Intertek Group Plc · LSE:ITRK
Intertek — H1 2009 Earnings Presentation
40 slides from Intertek's earnings presentation, Aug 3, 2009
Slide 1: 2009 Half Year Results Presentation
2009 Half Year Results Presentation 3 August 2009 Wolfhart Hauser Chief Executive Officer Bill Spencer Chief Financial Officer
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation contains certain for forward-looking ard looking statements with respect to the financial condition, results, operations and business of Intertek Group plc. These statements and forecasts involve risk and uncertainty because
Slide 3: Financial Performance
Bill Spencer Chief Financial Officer Financial Performance 2009 Half Year Results Presentation
Slide 4: Financial highlights
Financial highlights For the six months to 30 June 2009 +36.1% at actual Revenue £622.3m +10.5% at constant + 6 6.1% 1% at constant organic +50.7% at actual Operating profit 1 £103 5m +13.6% £103.5m +13 6% at constant + 8.5% at constant organic +160 bps at actual Operating profit margin 16.6% + 40 b
Slide 5: Highlights continued
Highlights continued For the six months to 30 June 2009 Operating cash flow 1 £117.1m Up 106.5% Profit before tax £87.7m Up 49.9% Diluted adjusted EPS 2 40.2p Up 49.4% 1. Operating cash flow is before capital expenditure 2. Diluted adjusted earnings per share based on operating profit before amortis
Slide 6: Profit before tax
Profit before tax Half Year 2009 2008 £m @ actual exchange rates Adjusted operating profit 1 103.5 68.7 g Amortisation of acquisition intangibles ((6.5)) ((4.4)) Statutory operating profit (up 50.9%) 97.0 64.3 Net interest expense (9.3) (5.8) Profit before tax (up 49.9%) 87.7 58.5 1. Operating profi
Slide 7: Taxation
Taxation Half Year 2009 2008 £m @ actual exchange rates Profit before tax 87.7 58.5 Tax ((23.9)) ((15.5)) Profit after tax (up 48.4%) 63.8 43.0 Reported tax rate 27.3% 26.5% www.intertek.com 03/08/2009 7
Slide 8: Dividends
Dividends Half Year 2009 2008 Interim dividend per share 8.2p 7.1p Growth in dividend per share 15.5% 22.4% I t i dividend Interim di id d amountt £13 0 £13.0m £11 2 £11.2m 10.0 Interim Dividend 8.0 Pence 6.0 4.0 2.0 0.0 2005 2006 2007 2008 2009 www.intertek.com 03/08/2009 8
Slide 9: Operating cash flow
Operating cash flow Half Year 2009 2008 £m @ actual exchange rates EBITDA (up 49.9%) 132.4 88.3 Change g in working g capital p ((15.3)) ((31.6)) Operating cash flow (up 106.5%) 117.1 56.7 Debtor days (actual exchange rates) 62 71 Debtor days (constant exchange rates) 59 63 www.intertek.com 03/08/20
Slide 10: Free cash flow
Free cash flow Half Year 2009 2008 £m @ actual exchange rates Operating cash flow 117.1 56.7 Net interest (5.7) (5.5) Taxation (35.5) (19.3) Capital expenditure (23.1) (26.7) Free cash flow 52.8 5.2 Capital p expenditure p to LTM sales % 5.5% 6.1% www.intertek.com 03/08/2009 10
Slide 11: Acquisitions
Acquisitions • Acquisitions A i iti ffor £29 £29.0m 0 (1H08 (1H08: £40 £40.0m) 0 ) • WISco (Industrial, USA) - £20.1m • Aptech (Industrial, USA) - £3.0m + £5.6m contingent • Sagentia Catella (C&E, Sweden) - £0.3m www.intertek.com 03/08/2009 11
Slide 12: Net debt
Net debt June FY Dec June £m @ actual exchange rates 2009 2008 2008 Borrowings 394.7 421.6 322.8 Cash (116.1) (113.3) (83.2) Net debt 278.6 308.3 239.6 Net debt to LTM EBITDA 1.2x 1.5x 1.4x www.intertek.com 03/08/2009 12
Slide 13: Financial summary
Financial summary • High Hi h revenue and d profit fit growth th rates t iin a difficult environment • Helped by exchange translation, due to weak pound • Excellent cash generation • Strong balance sheet www.intertek.com 03/08/2009 13
Slide 14: Operating Performance
Wolfhart Hauser Chief Executive Officer Operating Performance 2009 Half Year Results Presentation
Slide 15: Our industries
Our industries Our organisation Industries we operate in What we do Supporting our customers in their global trade Our organisation The The industries industries we we operate operate in in What Whatwe wedodo Aerospace & Automotive Testing Consumer Goods Building Products Chemical Inspection Commerc
Slide 16: Targeting the entire supply chain
Targeting the entire supply chain Product Supply Chain Component DESIGN RETURNS END RECALLS • Product Component PRODUCTION CONTROL DISTRIBUTION RETAIL & • Process P RECYCLING Component www.intertek.com 03/08/2009 16
Slide 17: Targeting the entire supply chain
Targeting the entire supply chain Commodity Supply Chain Oil, Gas, Minerals, Renewables RENEWABLES UPSTREAM DESIGN CONSTRUCTION PRODUCTION EXPLORATION • Plant Pl t • Infrastructure I f t t & STORAGE DISTRIBUTION • Extraction • Equipment TRANSPORT DOWNSTREAM PRODUCTS BLENDING Gasoline, LNG, RETAIL DI
Slide 18: TIC Industry composition
TIC Industry composition TIC Industry Intertek Total > $100bn Compulsory Third Party ~ 10% Global/ Supply Obligation Chain ~ 45% In house/Outsourced > $50bn Voluntary ~ 45% Regional/ Statutory > $50bn $50b www.intertek.com 03/08/2009 18
Slide 19: The growth drivers
The growth drivers www.intertek.com 03/08/2009 19
Slide 20: A highly resilient business model
A highly resilient business model • Main M i growth th drivers di iindependent d d t off economic environment • Customer penetration is low • Barriers to entry are high • Balanced portfolio of industries, geographies and customers • High single digit organic growth through cycle www.intertek.com 03/
Slide 21: Consumer Goods
Consumer Goods 26 1% 26.1% 51 9% 51.9% of Group of Group Revenue Profit Paul Yao Source 2009 1H Revenue & Adjusted Operating Profit Textiles; Toys; Hardlines; Food www.intertek.com 03/08/2009 21
Slide 22: Margin improvement
Margin improvement Consumer Goods £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 162.5 20.2% 15.9% O Operating ti profit fit 53 7 53.7 29 1% 29.1% 27 3% 27.3% Margin 33.0% +220 bps +310 bps www.intertek.com 03/08/2009 22
Slide 23: Consumer Goods review of 1H 2009 and outlook
Consumer Goods Review of 1H 2009 Outlook • Growth supported by CPSIA • CPSIA growth will regulation moderate in 2H • Azo-dye testing of textiles for • Increased global Europe is strong awareness of toy and • Inspection declined - volume product safety underpin and pricing growth • Investment in new
Slide 24: Commercial & Electrical
Commercial & Electrical 20 1% 20.1% 17 2% 17.2% of Group of Group Revenue Profit Gregg Tiemann Source 2009 1H Revenue & Adjusted Operating Profit Home Appliances; Lighting; Medical; Building; IT & Telecom; HVAC; Automotive www.intertek.com 03/08/2009 24
Slide 25: Difficulties in some industries
Difficulties in some industries Commercial & Electrical £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 125.2 2.5% (0.7)% O Operating ti profit fit 17 8 17.8 7 9% 7.9% (5 5)% (5.5)% Margin 14.2% +70 bps -60 bps Includes £0.5m restructuring www.intertek.com 03/08/2009 25
Slide 26: Commercial & Electrical review of 1H 2009 and outlook
Commercial & Electrical Review of 1H 2009 Outlook • Automotive and Wireless • Automotive could decline revenue and profit decline further • Japan decline across all • Solar and wind power industries investments • Industrial, Renewables, • Positive overall growth Lighting g g and Medical show expecte
Slide 27: Oil, Chemical & Agri (including Government Services)
Oil, Chemical & Agri (including Government Services) 33 0% 33.0% 19 6% 19.6% of Group of Group Revenue Profit Jay Gutierrez Source 2009 1H Revenue & Adjusted Operating Profit Petroleum; Chemical; Agriculture www.intertek.com 03/08/2009 27
Slide 28: Good top line
Good top line Oil, Chemical & Agri £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 205.6 4.5% 4.5% O Operating ti profit fit 20 3 20.3 (10 6)% (10.6)% (10 6)% (10.6)% Margin 9.9% -160 bps -160 bps www.intertek.com 03/08/2009 28
Slide 29: Oil, Chemical & Agri review of 1H 2009 and outlook
Oil, Chemical & Agri Review of 1H 2009 Outlook • USA flat, declines in • Slightly improving 2H higher margin testing performance • Good growth in Asia, • Higher oil price will Europe and Middle East support non-inspection • Biofuels decline due to related testing low oil p price • Government Service
Slide 30: Analytical Services
Analytical Services 10 8% 10.8% 6 3% 6.3% of Group of Group Revenue Profit Dr. Andrew Swift Source 2009 1H Revenue & Adjusted Operating Profit Oil & Gas; Lubricants; Chemical; Pharmaceutical www.intertek.com 03/08/2009 30
Slide 31: Steady progress
Steady progress Analytical Services £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 66.9 5.4% 3.8% O Operating ti profit fit 65 6.5 4 8% 4.8% 7 1% 7.1% Margin 9.7% -10 bps +30 bps www.intertek.com 03/08/2009 31
Slide 32: Analytical Services review of 1H 2009 and outlook
Analytical Services Review of 1H 2009 Outlook • Downstream ggood ggrowth • New standard (GF-5) will • Upstream steady with drive lubricants testing some project deferrals • Expect larger outsourcing • Ph Pharma d down: projects restructuring in UK • Stronger oil price supporting upstream • Pharma ou
Slide 33: Industrial Services
Industrial Services 6 5% 6.5% 3 5% 3.5% of Group of Group Revenue Profit Stefan Butz Source 2009 1H Revenue & Adjusted Operating Profit Industrial; Systems Certification; Health & Environment www.intertek.com 03/08/2009 33
Slide 34: Building scale
Building scale Industrial Services £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 40.2 67.5% 13.8% O Operating ti profit fit 36 3.6 200 0% 200.0% 75 0% 75.0% Margin 9.0% +400 bps +100 bps www.intertek.com 03/08/2009 34
Slide 35: Industrial Services review of 1H 2009 and outlook
Industrial Services Review of 1H 2009 Outlook • Global supply chain driving • Good prospects and strong ttechnical h i l iinspection ti bbusiness i synergies i withith OCA and d • Asset Integrity Management Analytical increasing in size and scale • Focus on value adding • System certification weak i
Slide 36: Minerals
Minerals 3 5% 3.5% 1 5% 1.5% of Group of Group Revenue Profit Marc Hoffer Source 2009 1H Revenue & Adjusted Operating Profit Mining and Exploration www.intertek.com 03/08/2009 36
Slide 37: Reduced demand
Reduced demand Minerals £m @ constant exchange Half Year Organic Change rates 2009 change Revenue 21.9 0.9% (3.3)% O Operating ti profit fit 16 1.6 (44 8)% (44.8)% (40 7)% (40.7)% Margin 7.3% -610 bps -490 bps www.intertek.com 03/08/2009 37
Slide 38: Minerals review of 1H 2009 and outlook
Minerals Review of 1H 2009 Outlook • Existingg mine sites • Uranium miningg expected production maintained to increase • Reduction of new • Gold mining robust exploration projects • C t under Costs d control t l • Excluding reallocation from OCA, organic g g growth was 4% www.intertek.com 03/08/2009
Slide 39: Revenue growth at constant rates
Revenue growth at constant rates Half Year 2009 By Division Consumer Goods 20.2% Commercial & Electrical 2.5% Oil, Chemical & Agri 4.5% Analytical Services 5.4% Industrial Services 67.5% Minerals 0.9% 10.5% www.intertek.com 03/08/2009 39
Slide 40: Outlook
Outlook • An excellent half year result • Expect good organic revenue growth for full year • Demonstrates resilience of business model • Medium and longer term outlook positive • A Acquisition i iti opportunities t iti opening i up www.intertek.com 03/08/2009 40