LONDON (Alliance News) - Quality testing company Intertek PLC Monday reported lower profit for the first half of the year as the strength of sterling hit revenue earned abroad, but it predicted organic revenue growth in the second half of the year and beyond.
The company reported a pretax profit of GBP119.8 million for the six months to the end of June, down from GBP127.9 million a year earlier, as revenue declined to GBP1.02 billion, from GBP1.08 billion. Revenue would have increased 2.9% at constant exchange rates, thanks to acquisitions, with organic revenue at constant rates down 0.5%. It said sterling's strength knocked GBP89 million off its revenue.
Intertek said it had made progress exiting some of its low value contracts, and that helped lift its operating margin by 30 basis points although it was also the cause of the organic revenue decline. It booked restructuring costs of GBP9.7 million, up from GBP4.1 million in the year-earlier period.
It said it was seeing good growth in consumer goods and its commercial and electrical business, offset by weakness in its commodities and industry & insurance divisions.
"Organic revenue growth for the group will strengthen in the second half as one-off effects annualise and as we continue to see good growth in other areas of our portfolio," Chief Executive Wolfhart Hauser said in a statement, predicting high single-digit organic revenue growth over the "coming years".
Intertek raised its interim dividend to 16.0 pence, from 15.0p, as the restructuring also helped lift cash flow from operations by 20% to GBP148.2 million.
The company bought United Arab Emirates-based oil and gas industry testing company International Inspection Services Ltd for GBP40 million in cash on a debt-free basis. It also invested GBP52.1 million in organic capital projects, down from GBP61.0 million in the first half of 2013.