Investor Presentation

Transcription

1 Valued Quality. Delivered. Investor Presentation May 2011 For further information contact: +44 (0)

2 Cautionary statement regarding forward-looking statements This presentation contains certain forward-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 they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast. May Investor Presentation May

3 Agenda Profile Financial performance 2010 divisional performance Acquisition of Moody Investor Presentation May

4 Profile Origins back to 1885 Floated 2002, entered FTSE 100 in 2009 Market Capitalisation 3.4bn 2010 Sales 1.4bn, EBITDA 283m (20.6%) 9.5% Average FY Organic Revenue growth

5 Quality and safety services Our organisation Industries we operate in Services Supporting our customers in their global trade Intertek as One Our organisation The industries we operate in What What we we do do Aerospace & Automotive Consumer Goods Building Products Chemical Commercial & Electrical Consumer Goods & Retailers Electrical & Electronic Oil, Chemical & Agri Energy Food & Agriculture Analytical Government & Institutions Industrial Industrial IT & Telecom Medical & Pharmaceutical Minerals Petroleum Textile, Apparel & Footwear Toys, Games & Hardlines Testing Inspection Certification Auditing Outsourcing Advisory Training Quality Assurance 30,000 employees 5

6 Our people We are Electrical engineers Chemists Mechanical engineers Medical doctors Consultants Biologists Inspectors Geologists Advisors to Government Auditors 6

7 What we do for our customers Support Their products and processes in their global trade in all quality related aspects Speed to Market Cut lead times and costs without compromising quality safety or environment Protect Reduce financial, operational, reputational and environmental risks 7

8 TIC industry composition TIC Industry Total > $200bn Intertek Global Supply Chain > $100bn Compulsory Third Party Obligation In house/outsourced Voluntary 10% 45% 45% Regional Statutory > $100bn 8

9 Leading the charge $bn 200 Market potential In-house TI (Testing & Inspection) 40 TIC Industry Companies Outsourcing Value added services 23 Top 10 Players 15 Quoted Cos Intertek 9

10 Growth drivers 10

11 Market drivers New Technologies Changing Product Life Cycles Technical Standards Development Supply Chain Costs Supply Chain Complexity Desire for Supply Chain Flexibility Access to Low Cost Markets CO2 CSR Health Effects Environmental Impacts Biodegradable & Recycling Product Life Cycle Quality Issues Publicity Awareness Brand Competitiveness Regulations Prosecutions & Enforcement Global Access Product Supply Chain Social-Environmental Quality Issues Regulation Internal considerations Clients External considerations 11

12 Our Market Drivers in Action New technology 1 Standard hrs testing 8 Standards 250 hrs testing Electrical Safety: BS EN Electrical & Mechanical Safety: BS 3456 Part 2 Mechanical Safety: BS EN EMC: BS EN ; BS EN ; BS EN ; BS EN ; Chemicals: BS EN Waste: BS EN Labelling: BS EN60456 Energy Efficiency: BS EN

13 Our Market Drivers in Action Supply chain complexity Produced in 3 Countries Sold in components Local sourcing 1980 Compliance Testing (1 Standard per country) 2010 Produced in 6 Countries Sold in components Global sourcing Performance Testing & Consulting for R&D and sales differentiation Auditing suppliers for Ethics, Environment, Quality Systems Advising on new market entry rules: Global market access certification program Training on new regulations & standards Consulting for Hazardous substances programme 13

14 Our Market Drivers in Action Future technologies? Appliance communicates with the grid over internet & telephony Telecom technology and wireless communication Smart functionality responds to individual user habits for improved energy & water efficiency Ongoing development of safety & environmental standards Media scrutiny of technology failures, product recalls & environmental breaches Carbon foot print?? 14

15 Strong growth market exposure Revenue split EMEA 29% Americas 33% Asia Pacific 38% Emerging Markets 33% 15

16 A strong and consistent growth record Revenue Operating profit (adjusted) m 1,475 20% CAGR m % CAGR 1,400 1,325 1,250 1, ,100 1,

17 Agenda Profile Financial performance 2010 divisional performance Acquisition of Moody Investor Presentation May

18 Financial highlights For the twelve months to 31 December 2010 Revenue 1,374.2m Operating profit m Operating profit margin % +11.1% at actual +7.7% at constant organic +8.9% at actual +5.9% at constant organic -30bps at actual -30bps at constant organic Profit before tax m +10.6% Diluted adjusted EPS p +9.7% Operating cash flow 271.4m -2.5% 1. Before separately disclosed items 18

19 Organic revenue growth Organic revenue growth * Resilient business model % Rapid return to strong growth Intertek as One supporting revenue growth to 08 Avg Q1 09 H1 09 YTD Q3 09 FY 09 Q1 10 H1 10 YTD Q3 10 FY 10 * Constant currency. YTD at each quarter 19

20 Acquisition strategy We are an acquisitive company; our strategy is: R&D New expertise Widen the portfolio Complementary services Increase scale Service lines/industries Leverage synergies Group wide rollout acquisitions 100m cost 56m new revenue acquisitions 79m cost 40m new revenue acquisitions 29m cost 32m new revenue acquisitions 41m cost 37m new revenue 2011 Moody 450m cost 293m new revenue 20

21 Agenda Profile Financial performance 2010 divisional performance Acquisition of Moody Investor Presentation May

22 Our divisions FY revenue by division Analytical Services 11% Industrial Services 7% Minerals 5% Oil, Chemical & Agri 33% Commercial & Electrical 19% Consumer Goods 25% 22

23 Consumer Goods 25% of Group Revenue 48% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 5.2% Operating profit % 1.8% Margin 32.0% (110)bps (110)bps Textiles testing continued growth Toys testing back to strong and steady growth in 2H Inspection and food testing also grew well with improving margins Drivers Increasing quality and safety concerns Increasing product variety Emerging market consumers Shorter time to market, cost reductions, brand value support to retailers with global supply chains Segments & Clients Textiles, toys & hardlines, food, auditing, health & beauty 23

24 Commercial & Electrical 19% of Group Revenue 17% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 7.8% Operating profit % 7.0% Margin 14.2% (10)bps (10)bps Medical appliances, lighting, HVAC - strong growth Alternative energy / energy storage contributing well Building products decline Drivers New product development Energy efficient products Market share gains Clients seeking global market access faster and at lower cost Segments & Clients Home appliances, lighting, medical, building, industrial, heating & air conditioning (HVAC), IT, renewable energy, automotive, aerospace & life safety 24

25 Oil, Chemical & Agri 33% of Group Revenue 23% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 8.0% Operating profit % 11.0% Margin 11.3% 40bps 30bps Emerging markets fastest growth End of year improvement in USA, especially higher margin testing Government Services and Agri performing well Drivers Emerging economies demand for oil Alternative fuels Increasing global trade flows in agri, oil and petrochemical Segments & Clients Cargo Inspection, Non-inspection related Testing, Agri, Government Services 25

26 Analytical Services 11% of Group Revenue 6% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 6.3% Operating profit % 1.4% Margin 9.6% (100)bps (50)bps Growth in chemicals and materials Decline in pharma Two new outsourcing deals at low initial margins Drivers Development of new lighter, stronger advanced materials, technologies and complexity Outsourcing of in-house laboratories Quality demands in Upstream Biologics (macro-molecules), biosimilars Segments & Clients Upstream oil & gas; Downstream Chemicals & Materials; Pharma 26

27 Industrial Services 7% of Group Revenue 3% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 7.4% Operating profit % 0.0% Margin 7.8% (40)bps (30)bps Strong 2H revenue acceleration Good growth for SC and H&E 2H sequential margin improvement Drivers Rising oil price and energy demand driving capex and opex Full bid pipeline Growth from Moody acquisition Systems certification now with global scale Health, safety & environment and risk consulting, greenhouse gas services Segments & Clients Industry; Systems Certification; Health & Environment 27

28 Minerals 5% of Group Revenue 3% of Group Operating Profit 2010 Performance constant exchange 2010 Change Organic change Revenue % 25.0% Operating profit % 65.9% Margin 11.1% 270bps 270bps Rapid ramp up in year New contracts on new mining capex Higher Asia trade inspection Improving laboratory utilisation rates Drivers Economic growth, especially from emerging economies Increasing demand and price of minerals Demand for analysis of precious metals, base metals and their raw content, eg iron ore, bauxite, coal and coke Segments & Clients Mining, Exploration and Trade 28

29 Agenda Profile Financial performance 2010 divisional performance Acquisition of Moody 29

30 Moody Acquisition Completed 28 April 2,500 People 60 Countries, 80 Offices A strategic deal with strong financial returns $m % CAGR Total Moody Revenue ($m) Price c $730m ( 450m) Revenue $476m ( 293m) Funded from new & existing debt EPS: 2011 accretive; strong long term accretion 30

31 Overview Technical Inspection Industry Services 87% Revenue Asset Integrity Expert Consulting System Certification 13% Revenue System Certification Intertek assumes a leadership position in quality & safety services for the global energy market Creates leading global technical inspection platform for energy infrastructure Inspection Technical Auditing Expediting Supervision Assessments Inspection Risk Assessment Data Analysis Safety Training Welding & Materials Training Placement of Experts ISO 9000/14000 Risk-based Auditing Food & Auto > 30,000 Certificates Stronger service portfolio to be leveraged across the Intertekclient base Increase penetration of existing and new clients in SC 2010 Industry Revenue ( ) Moody 258m Intertek 63m 2010 SC Revenue ( ) Moody 39m Intertek 23m Complementary geographic coverage Total 321m Total 62m 31

32 Energy market drivers Energy growth Increasing demand, capex and maintenance: ~10% pa Emerging Markets Environmental needs Fast growth in emerging markets Renewable infrastructure expansion; Environmental concerns Globalisation Globalisation of multinationals supply chain; Outsourcing of Q&S Quality & Safety Increasing Q&S across geographies; Higher incident awareness 32

33 A new leadership position Commodities & Materials Quality Retail & Manufactured Products Safety Industry Assets 33