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Intertek’s run of rising shareholder payouts to continue

The growing risks facing global corporations is good news for shareholders of quality control group Intertek who are in line for a tenth consecutive bumper payout.
The FTSE 100 group, which provides quality testing and assurance in more than 100 countries, is now within a rare group of 26 top-tier firms which have increased shareholder payouts every year for a decade.
Intertek’s shareholders have ticked the box on rising dividends for ten years straight as confidence in the $250bn global quality assurance industry strengthens.
The group’s rising profits helped boost the full year dividend per share by over 14pc to 71.3p per share for last year, and shareholders can expect a dividend payout ratio of around 50pc of its earnings from 2018, the group said.
Intertek’s full year pre-tax profits have climbed in line with the growing appetite for risk management services and reached ?393.3m last year from ?347.1m the year before.
Intertek
Intertek attributed the profit boom to an increasing focus on risk management, global trade flows, expanding regulations, and more complex sourcing and distribution operations.
An increase in technological innovations, global energy demand and government investments has also boosted the need for corporations to tighten up their quality controls.
Andre Lacroix, Intertek’s chief executive and former boss of Euro Disney, said the group is “uniquely positioned to seize these exciting growth opportunities” across multiple industries by tapping its global network of subject-matter experts located across 1,000 testing facilities in over 100 countries.
Intertek’s run of rising shareholder payouts to continue

Intertek boss Andre Lacroix

Credit:
JEAN-PIERRE MULLER/AFP
Analysts at AJ Bell said Intertek’s streak of dividend increases dates back to 2004 and analysts expect the company to add to its run in 2018 and 2019.
“Even though the forecast yield for 2018 of 1.5pc may not look exciting, a rising dividend should drag a share price higher over time,” the analysts said in a research note.
“In 2008, Intertek’s dividend was 20.8p and the price on 1 March 2008 was 889p – for a 2.3pc yield. But had investors bought at 880p and held on they would now be banking a 71.3p dividend for an 8.1pc yield on the price paid.
"That basic maths shows why dividend growth is so powerful,” the note added.
However, analysts at Shore Capital have warned that the quality assurance giant may need to be a little more careful within its own operations to keep a lid on the one-off charges which dragged its adjusted pre-tax profit of ?438.8m down by nearly 12pc to the statutory result.
“These charges include ?8m IT impairment, ?8.8m PPE impairment related to a service line and ?12.4m of restructuring costs, of this total it would appear around ?12m are cash charges,” Shore Capital said.
“We struggle to differentiate ongoing business improvement from exceptional charges,” they added.
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