3rd Mar 2014 08:47
LONDON (Alliance News) - Intertek Group PLC Monday reported higher 2013 revenues and profits, helped by the seven acquisitions it made during the year, as it also said it will buy United Arab Emirates-based International Inspection Services Ltd From Lamprell PLC for USD66 million, or GBP40 million, in cash.
The company reported a pretax profit of GBP281.8 million for 2013, up from GBP256.6 million in 2012, as revenues rose 6.3% to GBP2.18 billion, from GBP2.05 billion. The revenue growth was driven by 4.8% organic growth, with the rest coming from the acquisitions it made.
However, its operating margin dropped to 15.7%, from 16.3% in 2012, as it was hit by a downturn in its minerals business, European markets remained weak, and as it invested in new laboratories. It said it performed strongly in major developing countries, particularly China and India.
The quality and safety testing company said it spent GBP122 million on acquisitions in 2013, including a toy testing lab in Brazil, a pharmaceuticals testing unit in the UK, a US oil and gas services business, and a North American building products testing company.
Its spending on new labs and services was GBP145 million, up from GBP115 million in 2012.
Separately Monday, it said its acquisition of International Inspection Service, which does testing services for the oil and gas industry, gives it a business that employs 720 and offers one of the most diverse non-destructive testing businesses in the Middle East.
In a separate statement, Lamprell said it will remain a significant customer for International Inspection and has signed a multi-year preferred supplier agreement to provide services for it. International Inspection made a net profit of USD6.3 million in 2012, it said.
Lamprell, which is selling off assets it has decided are not a key part of its business going forward, said it will use part of the proceeds to pay down its debt.
"Over the last 18 months, Lamprell has refocused on its core activities of new build rigs, new build construction, land rigs and rig refurbishments. As a result, the group has been actively pursuing options to dispose of certain of its service businesses and this disposal is a key part of that strategy," Lamprell Chief Executive James Moffat said.
Intertek said it generated GBP394 million in cash from operations in 2013, up 14%, and it raised its full-year dividend to 46.0 pence, from 41.0p.
"The quality and safety services market in 2013 was characterised by variable conditions. For Intertek, strong growth in our businesses in the major emerging countries was partially offset by a cyclical downturn in some industries and geographies," Intertek CEO Wolfhart Hauser said in a statement.
The variable market conditions have continued into 2014, Hauser said, but the company expects to grow and profits to rise as markets stabilise and the benefits of its restructuring and cost cutting come through. Intertek is expecting to outperform the growth of the industry as a whole, he added.
The company started a review of its portfolio in 2012, closing down or selling businesses it found to be underperforming or that didn't fit its strategic priorities. That process continued in 2013, and it has spent GBP23 million on the restructuring over the two year period, with GBP9 million booked last year. Three businesses have been sold and 11 locations closed down, mainly in Europe. The review is continuing.
It said its consumer goods unit reported high-single-digit organic revenues growth and the commercial & electrical and industry & assurance divisions reported mid-single digit organic revenue growth for the full year. However, growth moderated in industry & assurance in the second half as it exited some low-value contracts and discretionary spending by customers in the US weakened.
Its commodities and chemicals & pharmaceuticals divisions continued to be hit in the second half by challenges in the minerals exploration market and persistent weak conditions in Europe.
Intertek shares were down 0.4% at 2,929 pence early Monday.
By Steve McGrath; [email protected]; @SteveMcGrath1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
LAM.L