Intertek struggles as revenues fall

FTSE 100 quality testing specialist Intertek (LON:ITRK) saw its share price drop by 5.93% to 5,712p (as of 11:00 GMT) after posting a trading update for the 10 months ended 31st October. Management said that like-for-like revenues for the year to date were down by 7.3% despite some recovery during the last few months.

CEO André Lacroix commented: “In the second half of the year, we have benefited from a rebound in Assurance, Testing, Inspection and Certification activities in all regions and we are on track to deliver a resilient full year 2020 financial performance, with sequential margin progress in H2, a year-end net debt of £570-590m, lower than 2019, demonstrating the strength of our high quality and highly cash generative earnings model despite an unprecedented global pandemic.

“With our leading and innovative Total Quality Assurance solutions, we are supporting our clients to resume their operations as they benefit from an easing of lockdown restrictions in most of their markets. In the last four months, we saw a strong revenue rebound in our Products and Trade divisions, which together represent 93% of the Group’s earnings, while trading conditions remain challenging in the Resources sector.

“We are making good progress on margin, based on productivity gains resulting from sequential revenue increases and our disciplined approach to performance management. Our operational focus on cash is delivering strong free cash flow and we continue to take a disciplined approach to capital allocation, investing in high growth and high margin sectors, as well as implementing our progressive dividend policy.“