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UPDATE 1-Intertek shares drop on sluggish first-quarter revenue
May 16, 2014 / 9:03 AM / in 3 years

UPDATE 1-Intertek shares drop on sluggish first-quarter revenue

* Q1 organic revenue growth 0.3 pct vs year-ago 7 pct

* Overall group revenue up 3.6 pct on constant currencies

* Sees better growth and profitability in second half

* Shares down as much as 7pct (Recasts with drop in recenue growth, adds shares, analyst comment)

By Li-mei Hoang

LONDON, May 16 (Reuters) - British testing firm Intertek Group Plc posted a sharp decline in underlying revenue growth in the first quarter, blaming variable market conditions which it said had affected activity in its energy infrastructure division.

Shares in the company, which tests everything from oil to children’s toys to check they comply with regulatory standards, dropped as much as 7.2 percent on Friday to become the biggest loser in the FTSE 100 index of blue chip stocks.

The company said on Friday revenue growth had dropped to 0.3 percent on an “organic” basis, excluding the effects of acquisitions, from 7 percent in the same period a year ago.

It said, however, it had seen good growth in its key product-related business, forecasting better growth and profitability in the second half of 2014 on the back of improving market conditions.

Overall group revenue growth reached 3.6 percent on a constant currency basis, the company said, adding that its operating margin had improved slightly as expected as it benefited from restructuring activities.

Mike van Dulken, head of research at brokerage Accendo Markets, noted the stock had been hard hit by the company’s confirmation that tough conditions had continued into the first four months of the year.

“With revenues barely growing organically and hindered by a strong (pound), cost control will be paramount with an outlook citing variable growth in key businesses and weak demand in others,” van Dulken added.

At 0816 GMT, shares in Intertek were down 5.1 percent to 2,930 pence. They fell as low as 2869p, their lowest since early March. (Editing by Brenda Goh and David Holmes)

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