Intertek Group PLC (LON:ITRK) lifted its full year dividend by 14% as profits and revenues grew, sending its shares higher on Tuesday.
The product-testing, inspection and certification company reported pre-tax profit of £438.8mln for 2017, up 13.3% at actual foreign exchange rates on the previous year or 9.5% at constant currency.
Organic revenue, excluding the impact of acquisitions and disposals, rose 6.9% at actual exchange rates or 2.1% at constant rates to £2.7bn.
Shares rose 6% to 5,166p in morning trading.
“The products and trade-related divisions, which represent 94% of the group's earnings, delivered an excellent performance with organic revenue growth of 4.8% at constant rates while, as expected, trading conditions remained challenging in the resources related division,” said chief executive André Lacroix.
Intertek raises dividend for 10th year in a row
The company recommend a final dividend of 47.8p per share, bringing the total payout for the year to 71.3p, a 14.3% increase on 2016.
“A 14% increase in the total dividend to 71.3p a share means Intertek remains a member of the select band of 26 current FTSE 100 firms that has increased its shareholder payout every year for the last 10,” said Russ Mould, investment director at AJ Bell.
“Despite concerns over the testing and quality assurance expert’s exposure to the global resources industry – and, ironically, some niggles over the quality of its accounting, given the reappearance of more supposedly ‘exceptional’ costs – investors are taking this as a positive sign and a show of confidence in the company’s competitive position and future prospects."
Intertek invests in expansion
The group completed two acquisitions last year, including German vehicle, component and fuel testing business KJ Tech Services GmbH, and US security certification company Acumen Security, LLC.
READ: Intertek acquires security certification specialist Acumen
Intertek said it would continue to invest in the business and take advantage of opportunities in the US$250bn global quality assurance industry.
“We are uniquely positioned to seize these attractive growth opportunities, underpinned by the increased complexities of corporate supply chains and the associated challenges of maintaining a high level of quality assurance end to end,” said Lacroix.
Intertek strategy on track
He added that the group was on track with its “good to great” plan and is making progress in both its performance and strategy.
The company expects to deliver “good organic revenue growth” at constant currency in 2018 with “sequential progression” during the year, moderate group margin expansion and strong cash generation.
It sees its products and trade-related businesses achieving robust organic growth but anticipates market conditions will remain challenging in its resources related businesses in the first half of 2018 with a gradual improvement expected in the second half.