Intertek Group Plc · LSE:ITRK
Intertek — FY2009 Earnings Presentation
44 slides from Intertek's earnings presentation, Mar 8, 2010
Slide 1: 2009 Full Year Results Presentation
2009 Full Year Results Presentation 8 March 2010 Wolfhart Hauser Bill Spencer Chief Executive Officer 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 Full Year Results Presentation
Slide 4: Financial highlights
Financial highlights For the twelve months to 31 December 2009 +23.3% at actual Revenue £1,237.3m + 7.0% at constant + 3 3.5% 5% at constant organic +26.9% at actual Operating profit 1 £209 0m + 66.1% £209.0m 1% at constant + 3.7% at constant organic +50 bps at actual Operating profit margin 16.9% -
Slide 5: Highlights continued
Highlights continued For the twelve months to 31 December 2009 Operating cash flow 1 £278.4m Up 43.5% Profit before tax £169.2m Up 22.1% Diluted adjusted EPS 2 81.5p Up 21.5% 1. Operating cash flow is before capital expenditure 2. Diluted adjusted earnings per share based on operating profit before
Slide 6: Profit before tax
Profit before tax £m @ actual exchange rates 2009 2008 Adjusted j operating p gpprofit 1 209.0 164.7 Amortisation of acquisition intangibles (12.8) (9.6) Impairment of goodwill - (0.5) Non-recurring costs (9.5) (6.7) Statutory operating profit (up 26.2%) 186.7 147.9 Net interest expense (17 5) (17.5
Slide 7: Taxation
Taxation £m @ actual exchange rates 2009 2008 Profit before tax 169.2 138.6 Tax ((45.5)) ((36.4)) Profit after tax (up 21.0%) 123.7 102.2 Reported tax rate 26.9% 26.3% www.intertek.com 2009 Full Year Results Presentation 08/03/2010 7
Slide 8: Dividends
Dividends 2009 2008 Full year dividend 25.5p 20.8p per share Growth in dividend 22.6% 15.5% per share Dividend cover 3 2x 3.2x 3 2x 3.2x www.intertek.com 2009 Full Year Results Presentation 08/03/2010 8
Slide 9: Operating cash flow
Operating cash flow £m @ actual exchange rates 2009 2008 EBITDA (up 27.2%) 256.2 201.4 Change g in working g capital p 22.2 ((7.4)) Operating cash flow (up 43.5%) 278.4 194.0 Debtor days (actual exchange rates) 65 83 Debtor days (constant exchange rates) 64 70 www.intertek.com 2009 Full Year Results
Slide 10: Free cash flow
Free cash flow £m @ actual exchange rates 2009 2008 Operating cash flow 278.4 194.0 Net interest (15.1) (15.0) Taxation (59.6) (36.6) Capital expenditure (52.8) (67.6) Free cash flow 150.9 74.8 Capital expenditure to revenue % 4.3% 6.7% www.intertek.com 2009 Full Year Results Presentation 08/03/2010
Slide 11: Acquisitions
Acquisitions A Acquisitions i iti ffor £30 £30.8m 8 (2008 (2008: £83 £83.1m) 1 ) • WISco (Industrial, USA) - £20.1m • Aptech (Industrial, USA) - £3.5m + £6.9m contingent • Sagentia Catella (C&E, Sweden) - £0.3m Good pipeline of opportunities www.intertek.com 2009 Full Year Results Presentation 08/03
Slide 12: Net debt
Net debt £m @ actual exchange rates 2009 2008 Borrowings 335.6 421.6 Cash (134.2) (113.3) Net debt 201.4 308.3 Net debt to EBITDA 0.8x 1.5x www.intertek.com 2009 Full Year Results Presentation 08/03/2010 12
Slide 13: Debt maturities
Debt maturities as at 8 March 2010 www.intertek.com 2009 Full Year Results Presentation 08/03/2010 13
Slide 14: Liquidity position at 31 December 2009
Liquidity position at 31 December 2009 £m @ actual exchange rates 2009 2008 Debt facilities 600 3 600.3 612 4 612.4 Repayments to 31 December (109.9) (88.0) Borrowings (331.9) (417.7) Letters of credit (5.3) (8.9) Undrawn committed borrowing g facilities 153.2 97.8 Cash 134.2 113.3 Liquid funds 287.
Slide 15: Organic revenue growth & EPS 2003 to 2009
Organic revenue growth & EPS 2003 to 2009 www.intertek.com 2009 Full Year Results Presentation 08/03/2010 15
Slide 16: Financial summary
Financial summary Strong operating St ti performance, f and d cash h flow fl in i a year off challenging economic conditions www.intertek.com 2009 Full Year Results Presentation 08/03/2010 16
Slide 17: Operating Performance
Wolfhart Hauser Chief Executive Officer Operating Performance 2009 Full Year Results Presentation
Slide 18: Our industries
Our industries www.intertek.com 2009 Full Year Results Presentation 08/03/2010 18
Slide 19: 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 2009 Full Year Results Presentation 08/03/2010 19
Slide 20: Leading the charge
Leading the charge $bn 200 Market p potential In-house TI ((Testing g & Inspection) p ) Value added 40 TIC Industry I d t Companies C i services Outsourcing 20 Top 10 Players 14 Quoted Cos I t t k Intertek www.intertek.com 2009 Full Year Results Presentation 08/03/2010 20
Slide 21: Strong growth market exposure
Global Intertek Strong gggrowth market exposure p EMEA Revenue split 29% Americas 34% Asia Pacific 37% Emerging Markets 32% www.intertek.com 2009 Full Year Results Presentation 08/03/2010 21
Slide 22: Impacting volume related business 30% of Intertek
Impacting volume related business 30% of Intertek 2009 2010 2011 Global trade growth* (12.3)% 5.8% 6.3% * IMF update 26 January 2010 www.intertek.com 2009 Full Year Results Presentation 08/03/2010 22
Slide 23: Global trade market drivers
1 GLOBAL TRADE 2 MARKET DRIVERS Product variety Some correlation to GDP growth Quality, Safety, Erratic upwards trend, Environmental & CSR independent of economic requirements conditions 2009 2010 2011 Global GDP growth (0.8)% 3.9% 4.3% www.intertek.com 2009 Full Year Results Presentation 08/03/2010
Slide 24: Expansion & market share outsourcing
1 GLOBAL TRADE 2 MARKET DRIVERS 3 EXPANSION & MARKET SHARE 4 OUTSOURCING Larger outsourcing deals relatively independent of economy Overflow work correlated to economic conditions www.intertek.com 2009 Full Year Results Presentation 08/03/2010 24
Slide 25: 2009 Full Year Results Presentation
www.intertek.com 2009 Full Year Results Presentation 08/03/2010 25
Slide 26: Intertek as One progressing well
Intertek as One progressing well • Cross C di divisional i i l selling lli – key k significant i ifi t wins i iin retail, automotive and general industrial • Country management system extended with cost savings from shared purchasing • First country shared service centre now live in US www.intertek.
Slide 27: Consumer Goods
Consumer Goods of Group 26% Revenue Paul Yao Organic £m @ constant exchange rates 2009 Change change Revenue 320 9 320.9 12 4% 12.4% 9 3% 9.3% Operating profit 105.5 16.8% 16.6% Margin 32.9% 120bps 210bps Textiles; Toys; Hardlines; Food; CSR; Health & Beauty
Slide 28: Consumer Goods: Review of 2009 and Outlook
Consumer Goods Review of 2009 Outlook • Growth was 1H weighted due • 1H will continue with low growth to CPSIA ((US toys y legislation) g ) due to tough g comparables p • 2H growth on tough • CPSIA expected to remain at comparables still good at 3.3% high levels, with potential • Textiles and Toys (
Slide 29: Commercial & Electrical
Commercial & Electrical of Group 20% Revenue Gregg Tiemann Organic £m @ constant exchange rates 2009 Change change Revenue 244 8 244.8 2 3% 2.3% 0 4% 0.4% Operating profit 34.7 (2.0)% (8.7)% Margin 14.2% (70)bps (120)bps Home Appliances; Lighting; Medical; Building; IT & Telecom; HVAC; Renewable Ene
Slide 30: Commercial & Electrical Marks
Commercial & Electrical Marks www.intertek.com 2009 Full Year Results Presentation 08/03/2010 30
Slide 31: Commercial & Electrical: Review of 2009 and Outlook
Commercial & Electrical Review of 2009 Outlook • Pick up in 2H growth • Expect some rebound in 2009 • Growth in Alternative Energy and weak areas: Lighting strongest • Delayed product launches • Automotive, Wireless and • IT volatile, but growth has to Consumer Electronic weakest come from new produ
Slide 32: Oil, Chemical & Agri
Oil, Chemical & Agri of Group 33% Revenue Jay Gutierrez Organic £m @ constant exchange rates 2009 Change change Revenue 406 7 406.7 2 2% 2.2% 2 2% 2.2% Operating profit 43.7 (7.2)% (7.2)% Margin 10.7% (110)bps (110)bps Oil Cargo; Free Standing Testing; Agriculture; Government Services
Slide 33: Oil, Chemical & Agri: Review of 2009 and Outlook
Oil, Chemical & Agri Review of 2009 Outlook • Diversification has protected • Underperforming labs being revenue restructured • Decline in North America • North America remains tough • Growth in Latin America, Middle with pricing pressure East & Asia • Higher margin Bio-fuels Bio fuels and • North A
Slide 34: Analytical Services
Analytical Services of Group 11% Revenue Andrew Swift Organic £m @ constant exchange rates 2009 Change change Revenue 137 5 137.5 4 3% 4.3% 4 0% 4.0% Operating profit 14.6 (2.0)% (1.5)% Margin 10.6% (70)bps (60)bps Upstream; Chemicals & Materials; Pharmaceutical
Slide 35: Analytical Services: Review of 2009 and Outlook
Analytical Services Review of 2009 Outlook • Upstream grew well • Reduced exploration but throughout year production related work • Despite impact of chemical and enhanced oil recovery industry, y Chemicals and studies will boost revenue Materials maintained slow • Expect improvement in growth Pharm
Slide 36: Industrial Services
Industrial Services of Group 6% Revenue Stefan Butz Organic £m @ constant exchange rates 2009 Change change Revenue 80 7 80.7 53 1% 53.1% 6 2% 6.2% Operating profit 6.5 91.2% 38.5% Margin 8.1% 160bps 90bps Industry; Systems Certification; Health & Environment
Slide 37: Industrial Services: Review of 2009 and Outlook
Industrial Services Review of 2009 Outlook • Some delays emerging on • Weak 1H 2010 until newly infrastructure projects funded projects come on • Systems Certification stream revenues maintained • Advisory to pick up with despite automotive REACH, Greenhouse Gas exposure Emissions www.intertek.com 2
Slide 38: Minerals
Minerals of Group 4% Revenue Marc Hoffer Organic £m @ constant exchange rates 2009 Change change Revenue 46 7 46.7 (4 9)% (4.9)% (7 4)% (7.4)% Operating profit 4.0 (32.2)% (29.1)% Margin 8.6% (350)bps (270)bps Mining and Exploration
Slide 39: Minerals: Review of 2009 and Outlook
Minerals Review of 2009 Outlook • Reduced exploration • Expect to improve as impacted division exploration picks up and • Cost reductions made metals prices stabilise without losing g expertise p or • New contracts from new capacity mine-sites being tendered www.intertek.com 2009 Full Year Results P
Slide 40: Outlook
Outlook • Expect to continue growing organically in 2010 at similar levels to 2009 • Expect 2H growth to be better than 1H as economic conditions improve and tough comparatives annualise • Long term growth will come from supplying more added-value services along the supply chain, deepening our custo
Slide 41: 2009 Full Year Results Presentation
www.intertek.com 2009 Full Year Results Presentation 08/03/2010 41
Slide 42: Q&A
2009 Full Year Results P Presentation t ti Q&A
Slide 43: Growth % constant organic by division
Growth % constant organic by division 1H 2H FY Revenue Revenue Revenue Consumer Goods 15.9% 3.3% 9.3% Commercial & Electrical (0.6)% 1.4% 0.4% Oil, Chemical & Agri 4.6% 0.0% 2.2% Analytical Services 4.0% 4.0% 4.0% Industrial Services 13.9% (0.9)% 6.2% Minerals (3.5)% (10.4)% (7.4)% Group 6.1% 1.0% 3
Slide 44: Growth % constant by division
Growth % constant by division 1H 2H FY Revenue Revenue Revenue Consumer Goods 20.3% 5.4% 12.4% Commercial & Electrical 2.5% 2.2% 2.3% Oil, Chemical & Agri 4.6% 0.0% 2.2% Analytical Services 5.4% 3.3% 4.3% Industrial Services 67.6% 40.2% 53.1% Minerals 0.9% (9.3)% (4.9)% Group 10.5% 3.7% 7.0% www.int