Key Financial Points
Constant currency revenue up 2.3%, including acquisitions which added 2.9%.
Constant currency organic revenue down 0.6%; and up 1.4% excluding low-value Industry contract exits.
Operating margin 15.5%, down 20bps.
Strong cash performance with cash generated from operations of £403.7m, up 2.4%; Free cash flow of £184.8m, up 41.5%.
Reported diluted Earnings per Share ('EPS') of 132.1p, down 4.7%.
Recommended full year dividend per share of 49.1p, up 6.7%.
Key Operating Points
Good growth in Consumer Goods, Commercial & Electrical and Chemicals & Pharmaceuticals divisions, driven by Textiles, Electrical, Building Products, Transportation, Lubricants, and geographically in the Middle East, India, Turkey and Vietnam.
Industry & Assurance revenue decline includes the strategic exit from low-value contracts (reduced Group organic growth rate by 2.0%) and reductions in oil and gas capex infrastructure project work. Food & Agriculture and Business Assurance grew strongly.
Commodities saw growth in the oil and gas cargo trade business, but this was offset by declines in Minerals resulting mainly from the Indonesian ore export ban.
Continued focus on profitability with cost alignment in response to market developments and overall cost improvement initiatives; £23.5m restructuring cost.
Wolfhart Hauser, Chief Executive Officer, commented:
"Intertek delivered solid growth in its product-related businesses in 2014. However, we saw continuing headwinds in the oil and gas capex and mining sectors, and the effect of our strategic exit from certain low-value Industry contracts.
The positive growth in our product-related businesses was supported by long-term growth drivers such as end-user quality demand in developed and developing markets, regulation and supply chain developments, shifting sourcing patterns and new technologies.
Challenging conditions for our customers in oil and gas capex and minerals end-markets affected the level of demand for our services in these sectors during the year.
We have restructured and actively managed our portfolio of businesses during 2014. The restructuring related to underperforming businesses and laboratories in Europe, Minerals, Cargo, Chemicals & Pharmaceuticals and Industry Services, where we have closed businesses and reduced costs.
The Group margin for the full year was slightly below the margin for the same period last year. However the effect of weaker growth was materially mitigated by a strong focus on restructuring and cost control in response to market conditions.
In line with our progressive dividend policy and with a continuing healthy financial position, the Board is recommending a 6.7% dividend increase.
During 2015 we expect our organic revenue growth rate to improve gradually during the year compared to the 2014 growth rate with the margin broadly similar to 2014. Whilst we expect good growth in our product-related businesses, we anticipate continued weakness in 2015 in our oil and gas capex business, which represents around 13% of Group revenues.
Looking further ahead, we expect the near-term negative headwinds in our oil and gas capex business to ease. Our commodity and infrastructure businesses will enable Intertek to take advantage of the long-term growth in energy demand. Our product divisions are strongly leveraged to increasing middle-class demand for quality in emerging markets, expanding regulation and product variety.
Our strategic choice of portfolio positions Intertek to benefit from attractive structural growth drivers, as well as energy and commodity end-market drivers. Through these strategic choices, Intertek is well placed to deliver mid-single digit organic revenue growth over the medium term, supplemented by growth from acquisitions."
