Shares in testing and certification firm Intertek (ITRK) jumped over 10% after the company said it was undertaking a strategic review. The outcome could involve the separation and sale or demerger of the Energy & Infrastructure business.
Parting of the ways
The strategic review will decide whether Intertek Testing & Assurance and Intertek Energy & Infrastructure would be better as separate businesses. Testing & Assurance includes Consumer Products, Corporate Assurance and Health & Safety, and generated £1.9 billion of revenue in FY25.
The firm believes a dedicated Testing & Assurance business would be ‘a global market leader, providing risk-based Quality Assurance to world-leading brands’. It could also utilise its ‘superior Science-Based Customer Excellence value proposition and best in class economics to seize the attractive growth drivers ahead’.
Energy & Infrastructure comprises Industry, Metals, Construction, Caleb Brett and Transport and generated turnover of £1.6 billion last year. These businesses have ‘strong, highly complementary leadership positions across the entire energy and infrastructure value chain of Intertek’s clients’.
Growth improving
For Q1, the group said LFL revenue had grown 5.4% compared with 3.9% for the year to December 2025. Corporate Assurance and Consumer Products showed the fastest growth at 10.8% and 6.5% respectively.
Energy revenues were stable, making it the worst performing division, although at least sales weren’t down as in FY25. Group margins rose thanks to product mix, pricing, operational gearing, cost control and productivity gains.
The group confirmed its full-year guidance of mid single digit LFL revenue growth, margin progress and ‘strong’ growth in earnings and cash flow.
We wonder if Intertek’s major shareholders came up with this plan after the stock bombed last month on the FY results. Until now there had been no suggestion Energy and Infrastructure were peripheral to the group.
However, splitting the two divisions could indeed bring lots of benefits and allow sharper capital allocation. Moreover, a specialised approach could mean faster in-market execution, to the ultimate benefit of shareholders.
We’ve long liked Intertek, and couldn’t understand why it wasn’t trading at a premium valuation given its strong growth credentials. The market likes the idea of splitting it in two, although exactly how and when that happens is still unclear.
Read the press release here: https://www.intertek.com/investors/
