Intertek profit rises, interim dividend lifted as product division does well

Product testing company Intertek posted a rise in first half-profit on Tuesday thanks to a strong performance from its products division, as it hiked its dividend.

Interim pre-tax profit was up 1.6% to £213.6m, or 7.5% higher at constant currency. Revenue was down 1.8% to £1.35bn, or 3.9% higher at constant currency, while organic revenue was 2.3% lower at £1.34bn, or 3.4% higher at constant currency.

Operating profit was up 0.8% to £225.8m, or 6.4% higher at constant currency, and the company lifted its interim dividend by 35.7% to 31.9p a share, moving towards its new payout ratio of around 50% of earnings.

Intertek's products and trade related divisions, which represent 94% of its earnings, saw revenue growth of 4.9% and adjusted margin expansion of 40 basis points, with the products division seeing revenue growth of 5.7%, benefiting from recent acquisitions.

The company's resources related businesses, which represent 6% of profit, saw organic revenue drop 0.7% and a margin reduction of 40 basis points versus the previous year.

Chief executive Andre Lacroix said: "The group has continued to deliver progress in revenue, margin and cash performance in the first half at constant rates, reflecting the group's performance management discipline focused on margin accretive revenue growth with strong cash conversion and accretive disciplined capital allocation. We are well positioned to deliver in 2018 good organic revenue growth with moderate group margin progression at constant currency and strong cash conversion.

"We are on track on our 'good to great' journey, making progress on both performance and strategy. We continue to be uniquely positioned to benefit from the GDP+ organic revenue growth prospects in the $250 billion global Quality Assurance Industry in the medium to long term, leveraging our high quality and highly cash generative earnings model."