The share price of Intertek (LSE: ITRK) added 53p to 2,993p during early trade this morning after the group unveiled profit growth of 2%. Intertek, which tests and certifies the safety of consumer products, saw profits increase to £315m from £308m the year before.
The FTSE 100 member added that revenue increased by 6% to £2.2bn driven by organic revenue growth of around 5%.
Additionally, cash flow increased by 14% to £394m on the increase in profit, as well as improved working capital management.
In a separate announcement today, Intertek revealed it has purchased International Inspection Services Ltd (INSPEC), a UAE-based subsidiary that carries out inspections for infrastructure-intensive industries like oil and gas. Intertek is paying £39m to Lamprell Energy for the acquisition.
The total amount spent on acquisitions in 2013 was £122m, while £145m was invested in capital investment to support the group’s growth.
The chief executive, Wolfhart Hauser, commented on today’s results:
“The quality and safety services market in 2013 was characterised by variable conditions. For Intertek, strong growth in our businesses in the major emerging countries was partially offset by a cyclical downturn in some industries and geographies. Despite these conditions, we reported growth in revenue, operating profit and earnings per share, reflecting the strength of our portfolio.
Variable market conditions in the second half of 2013 have continued into the start of this year. As markets stabilise and the benefit of the Group’s restructuring and cost reductions come through, we expect 2014 to be a year of progressively improving growth and profitability.”
Intertek announced a 6% increase in earnings per share to 139p in support of a dividend payment of 46p.
Therefore, after the earlier price movement, shares in Intertek may trade on a P/E of 21 and offer a dividend yield of 1.6%.
Whether or not Intertek is a ‘buy’ for you — based on those ratings, todays results and the wider prospects for the safety industry — is solely your decision.
