Quality control and assurance services provider Intertek (ITRK) is impressing investors with positive results and a dividend hike.
The figures, for the year to 31 December 2017, show a 13.3% increase in pre-tax profit. There's also a 14.3% increase in its full year dividend.
Operation margins are up by 1.1% and the company expects to build on a 6.9% increase in organic revenue in 2018. The one obvious fly in the ointment is the resources division which is expected to see market conditions remain challenging in the first half.
The company plans to invest to take advantage of opportunities in the $250bn global quality assurance market.
ONE-OFFS CAST SHADOW
So far so good but looking beneath the headline figures reveals areas of concern. Analysts at Shore Capital remain worried about the number of one-off charges contained in the results. Adjusted pre-tax profit of £438.8m is nearly 12% higher than the statutory number of £393.3m.
Reiterating their ‘sell’ advice analysts Ben McSkelly and Robin Speakman comment: ‘These charges include £8m IT impairment, £8.8m PPE impairment related to a service line and £12.4m of restructuring costs, of this total it would appear around £12m are cash charges.
‘In a group of Intertek's size, global reach and range of products it is necessary for management to reposition the group for the best opportunities, however we struggle to differentiate ongoing business improvement from exceptional charges.’
