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03 May 2023 | 10:48

Intertek unveils new segmental growth strategy

(Sharecast News) - Quality assurance and testing specialist Intertek took the wraps off its new 'Intertek 30 AAA' growth strategy on Wednesday, aiming to unlock significant value growth opportunities. The FTSE 100 company was holding a capital markets event, presenting the plan to institutional investors and sell-side analysts.

It said the Intertek 30 AAA growth strategy would focus on strengthening its portfolio to achieve mid-single digit like-for-like revenue growth at constant currency, taking the margin back to the peak of 17.5% and beyond, as well as higher cash generation to fuel growth investments, and "more agile" organisation and high-performance capability.

The firm also announced that its current trading for 2023 was in line with guidance.

Intertek said it was aiming to achieve its growth targets by investing in technology and infrastructure, expanding its service offering, and improving operational efficiency.

The company was planning to expand its presence in high-growth markets, such as Asia-Pacific and Africa, and focus on sustainability, which the board said was "increasingly important" for customers and investors.

Intertek said its enhanced segmental disclosures would allow investors and analysts to better understand its performance across different markets and service lines.

"We have made significant progress on our portfolio which is poised for faster growth at the global level given that all business lines are expected to benefit from exciting structural growth and at the local level given our strong business line/country portfolio mix," said chief executive officer André Lacroix.

"To better reflect their respective growth drivers, we are expanding our segmentation to disclose our results in five divisions.

"We have made great progress on cash generation with conversion consistently in excess of 120% and when it comes to cash management, there is much more fuel in the tank."

Lacroix said the company expected higher cash generation to fuel growth investments, and deliver strong returns, as Intertek continued to pursue accretive disciplined capital allocation.

"Our Intertek 30 AAA growth strategy will capitalise on the best-in-class operating platform we have built and target the areas where we have opportunities to get better.

"We are focussed on delivering value consistently, targeting mid-single digit like-for-like revenue growth, margin accretion, and strong cash generation, while pursuing disciplined investments in attractive growth and margin ATIC spaces."

Intertek operates a "differentiated, high-quality growth business", André Lacroix added, with "excellent fundamentals" and "intrinsic" defensive characteristics.

"Our leading ATIC solutions are mission-critical for the world to operate safely and the growth in our end-markets is accelerating.

"The implementation of our Intertek 30 AAA growth strategy will leverage our high-performance earnings and cash compounder model which has generated 8% annual total shareholder returns over the last 10 years, to unlock the significant value growth opportunity ahead."

At 1027 BST, shares in Intertek Group were up 1.86% at 4,213p.

Reporting by Josh White for
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