Margins fall as debt rises at Intertek

Marion Dakers
SHARES in testing firm Intertek dropped 2.4 per cent yesterday after the firm’s profit margin fell in the first four months of the year, mainly due to slower growth in its consumer goods arm.

Organic revenues grew eight per cent in the period compared to last year at constant exchange rates, though the firm said consumer goods growth was “lower then expected, mainly as a result of an unusually long holiday shut-down period in China”.

Intertek said that when revenue from its purchase of industrial services group Moody and unfavourable exchange rates are taken into account, revenues rose 11 per cent.

The purchase of Moody in March pushed Intertek’s debt to EBITDA ratio to 1.9 times on a pro-forma basis.

Intertek said there had been “an element of disruption” to activities in Japan and North Africa, but added that its work in these regions is on a small scale.

“Looking ahead, we expect to achieve group organic revenue growth, at constant exchange rates, in the high single digits range for the full year,” said chief executive Wolfhart Hauser in a statement.

“Intertek’s early 2011 revenue performance is in line with our forecast, but we believe that lower year-on-year margin comments may lead to some profit-taking following the outperformance of the shares over the past three months,” wrote Numis analyst Steve Woolf, who has a “hold” rating on the stock.

The firm is due to hold its annual general meeting this afternoon.

The firm’s FTSE 100-listed shares lost 47p to close at £19.50, giving it a market capitalisation of £3.17bn.