Quality testing giant Intertek saw revenues and profits decrease on a drop off in oil and gas project work.
But the firm, which has testing facilities in Aberdeen, said it expects “near-term negative headwinds” in its oil and gas business to “ease”.
In note to investors, the FTSE 100 company said that around 40% of its annual revenues in the first half of the year were linked to the oil and gas industry – through technical inspection (capex), asset integrity management and non-destructive testing, as well as cargo inspection and testing.
Wolfhart Hauser, the firm’s chief executive, said he expects “continued weakness” this year in its oil and gas capex
business, which represents around 13% of group revenues.
Mr Hauser, who is retiring from the role in May after ten years with Intertek, will be replaced by André Lacroix, who joins the London headquartered-Intertek from automotive retailer and distributor Inchcape.
Robin Speakman, an analyst with Shore Capital, said Mr Lacroix is “likely to conduct a major review of continuing operations and the cost base” which he said “could have further negative implications for our forecasts through the next couple of years”.
“That said, this remains a quality business, in our opinion, that remains exposed to longer-term secular growth trends in testing and compliance; the balance sheet also remains robust,” he added in a note to investors.
Intertek yesterday revealed that income had fallen 4.2% to £2billion in the year, while pre-tax profits fell 4.7% to £300.2million.
In 2013, the company made a number of acquisitions including US-based building products testing and certificationfirm Architectural Testing for £59million vehicle engine testing company Tickford for £5.5million.
Mr Hauser said the firm aimed to continue on the acquisition trail.
He said: “Intertek delivered solid growth in its product-related businesses in 2014. However, we saw continuing headwinds in the oil and gas capex and mining sectors, and the effect of our strategic exit from certain low-value Industry contracts.
“Challenging conditions for our customers in oil and gas capex and minerals end-markets affected the level of demand for our services in these sectors during the year.
“Looking further ahead, we expect the near-term negative headwinds in our oil and gas capex business to ease. “Intertek is well
placed to deliver
mid-single digit organic revenue growth over the medium term, supplemented by growth from acquisitions.”
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