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UPDATE 1-Intertek says on track to deliver revenue growth target
August 4, 2014 / 9:06 AM / 3 years ago

UPDATE 1-Intertek says on track to deliver revenue growth target

(Adds CEO comments, shares, analyst comments)

By Li-mei Hoang

LONDON, Aug 4 (Reuters) - Britain’s Intertek Group, which tests goods to check they comply with regulatory standards, said it was on track to deliver single-digit revenue growth in 2015 after posting a 6.7 percent rise in half year pretax profit.

Chief Executive Wolfhart Hauser said the company, which checks standards on everything from oil to childrens’ toys, planned further acquisitions in the second half of the year and maintained a positive outlook despite being hit by the impact of a strong pound relative to currencies like the dollar and yuan.

“From 2015 onwards ... we will be back to higher single digit growth rates and so we think there is a positive outlook from where we are coming from,” he told Reuters.

“The real hit that we had to take is the currency ... because we are trading in more than 80 different currencies and the pound nearly strengthened to all of them,” said Hauser.

Intertek, which operates in more than 100 countries, said pretax profit rose to 140.9 million pounds ($237.08 million) at constant currency, and raised its interim dividend 6.7 percent to 16 pence per share. Currency headwinds dragged overall growth down by 8 percent in the first half of the year.

Analysts welcomed the results but Jefferies said it expected Intertek would have to trim its organic revenue target.

“The outlook statement is confident and organic revenue growth should ‘strengthen in the second half’ but consensus will need to trim by low single digits given the weaker organic growth profile,” said Jefferies analysts in a note.

Intertek has struggled over the past year after weak commodities markets prompted it to shrink its minerals business last year. It said that business had also been hit by an export ban in Indonesia.

Hauser, who has held the CEO role for nearly 10 years, said he aimed to spend up to 100 million pounds on acquisitions this year and was looking for businesses with new technologies - such as in battery testing - that would expand their reach in new industries, as well as companies that would give them a foothold in regions with strong growth such as Latin America and Asia.

“We have a good pipeline so we expect to do further acquisitions,” he said.

“We don’t have fixed target but we usually try to do between 50 and 100 million in acquisitions. Last year we did 120 million, so you can expect that in the second half, we will announce further acquisitions,” he added.

Shares in Intertek were up 2 percent to 2583 pence by 0851 GMT.

$1 = 0.5943 British Pounds Reporting by Li-mei Hoang; Editing by Neil Maidment and Sophie Walker

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