Intertek Group PLC (LON:ITRK) appeared to speed off to a strong start in the first four months of the year, but acquisitions and currency swings masked a softening in organic growth for the quality assurance and testing group.
Group revenue of £924.3mln in the period to 30 April jumped by 7.3% compared to this time last year, and were up 5.3% at constant exchange rates.
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The group delivered organic growth of 3.3% at constant rates, while there was a contribution from the four acquisitions made in the previous year, focused on sectors offering growth and margin, plus a 2% benefit from forex.
That growth was slower than the 3.9% seen in the second half of last year, while the new additions provided a 2% uplift to help lift overall constant-currency growth above the 4.7% seen for the whole of last year.
Products, Intertek's largest group segment, saw organic growth slow to 2.6% from 4.7% as the firm flagged tough year-on-year comparatives and several end-markets tracking below full year growth guidance ranges. The Trade segment, however, accelerated growth to 5.3% and Intertek's Resources businesses rose to 2.9%.
“We are on track to deliver our 2019 targets of good organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion,” said chief executive André Lacroix, in line with the guidance given at March's final results.
Confident outlook
The Intertek boss added that given the good start to the year, good organic revenue growth at constant currency rates was expected in each of its three divisions.
Although the Products arm saw some softening, Lacroix's statement ahead of the FTSE 100 group's annual shareholder meeting on Thursday contained no words of caution about the effect of global trade tensions as the US squares up to China and the EU.
Instead he expressed confidence about the “$250bn global quality assurance industry” and structural growth prospects driven by the “increased focus of corporations on risk management, global trade flows, global demand for energy, expanding regulations, more complex sourcing and distribution operations, technological innovations, government investments in large infrastructure projects, and increased consumer demand for higher quality and more sustainable products”.
Analysts at UBS noted that as well as a slight slowing in organic growth, a further slow-down in the Products segment "may be a cause for concern", though comparatives get easier through the rest of the year.
Intertek shares were down more than 2% to 5,066p on Thursday morning.
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