Our 2022 score was 80.
• Our voluntary permanent employee turnover was at a low rate of
14%.
At the end of August, we were pleased to announce that the Group's near-term
greenhouse gas (GHG) emissions reduction targets have been approved by the
Science Based Targets initiative (SBTi). Through the validation of its scope
1, scope 2 and scope 3 targets, the SBTi found Intertek to be in line with the
ambition to limit global temperature increases to 1.5°C above pre-industrial
levels.
Intertek is committed to:
• reducing absolute scope 1 and 2 GHG emissions by 50% by 2030 from
a 2019 base year;
• reducing absolute scope 3 GHG emissions from business travel and
employee commuting by 50% within the same timeframe;
• ensuring 70% of its suppliers by spend will have science-based
targets by 2027.
This achievement serves to reconfirm Intertek's commitment to sustainable
growth and acknowledges the Group's ongoing efforts to limit the effects of
climate change as part of the Race to Zero.
M&A
We are investing inorganically to seize the attractive growth opportunities in
the global Quality Assurance market and to strengthen our ATIC portfolio in
high-margin, high-growth areas.
Our recent acquisitions, SAI Global Assurance, JLA Brasil Laboratório de
Análises de Alimentos S.A. and Clean Energy Associates LLC and Controle
Analtico have been successfully integrated and are performing well and in line
with our expectations.
In August, we announced the acquisition of US-based PlayerLync, a leading
provider of high-quality mobile-first training and learning content to
frontline workforces at some of the world's leading consumer brands,
strengthening our position as a leader in SaaS-based, technology- enabled
People Assurance services. We invested in our People Assurance business with
the acquisition of Alchemy/Wisetail in 2018, and PlayerLync provides a
compelling opportunity to further enhance our differentiated TQA proposition
and customer excellence advantage in what is a fast-evolving landscape. As the
deskless frontline workforce continues to grow, software-based technology
solutions that deliver learning, communications and engagement are ever more
important and the combination of Wisetail and PlayerLync are exceptionally
well-placed to address those needs.
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.
Outlook 2023
In 2023, we continue to expect the Group will deliver mid-single digit LFL
revenue growth at constant currency, with margin progression year-on-year and
a strong free cash flow performance.
Our mid-single digit LFL revenue growth at constant currency will be driven by
the following contribution from our divisions:
• Consumer Products: Low-single digit
• Corporate Assurance: High-single digit
• Health and Safety: Mid-single digit
• Industry and Infrastructure: High-single digit
• World of Energy: High-single digit
Our financial guidance for 2023 is that we expect:
• Capital expenditure in the range of £115-125m
• Net Finance costs in the £40-42m range
• Effective Tax Rate in the 25%-26% range
• Minority interests of between £22-23m
• FY23 financial net debt to be in the range of £630-680m
Currency has remained volatile, and we are updating our FY forex guidance. The
average Sterling rate since the beginning of the year applied to our FY 2022
results, would reduce our FY revenue by 300bps and FY Earnings by 500bps.
Significant value growth opportunity
We have made strong progress in the last eight years, delivering sustainable
growth and value for our stakeholders and we are very excited about the
significant growth value opportunity ahead, capitalising on our Science-based
Customer Excellence ATIC advantage. Our clients understand the
mission-critical nature of risk-based quality assurance to make their
businesses stronger and we have seen the demand for our ATIC solutions
accelerate in the last few years.
On 3 May 2023, at our Capital Markets event in London, we announced our
Intertek 30 AAA Growth Strategy to unlock the significant value growth
opportunity ahead.
True to our high performance 10X Culture, our Intertek AAA differentiated
growth strategy is about being the best and creating significant value for
every stakeholder, all the time. We want to be the most trusted TQA partner
for our customers, the employer of choice with our employees, to demonstrate
sustainability excellence everywhere in our community and deliver significant
growth and value for our shareholders.
To seize the significant growth value opportunity ahead we will be
laser-focused on three strategic priorities and three strategic enablers. Our
Strategic Priorities are defined as Science-based Customer Excellence TQA,
Brand Push & Pull and Winning Innovations, and our three Strategic
Enablers are based on 10X Purpose-based Engagement, Sustainability Excellence
and Margin Accretive Investments. We will both further improve where we are
already strong and address the areas where we can get better.
Our high-quality portfolio is poised for faster growth:
• The depth and breadth of our ATIC solutions positions us well to seize
the increased opportunities arising from corporate needs for Risk-based
Quality Assurance
• All of our global business lines have plans in place to seize the
exciting growth drivers in each of our divisions
• At the local level, our local portfolio is strong, with the
majority of our revenues exposed to fast growth segments
• Geographically we have the right exposure to the structural growth
opportunities across our global markets
We have improved our segmental disclosures to better reflect the growth
drivers in our businesses reporting revenue, operating profit and margin in
five divisions:
• Consumer Products
• Corporate Assurance
• Health and Safety
• Industry and Infrastructure
• World of Energy
In terms of LFL revenue growth we are targeting Group mid-single digit LFL
revenue growth at constant currency with the following expectations by
division:
• Low- to mid-single digit in Consumer Products
• High-single digit to double digit in Corporate Assurance
• Mid- to high-single digit in Health and Safety
• Mid- to high-single digit in Industry and Infrastructure
• Low- to mid-single digit in the World of Energy
Margin accretive revenue growth is central to the way we deliver value, and we
are confident that over time we will return to our 17.5% peak margin
performance and go beyond from there. Our confidence is based on three simple
reasons: we have the proven tools and processes in place, we operate with a
span of performance, and we pursue a disciplined accretive portfolio strategy.
To deliver sustainable growth and value we will stay focused on our Intertek
Virtuous Economics based on the compounding effect year after year of
mid-single digit LFL revenue growth, margin accretive revenue growth, strong
free cash-flow and disciplined investments in high growth and high margin
sectors.
We believe in the value of accretive disciplined capital allocation and pursue
the following priorities:
• Our first priority is to support organic growth through capital
expenditure and investments in working capital (target circa 5% of turnover in
capex).
• The second priority is to deliver sustainable returns for our
shareholders through the payment of progressive dividends and we target a
pay-out ratio of circa 50%.
• The third priority is to pursue M&A activities that strengthen
our portfolio in attractive growth and margin areas, provided we can deliver
good returns.
• And our fourth priority is to maintain an efficient balance sheet
with flexibility to invest in growth. Our leverage target is 1.3 - 1.8 net
debt to EBITDA with the potential to return excess capital to shareholders
subject to our future requirements and prevailing macro environment.
Our good to great journey continues to unlock the significant value growth
opportunity ahead.
-ENDS-
The 2023 November Trading Statement Audiocast CEO Script will be available
after the call at www.intertek.com/investors/
(http://www.intertek.com/investors/)
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