Intertek share price dives as it swings to a loss on oil price rout
Shares in London-listed Intertek slumped as much as 4.5 per cent to 2,868p per share today, after it swung to a loss in 2015.
The figures:
Intertek booked a £577m impairment charge in its industry services division on challenging trading conditions in the oil and gas industry, and reduced energy spending by its customers.
The charge contributed to the company posting a loss of £307.7m in the year ended 31 December, down from a profit of £252.2m in 2014.
This was on revenue growth of 3.2 per cent to £2.2bn, from £2.1bn a year earlier.
The full-year dividend rose 6.5 per cent to 52.3p per share.
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Why it's interesting:
Intertek carries out safety testing on trains, toys and a range of other products. But it also tests oil and equipment, and the headwinds plaguing this industry pushed it to an annual loss for 2015.
Oil and gas companies have had their balance sheets pummelled by tumbling Brent crude prices, which have shed around 70 per cent since 2014. It’s led them to reduce spending on services firms such as Intertek typically provide.
But Intertek's other divisions posted a good performance during this period. Minus the impairment charge, the firm made a pre-tax profit rose 4.4 per cent to £319.2m last year, from £300.2m in 2014.
This was also the company’s maiden set of annual results new chief executive Andre Lacroix who took the reins in May. He joined from join from multinational car dealer Inchcape, where he has been chief executive since 2005.
What Intertek said:
"We expect to deliver a solid organic growth performance in 2016, with group margins broadly stable year on year," the company said.
"Our products and trade-related businesses, which currently account for 90% of the group's earnings, should continue to benefit from good growth momentum, which will be partially offset by continuous challenging trading conditions in our resource-related businesses," it added.
In short:
Intertek booked a loss in its industry services division due to the embattled oil and gas industry, helping it swing to a loss in 2015, however the rest of the company performed well during this period.