Intertek Group (ITRK) H1 2024 earnings summary

Executive summary

• Delivered double-digit growth in operating profit, EPS, and free cash flow for H1 2024, with like-for-like revenue up 6.1% at constant currency and strong margin improvement of 110bps year-over-year.

• ROIC increased by 220bps to 20.4% at constant currency, and interim dividend rose 43% in line with a 65% payout policy.

• Strong cash conversion at 118% and net debt-to-EBITDA ratio of 1.0x, reflecting a robust balance sheet.

• Recent acquisitions and cost reduction initiatives contributed to performance, with £5m in H1 savings and £11m targeted for the year.

• Continued investment in growth, innovation, and global ATIC capability, with a positive outlook for H2 2024.

Financial highlights

• H1 2024 revenue reached £1,669.5m, up 6.6% at constant rates (1.8% at actual rates); adjusted operating profit rose 14.2% at constant rates to £265.1m, with margin up 110bps to 15.9%.

• Adjusted diluted EPS increased 17.5% at constant rates to 104.9p; free cash flow grew 13.8% to £90.6m; cash conversion at 118%.

• Interim dividend of 53.9p, up 43%; net debt at £708.2m, net debt-to-EBITDA at 1.0x.

• ROIC at 20.4%, up 220bps year-over-year at constant rate.

• CapEx of £56m in H1 2024; capex to sales ratio remains disciplined at around 3%.

Outlook and guidance

• Confident in delivering strong FY 2024 results, targeting mid-single digit like-for-like revenue growth at constant currency, margin progression, and robust free cash flow.

• CapEx investment planned at £135–£145m; net debt guidance of £510–£560m before M&A or FX.

• Net finance costs expected at £41–£43m, effective tax rate at 25–26%, and minority interest at £23–£24m.

• Division outlooks: Consumer Products (mid-single digit), Corporate Assurance (high-single digit), Health and Safety (high-single digit), Industry and Infrastructure (low-single digit), World of Energy (high-single digit) LFL revenue growth.