Intertek Group PLC (LON:ITRK), the product testing specialist, said it will still pay a dividend as it reported a 4.6% reduction in sales to £882mln for the first four months of 2020.
The core products businesses, which last year delivered more than three-quarters of profit, saw like-for-like revenue slide 6.6%, while the smaller trade business saw sales fall 5.9%. Revenues at the resources arm rose 2.4%.
Both Softlines and Hardlines testing businesses saw double-digit declines due to supply chain disruption in China and India, which was partially offset by strong growth in e-commerce.
The electrical device and connectivity-focused business was stable, as were construction and transport technology, while business assurance and food both saw single-digit declines.
Pharmaceuticals saw double-digit declines as lockdown measures reduced demand for regulatory assurance and chemical testing and the industry reprioritised investments and delaying projects for Intertek’s laboratories.
Chief executive André Lacroix said that under the group progressive dividend policy and the targeted payout ratio of circa 50% of earnings, the 2019 final dividend of 71.6p will be paid on 11 June, amounting to a sum of £115mln.
“Notwithstanding the impact of the pandemic, I am confident in our ability to navigate what will be a challenging 2020,” he said.
He said the group’s debt has a long duration maturity profile and the company recently refinanced and extended its bank facility to US$850mln out to January 2025.
Analysts at Shore Capital said the key to the current year's performance and the outlook into 2021 would be the cyclical economic trend from this point and the impact on margin from both potential negative operational gearing and competitive forces for services.
Shares in Intertek rose more than 5% on Thursday morning to 5,102p, where they are down around 12% since the start of the year.