LON:ITRK Intertek Group H2 2024 Earnings Report GBX 4,594 +40.00 (+0.88%) As of 04/25/2025 12:28 PM Eastern Earnings HistoryForecast Intertek Group EPS ResultsActual EPSGBX 242.60Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AIntertek Group Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AIntertek Group Announcement DetailsQuarterH2 2024Date3/4/2025TimeBefore Market OpensConference Call DateTuesday, March 4, 2025Conference Call Time4:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckInterim ReportAnnual ReportEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Intertek Group H2 2024 Earnings Call TranscriptProvided by QuartrMarch 4, 2025 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to InterTech full year results twenty twenty four. At this time all participants are in listen only mode. Later we will conduct a question and answer session. If you wish to ask a question we ask that you please use the raise hand function at the bottom of your Zoom screen. If you have dialed in, please select 9 to raise your hand and 6 to unmute. Operator00:00:24Instructions will also follow at the time of Q and A. I would like to remind all participants that this call is being recorded. Questions will follow after the presentation. I will now hand over to Andre Le Croix, chief executive officer, to start the presentation. Speaker 100:00:40Good morning to you all and thanks for joining us on our call today here from London. I have, with me, Coram Dizzy, our CFO, and Denis Moreau, our VP of Investor Relations. In 2024, we have delivered a strong performance with earnings slightly ahead of market expectations. And I would like to start our call today by recognizing all of my colleagues around the world for their incredible support. Here are the key takeaways of our presentation today. Speaker 100:01:082024 marks the fourth consecutive year of consistent mid single digit like for like revenue growth in line with the strategic guidance we gave at our capital market event a couple of years ago. Profit conversion was strong with a margin increase year on year of 100 bps. EPS growth at constant currency was 15.2%. We had very strong cash performance and delivered a record adjusted cash flow of GBP $789,000,000. ROIC was outstanding at 22.4%, up year on year by two fifty basis points. Speaker 100:01:41And our dividends to shareholders are up 40.1. Importantly, moving forward, the value growth opportunity ahead of us is significant. We expect a robust financial performance in 2025. We are announcing today an initial share buyback program of GBP $350,000,000, and we are raising our medium term margin targets to 18.5 plus. Let's start with our performance highlights. Speaker 100:02:09We delivered, as I said, a strong financial performance in 2024. Our group revenue was up 6.6% at constant rate and 1.9% at actual rate. Like for like revenue growth was in line with expectation at 6.3% at a constant rate. Operating profit was up 13% at constant rate and 7% at actual rate. Operating margin was excellent, as I said, 17.4% up year on year by 100 basis points. Speaker 100:02:36EPS grew at 15% at constant rate. ROIC 22.4% up two fifty basis points at constant rate. And our free cash flow of GBP $4.00 9,000,000 was up year on year by 8%. In line with our dividend policy, our full year dividend is GBP 156.5 and is up year on year by 40.1%. Our balance sheet is very strong with a net debt to EBITDA ratio of 0.7 times. Speaker 100:03:06Let's now discuss our like for like revenue growth performance. Demand for ATIC Solutions was robust and 2024 marks the fourth consecutive year of mid single digit like for like revenue growth, clearly a higher growth cycle compared to what we saw pre COVID. Our like for like revenue growth of 6.3% at constant rate was driven by both volume and price. And we'll discuss later in the call the performance by division and business lines. The acquisitions we've made are performing extremely well. Speaker 100:03:36We've made six acquisitions in the last five years to strengthen our ATIC value proposition in high growth and high margin sectors. These six investments are value accretive to the group, having delivered in aggregate a margin of 25.1% in 2024. The consolidation opportunities in our industry are very exciting and significant and will remain selective as we continue to invest in organic growth. From a geographic standpoint, our revenue growth was broad based with Americas, EMEA and APAC up respectively by 5.9%, seven point five % and six point seven % at constant currency. There's been a lot of discussion about the economy in China and the impact it has on our business. Speaker 100:04:21Let me give you an update on the performance of our business in China. We have a super strong business in China, which we have built over the last fifty years, where we operate a diversified portfolio with scale positions across all of our business lines. We've delivered a robust like for like revenue growth performance of 6.7% in China in 2024, with growth accelerating to 7.7% in the second half. The growth opportunities ahead in China are significant given the manufacturing excellence that China offers to Western brands, the investment made in existing and new sectors and of course, the untapped opportunities in the domestic market. We provide our clients with total quality assurance given our unique end to end ATIC approach to quality, safety and sustainability. Speaker 100:05:10Our ATIC portfolio is very well diversified with assurance, testing, inspection and certification representing respectively 21, 40 six percent, 20 five percent and eight percent of our total revenue. As you can see on the slide, between 2015 and 2024, our capital light and high margin Assurance business has grown double digit. Let's move to margin. We are very pleased with our margin performance of 17.4%, up 100 basis points at constant currency as I just explained. We benefited, of course, from a portfolio mix, but also from fixed cost leverage linked to our 6% plus organic growth, productivity improvement, our restructuring programs and accretive M and A. Speaker 100:05:55These positive margin drivers were partially offset by cost inflation, as you will expect. And in addition, we've continued to invest in capability to accelerate revenue growth. A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program has delivered $30,000,000 of savings in 2023 and a further $11,000,000 in 2024. We expect a $3,000,000 benefit in 2025 from the restructuring done in 2024. Speaker 100:06:27And of course, we'll continue to look at further cost reduction opportunities. Margin accretive revenue growth, as you know, is central to the way we deliver value at InterTech. We have increased margin by 190 basis points between 2014 and 2024, making us the only global player in the industry with such an impressive track record. Cash was excellent with a cash conversion of 121%. In 2024, we delivered the highest ever cash from operation of £789,000,000 enabling us to invest in organic and inorganic growth. Speaker 100:07:04With free cash flow at GBP $4.00 9,000,000, our net debt declined by GBP 111,000,000 to GBP 500,000,000, and our net debt to EBITDA ratio improved to 0.7. I will now hand over to Carm to discuss our full year results in detail. Speaker 200:07:19Thank you, Andre. In summary, in 2024, the group delivered a strong financial performance. Total revenue grew to £3,400,000,000 up 6.6% at constant currency and 1.9% at actual rates. Sterling strengthened compared to major currencies impacting our revenue growth by 470 basis points. Operating profit at constant rates was up 13% to £590,000,000 with operating margin of 17.4% up year on year by a hundred basis points at constant currency and 80 basis points at actual rates. Speaker 200:07:58Diluted earnings per share were at two forty point six p with double digit growth of 15.2% at constant rates and 7.9 at actual rates. Turning now to cash flow and net debt. As you have heard from Andre, the group delivered record adjusted cash from operations of £789,000,000 compared to £749,000,000 last year, growth of 5.4%. Adjusted free cash flow of £409,000,000 was higher year on year by £30,000,000 reflecting the growth in operating cash. We finished 2024 with financial net debt of just £500,000,000 1 hundred and 11 million pounds lower than 2023 and represents financial net debt to adjusted EBITDA of 7.7 times. Speaker 200:08:52Turning to our financial guidance for '25, we expect net finance costs to be in the range of 42 to £44,000,000 excluding FX. We expect our effective tax rate to be between 2526%. Our minority interest to be between 23 and 24,000,000, and CapEx investment to be in the range of a hundred and 35 to a hundred and 40 5 million pounds Our financial net debt guidance excluding future change in f FX rates, m and a, or the buyback is £470,000,000 to £520,000,000 I will now hand back to Andre. Speaker 100:09:28Thank you, Con, and I will go through the performance division by division. There is, of course, more detail in our RNS, and all the comments I will make in these, next few minutes will be at constant currency. Let's start with consumer product, very important division for InterTech, as you know very well, where we've delivered a revenue of GBP $959,000,000 a year on year by 7.6%. Our high single digit like for like revenue growth was driven by double digit like for like in soft lines, mid single digit like for like in hard line, high single digit like for like in electrical and low single digit like for like revenue growth in GTS. Operating profit was super strong at GBP $269,000,000 with a margin of 28%, up year on year by 170 basis points. Speaker 100:10:19As you can imagine, we benefit from a strong operating leverage, productivity gains and of course, portfolio mix. In 2025, we expect Consumer Products division to deliver mid single digit like for like revenue growth. Let's move now to Corporate Assurance, a very important division also for Intertek. Revenue grew by 8.6% to GBP496 million. Our high single digit like for like revenue growth was driven by high single digit like for like in business insurance and mid single digit like for like in insurance. Speaker 100:10:51Operating profit was excellent at GBP 117,000,000, up year on year by 13% with a margin of 23.6%, an improvement of 80 basis points, where we benefited of course from operating leverage, productivity gain and mix. In 2025, we expect our Corporate Insurance division to deliver high single digit like for like revenue growth. Health and Safety delivered a revenue of £337,000,000 an increase of 9%, very commendable. Our high single digit like for like revenue growth of 8% was driven by high single digit like for like in agri world and food, mid single digit like for like in chemical and pharma. Benefiting from operating leverage and productivity gains, our operating profit rose by 14% to 46,000,000 with a margin of 13.6% up year on year by 50 basis points. Speaker 100:11:43In 2025, we expect our Health and Safety division to deliver mid single digit like for like revenue growth. Revenue in Industry and Infrastructure increased by 2.4% to GBP $844,000,000 after a growth of 7.9% in 2023, as you would remember. Our low single digit like for like revenue growth was driven by mid single digit like for like in industry services with a strong double digit like for like revenues in our CapEx business, partially offset by negative like for like revenue in OpEx due to the exit of non profitable contracts as we discussed throughout the year. Within Minerals, we delivered a mid single digit like for like revenue growth after a high single digit in 2023 and double digit in 2022. We saw low single digit negative like for like in building construction as expected due to the temporary slowdown of large project, which happens during election years in North America and as we discussed in November, severe weather conditions in The United States. Speaker 100:12:42Operating profit of GBP 81,000,000 was down 2% with a margin of 9.6%, forty bps lower than last year. The progress we made on margin within Industry, Services and Minerals was more than offset by lower margin in Building Construction. In 2025, we expect our industry and infrastructure related business to deliver mid single digit like for like revenue growth. Let's move to the world of energy, where we delivered an 8% revenue growth year on year and saw $75,000,000 of revenue for the total division. Our high single digit like for like revenue growth was driven by high single digit like for like in Calibrate and our TT business and double digit like for like in our CA business, the industry leader in solar panel quality assurance. Speaker 100:13:29Operating profit was GBP 78,000,000, up 25%. And the margin rose 140 bps to 10.2, reflecting operating leverage, productivity gains and portfolio mix. In 2025, we expect our World of Energy division to deliver mid single digit like for like revenue growth. In 2023, we've introduced our AAA strategy to unlock the significant value growth opportunities ahead. And today, I would like to give you an update on the progress we are making on the ground executing our AAA strategy. Speaker 100:14:04In March and August, I shared with you six deep dives on what we call AAA strategy in action. Today, we'd like to give you an update in three important areas. First, we'll discuss why China is not running out of growth and why China plus one is an ATIC growth opportunity, which is very exciting for InterTech. We'll then talk about what AAA performance really means concretely for each of our stakeholders. And then I'll spend time on how we create superior value for our shareholders. Speaker 100:14:38Let's first discuss why China exports will continue to grow. The Chinese export economy was up 5.8% in 2024 and is up 43.1% compared to where it was in 2019. China has a track record of manufacturing excellence and strong customer service with fast turnaround times and a highly efficient logistic ecosystem. Importantly, China's consistent investments in new end markets has resulted in a strong diversification of the export revenue streams, with APAC now being their largest export partners and growing at double digit rate. As we all know, China share in the global export economy has increased consistently with export growing on average by 12% per year since the beginning of the century. Speaker 100:15:26We are confident about the growth opportunities of the China export economy. Given the manufacturing excellence that China offers to Western brands, the continued expansion in new industry and the increased investment in R and D. In our business, supply chains never stand still and we have seen structural change in the operations of our clients in the last few decades. Our mantra at Intertek is very simple: We always try to anticipate where our clients are taking their supply chain. Our global footprint and capital light business model means that we are very agile, giving us the ability to move fast if we need to build additional ATIC capability for clients in existing or new markets. Speaker 100:16:09There have been a lot of discussions about brands exiting their manufacturing footprint in China. Over the years, we've seen only a handful of brands doing so because charging production locations is indeed a high risk decision for any business. What we have seen is companies pursuing a China plus one strategy, which consists in building their supply chain for new businesses in a new country to operate a more diversified footprint. That has resulted in additional investments in countries like Vietnam, Cambodia, India and Bangladesh. We also have seen investment in neosharing to reduce the time to market and CO2 emissions, with the main beneficiaries being Egypt, Turkey, Portugal, Morocco, Guatemala and Mexico in The Americas. Speaker 100:16:52Finally, we are seeing onshoring investment in the renewable sectors, with manufacturing investments in energy storage, solar and wind, which are important for the energy security of the European and North American markets. What really matters to us is first, the number of SKUs in the global market that need to be tested and certified and second, the number of factories and Tier one, two and three suppliers that we need to audit and inspect. In summary, China Plus One is making the ATIC market larger for intertech with an increase in number of products to test and factories to audit. APAC and The Americas will be the main beneficiaries from China Plus One. These are the two most vibrant regions in terms of investments, in terms of additional supply chain capability. Speaker 100:17:40These two regions represent 68% of global manufacturing and 85% of the global investments that are currently made in supply chain. We operate a scale Ethic portfolio with leading market position in EPAC. And EPAC represents 35% of our revenues over the years. We've built a strong portfolio of business lines in 22 countries, and that position us well to benefit from future supply chain investments. The Americas is our largest region, contributing 39% of the group revenue. Speaker 100:18:14As I mentioned, we've invested significantly in the last few years to take advantage of the ATIC demand acceleration. In The Americas, we operate scale operations in all of our business lines and we are extremely well positioned to take advantage of future investment in supply chain capability. Let's now discuss how we are delivering AAA value for each of our stakeholder groups. The main goal of our AAA strategy is very clear: We want to be the best in the industry by being the best every day for customers, employees, communities, and shareholders. That's what AAA is all about, being the best for every stakeholders all the time. Speaker 100:18:57Being the most trusted partner for our clients is, of course, where it starts. To do so, we capitalize on our unique competitive advantage, science based customer excellence. We offer, as you know, a unique value proposition with ATIC. We operate well capitalized state of the art operations. We recruit from the best universities and offer unlimited opportunities. Speaker 100:19:18We invest in powering innovation largely technology based. And we rigorously monitor our customer service performance. Let's now talk about these five differentiators in more detail. Our superior customer service is based on our unique end to end ATIC offering, which we call risk based quality assurance. Our clients expect much more than our TIC solutions to manage their complex sourcing, manufacturing and distribution operations. Speaker 100:19:44That's why a few years ago, we have really found a value proposition adding assurance to help our clients identify the intrinsic risks in their operations. Reinventing ourselves by offering our clients new solutions to address their unmet needs is paramount to stay ahead. That's why we never stop pioneering innovation to step up the quality of our customer service with an increased focus on technology based solutions. We've highlighted numerous examples in the ARNS, and there are more details on our website, intertech.com. I'm really proud of the work our teams have done over the years to strengthen our network of local operations around the world. Speaker 100:20:24We've invested more than a billion in CapEx in the last decade, and we operate a well capitalized state of the art operations, given the opportunity to our colleagues to leverage their scientific expertise and deliver the best IT customer experience to all of their clients. Let's now discuss what we do to be the employees of choice. Our approach is simple. We always treat our employees the way we want them to treat our customers. That's how we've built a high performance organization by energizing our colleagues to take our company to new heights. Speaker 100:20:56We take, as you can see on the slide, a very comprehensive approach and put people at the heart of our growth strategy. Our 10X culture is our DNA, the glue that binds us all together and is a major driver of high performance. We are really proud of the progress we've made on the metrics that define a high performance organization, as you can see on the slide. We've made progress on revenue per employee, profit per employee, cash flow per employee, employee turnover, and engagement. Sustainability is an exciting growth driver for Intertek and internally we are focused on sustainability excellence in every single operation. Speaker 100:21:37We are targeting net zero emission by 02/1950 and we have reduced our CO2 emission by 17% in 2024 and by 47% since 2019. Of course, sustainability is much more than achieving net zero. We continue to make progress on customer satisfaction, diversity and inclusion, health and safety, compliance and engagement. I'm particularly pleased by the commitment that our colleagues make every single day in their community. Let's now discuss how we are creating super value for our stakeholders. Speaker 100:22:12We operate a high quality cash component earnings model that has created significant value over the years, as you can see on the slide. Between 2014 and 2024, we have grown revenue by 62% and have increased operating profit by 82%. Our margin has increased, as we talked earlier in the call, by 190 basis points. Our EPS has grown by over two third. Our cash on operation has grown by GBP $385,000,000 and our ROIC has improved by six ten bps to over 22%. Speaker 100:22:42Of course, we are extremely proud of the value we have created for shareholders over the years. But more importantly, we are super excited about the future ahead of InterTech. The value growth opportunity ahead is significant. And let me explain how our AAA strategy will accelerate value creations for many years to come. First and foremost, we are now operating in a higher organic growth market with very attractive ATIC growth opportunities. Speaker 100:23:12Companies have increased their investment in risk based quality assurance in the last two decades. And moving forward, based on the growing challenge they face in their supply chain and more and more demanding stakeholders or clients will continue to increase their investments. That's why we expect to deliver mid single digit light for our revenue growth through the cycle. Our high quality portfolio positions us very well to deliver faster organic growth with industry leading margin, implementing our laser focused portfolio strategy which always prioritize high growth and high margin ethics spaces where we can be leader with scale. We have built over the years a unique suite of industry leading ethics solutions in each of our five divisions, and all of our global business lines enjoy a scale leadership position, both at the local and global level, to deliver sustainable and profitable growth. Speaker 100:24:05In addition to the exciting growth opportunities ahead, our portfolio has strong intrinsic defensive characteristics. The ATIC solutions we offer to our clients are mission critical. Our clients cannot operate with these. We operate a highly diversified set of revenue streams and we enjoy strong and lasting relationships with our clients. Let's move to the next important topic, remuneration and incentive in the group. Speaker 100:24:32Our organization is very aligned with what matters to our shareholders in terms of value creation. All of our colleagues share the same annual incentives throughout the group with 70% of the earning opportunities linked to the delivery of margin equity revenue growth, 15% to progress on ROIC and 15% to reduction of CO2. At a senior level, our long term incentive program is based on consistent EPS growth delivery, additional free Class IV generation and progress on ROIC. To deliver sustainable growth and create value for our shareholders, we'll continue to strengthen our high quality cash compound earnings model, benefiting year after year from the compounding effect of mid single digit like for like revenue growth, margin accretion, strong free cash flow and disciplined investments in high growth and high margin sectors to deliver high quality revenue growth with a superior ROIC. Margin accretive revenue growth is central, as you know, to the way we deliver value and performance at Intertek. Speaker 100:25:37We have effectively delivered the 17.5% target we set in 2023, faster than we expected. And today, we are announcing a new margin target. We are confident we'll achieve our medium term ambitious targets of 18.5% plus for three very simple reasons. We expect to operate with mid single digit like for like revenue growth moving forward, and that will drive a strong operating leverage. We'll continue to streamline costs and drive productivity improvements through to our ever better approach to business. Speaker 100:26:10And as you would expect, we'll stay very, very focused in terms of capital allocation and we'll invest in high growth and high margin segments provided we can deliver margin accretive revenue growth and a superior ROIC. Let's move to capital allocation because disciplined capital allocation is also a key element of how we deliver sustainable growth and value for shareholders. In 2024, we've increased our investments in CapEx. We've spent SEK135 million in organic opportunities. In line with the dividend policy, we've announced a 40.1% increase in the full year dividend to 156.5 p. Speaker 100:26:48As you know, we've acquired base Met Labs, a high quality operators in the minerals business in North America, and our year end leverage was excellent at 0.7 times. Our high growth cash component earnings model is getting stronger every year, giving us the opportunity to further reward our shareholders while still investing organically and looking for value accretive M and A opportunities. Given the strength of our earnings models, our performance track record, our confidence in future growth opportunities and the current level of leverage, we have announced today an initial $350,000,000 share buyback program to be completed during the current financial year. Subject to compelling organic and inorganic investment opportunities to deploy capital, to leverage remaining sustainably below the bottom of our target range and to any relevant external macro economic factors, we expect our share buyback program to remain a core element of our capital allocation policy and to recur regularly. Before taking any questions, I'd like to share our guidance for 2025. Speaker 100:27:52We're entering 2025 with confidence and we expect the group will deliver mid single digit like for like revenue growth at constant currency. Driven by mid single digit like for like in consumer product, health and safety, industry infrastructure and the world of energy, we expect high single digit lag for lag in corporate assurance. We are targeting further margin progression. Our cash discipline will remain in place to deliver a strong free cash flow. We'll invest in growth with a CapEx of circa million to million. Speaker 100:28:22We expect our financial net debt to be in the range of $470,000,000 to $520,000,000 before any M and A or ForEx movement and of course the impact of share buyback. A quick update on currencies for your model. The average sterling exchange rate in the last three months applied to the full year results of 2024, would be broadly neutral at the revenue and operating profit level in 2025. In summary, the value growth opportunities ahead of us at Intertek is significant. We are seeing higher demand for ATIC solutions creating exciting organic and inorganic opportunities. Speaker 100:28:58We are very focused on converting revenue growth into stronger profit growth targeting 18.5 plus operating margin in the medium term. Our strong cash generation will enable us to invest in growth while providing our shareholders with strong returns. All of us at Intertek are committed to being the best all the time for every single stakeholder. This is what our AAA differentiated growth strategy is all about. We'll now take any question you might have. Operator00:29:30We will now start the Q and A. We will take our first question from Rory McKenzie with UBS. Speaker 300:29:47It's Rory McKenzie here. Two questions, please. Firstly, consumer products. Firstly, consumer products accelerated through the year and I think was in double digit growth in November, December. Can you just help us understand what's within that growth? Speaker 300:30:02For example, how much of it is due to client activity still rebounding? Are you taking share? And maybe can you say how much of that growth is coming from Asia outside of China? And then obviously in terms of outlook, you're guiding for mid single digit growth in that division. Are you seeing any signs today that client activity is slowing perhaps, lating to a tariff uncertainty? Speaker 300:30:27And then secondly, on capital allocation, the stats you gave show a very good return on your inorganic investments. But we've only seen smaller bolt ons past couple of years and it's the deleveraging. How do you see the environment or the landscape, the more the strategic acquisitions such as Alchemy or SAI, you made in the past? Thank you. Speaker 100:30:51Thanks, Rory. The last bit of your question was not super clear. Can you because the the the the volume of, was down. Can you repeat? Speaker 300:31:01Yeah. I saw on capital allocation. You know, you could could stats on the return on your acquisitions overall. For the past couple of years, we've only seen smaller bolt ons. But can you talk about the landscape or perhaps larger, more strategic deals as we saw with SAI Global Alchemy? Speaker 100:31:21Yeah. Look, maybe let let let's start with capital allocation and we'll go back to consumer. Look, we have always had a very strategic selective approach to M and A. You know, we we believe that it's very important to fewer, bigger, better M and A, if I could say, and deliver returns that we just talked about. And for sure, the landscape has been a bit quite post COVID, especially in 2021 and '22. Speaker 100:31:51We've seen the environment becoming a bit more, you know, open to to to to activities. We've done obviously one transactional last year. And what I said in a call is what matters for us is the returns you get on all these investments that we make inorganically. So we've been very, very consistent of always investing in high growth, high margin sectors. Most of, you know, our investments, have been in the fast growing, high margin, you know, sectors. Speaker 100:32:26As you know, sometimes we've used investments to get into new sectors. And then for us, the focus is really in attractive, you know, inorganic opportunities. And and if you look at what we've done, I mean, largely, all of our businesses has been of a bolt on nature, and this is what what we are focused on. We don't want to basically raise for scale and and make a large acquisition that will basically, you know, dilute the margin of the group. So I think it's very important that, you know, the acquisition that we made augment the IT value proposition by getting additional coverage like we've done in the case of SEI or additional solutions, but that position us in the high growth high margin sectors. Speaker 100:33:07Otherwise, you know, you you we're not true to our accretive capital allocation policy. That's, what we need to do. M and A is here to augment the organic performance on revenue growth, margin and of course, capital returns over time. As far as consumer products, of course, we had a very strong growth. You rightly said it was double digit and it was across the board, frankly. Speaker 100:33:35We've seen a very strong rebound in GTS. As you know, we had exited a few contracts, so we're expecting that. Electrical remained super strong and soft line was double digit, but was a very strong double digit, if I may say so. And hard line, you know, was, you know, very, very strong, high single digit, very close to double digit in November, December. Essentially, we should remember that we had a low base in 2023. Speaker 100:34:04You remember we saw retailers reducing their activities. So that was to be expected. But it was better than I thought because the retailers have seen very strong traffic in bricks and mortars operation, but also Speaker 400:34:20online. Speaker 100:34:20And the confidence has been super strong during the year. And we've seen a lot of additional new product development, which obviously benefited our soft lines and hard line electrical operations. Are we getting share? I would believe so, but equally, in our business, this is a very different way of measuring shares. You have to do it based on your own intel. Speaker 100:34:40There is no independent market composite out there. Do we see any cars pull demand into Q4? No. I mean, in the consumer products, this is not possible. When you know, a client develop a new SKU for a new product. Speaker 100:34:56There is a significant planning that needs to get in place. They need to have the specs clearly, you know, communicate to the factory. The factory need to put the tools in place. Then they need to get the tier one, tier two, tier three suppliers ready for production. So this inertia in terms of supply chain management planning makes it very complicated for anyone to say, you know what, we're gonna increase, you know, the number of new products when they launch because tariffs are coming our way. Speaker 100:35:23And as you know, for us, what matters is not the number of t shirts being produced, but the number of SKUs being produced in the factory. So now it was a very, very strong, you know, finish for consumer products. I'm I'm delighted for the team, and it's across the board. Speaker 300:35:38Great. Thank you, Audrey. Operator00:35:42Our next question comes from Neil Tyler with Redburn Atlantic. Please go ahead. Speaker 500:35:50Yes. Good morning. Andre, good morning, Con. Speaker 100:35:52Good morning. Speaker 500:35:53Two questions, please. Firstly, on the margin outlook, the increase that you in the medium term that you're framing. In your prepared remarks, you talked about principally operating leverage contributing to that. If I look at the mix of your sort of growth expectations, it looks as though divisional mix will act against that operating leverage a little bit. And then within the performance this year, you've also had some, I suppose, product mix improvements as you've been shedding unprofitable contracts, I think, in industry and infrastructure. Speaker 500:36:33So could you sort of help us sort of piece those components back together and in sort of as we bridge those 100 basis points or so over the next couple of years, think about the relative contributions of the various pieces I described, please. Speaker 100:36:50Yes. Look, we did do a deep dive recently, and it's in one of the presentation that we made on how we are driving margin equity revenue growth. You would recall, we did several examples looking at, you know, by business lines. And, and essentially, you know, we do have our own, of course, strategic plan that obviously computes all the drivers that that you just talked about, but there are more than that. You get in terms of drivers of margin, you got, of course, operating leverage linked to faster organic growth, which is, of course, linked to disciplined fixed cost management. Speaker 100:37:33You got productivity, which is how you start getting productivity improvements on the additional revenue that you get. You got, as we said, the investments in the sectors that you want, gross and margin accretive. You got, as you said, the mix effect, which you look at from your perspective at the global level, rightly so. But I look also at the mix effect at the local level. I'll come back to that in a second because I think that's the most important part of the iceberg that none of you can see. Speaker 100:38:04But for us, this is what we do. And I'll spend a few minutes on that in a second. And then, you know, finally, as, we should not underestimate the fact that we have a span of performance. Right? Doesn't matter, you know, you know, if we are proud about the fact that we're only the only one to have made such a progress in margin in industry, We still have significant opportunities because not every single operation is firing on all cylinders. Speaker 100:38:26And this span of performance means that, you know, we need to be very robust in terms of performance management. You heard me talk about that. I managed, you know, margin in three dimension against last year, against budget, but also against best in class, which is a property model we have, where we can quantify line by line on the P and L, the delta between the actuals and what best in class look like in that business. But let me talk about the area that I think is, for me, you know, fundamental and why, you know, we are doing a pretty good job is essentially volume price mix at the local level. That's where it all starts. Speaker 100:39:05And let me just give you a very simple example that I've used in meetings to make it simple. We are, you know, a people based business. When you run a lab with hundred engineers, how you allocate the available hours of these hundred engineers will have a significant impact on your growth, but also on your margin. So let me give you a very concrete example. Within our electrical business, in North America, which is a super strong business, you know, we have an excellent margin in North America. Speaker 100:39:37It happens that, you know, one of our best performer in terms of margin is a site called Bogsboro in the North Of Boston. Why is that? It's because our team, of course, does the certifications for, you know, light bulbs for electrical appliances, for HVACs, does EMCs, does, you know, all, testing you can imagine in, you know, machinery equipment for factories. But in addition, they've invested in a very important sector called medical device, which a few years ago was nascent and now is scaled and is a high margin sector. Where it really starts in terms of margin management at InterTech, and that's why I talked about the incentive schemes where everyone inside the company is incentivized on ROIC and CO2 reduction, but on revenue growth and margin accretion. Speaker 100:40:26Because that, you know, site manager in Bogsborough has got the opportunity to make a difference. If she or he allocate a certain amount of available engineer hours to that growing segment, it's gonna basically accelerate roles because they are starting to take share in a niche segment that will come very, very big. And in addition, they are getting margin accretion on top of the other sectors. If I were to summarize in a very simple story, if you're a law firm in New York City or London here, and if all of your talent lawyers, your hundred lawyers, only do rental contracts for one bedroom apartment, they're going to make some margin of X. If they do this, plus restructurings and M and A, they're going to make a much higher margin. Speaker 100:41:09And that's the power of margin equity revenue growth. That's why we focus on what I call quality revenue growth because I want every single site operator and therefore regional operators, business lighters to focus on the available revenue and available margins margins that are basically true to Speaker 400:41:26our Speaker 100:41:26strategy. And you can imagine that the opportunities are very significant because essentially that's how you, basically deploy capital and invest in future growth. Right. So yes, 18.5% plus is ambitious. Yes. Speaker 100:41:42You know, it's going to take us some time, but we're going to get there because I've got tremendous confidence in our performance management or capital allocations or mix management. But first and foremost, on the operational power of our volume price mix management at the local level. Speaker 500:42:00That's very helpful. Thank you. And then the second question, just if I compare your FY twenty twenty five divisional guidance and the medium term targets, specifically consumer and industry divisions, one is a bit higher than medium term, the other is a bit lower. Can you just sort of bridge those expectations short and medium term in your mind for us? And what's making the difference in each Speaker 400:42:27case? Thank you. Speaker 100:42:28Yeah. Look, I think it's a fair question. When we did, you know, medium term guidance at the capital market event that we had here in London in May, we gave essentially several ranges for each of the five divisions. Now we're not going to do that on the call because we'll be too much details. But you would be surprised, I've done the analysis because I was expecting the question. Speaker 100:42:52You'll be surprised if you look at, you know, the 22, 20 three, 20 four, 20 five margin that we are guiding and you do a CAGR, you'll be surprised how close, the, you know, three year numbers is to the guidance we've given. And this is a guidance we're giving, you know, through the cycle. Right? This is a guidance that's meant to be true till twenty twenty, thirty. So there will be differences from one year to the other. Speaker 100:43:15Like, of course, you know, in 2024, industry infrastructure was low at 1.7%, but it was 6.7% in 2022 and seven point nine percent in 2023. I'm guiding for mid single digit. And then if you take mid single digit as mid single digit, you will see that the CAGR is banging in the range. So there is precision in the long term guidance that we've given. But there will be some change from one year to the other. Speaker 100:43:45That's what you expect in business. But you will see through through the cycle, you know, it's pretty well calibrated. Speaker 500:43:52Okay. Super. That's very helpful. Thank you, Andre. Operator00:43:56Our next question comes from Annalise Vermillion from Morgan Stanley. Please go ahead. Speaker 600:44:04Hi good morning Andre, I have two questions, good morning, I have two questions please. So firstly just on the high single digit guidance for corporate assurance this year, could you talk a little bit about the drivers of that? And I'm asking that question particularly in light of the recently simplified omnibus package in Europe, as well as President Trump's very clear anti ESG stance. So how do you think about the sort of headwinds and tailwinds to that guidance for this year, if any? And then just a follow-up on the margin progression and your medium term target. Speaker 600:44:39Could you give a little bit more detail on the divisional contribution to that? I mean, it sounds like what you're talking around, you know, the the the volume price mix and so on is is broad based, but given the progress you've already made in your high margin divisions of consumer and corporate assurance, I'm just wondering where that incremental margin uplift will come from on a divisional level. Thank you. Speaker 100:45:02Yeah. So let's just start with margin. The reality is that we expect every single site, every single business, local level, every single country, every single division, every single business lines to drive margin equity revenue growth. That's the way people are targeted. And that's where, you know, we do business as I just explained. Speaker 100:45:23Of course, you know, if the higher margin businesses like consumer product and corporate assurance grow faster, you got a you get a divisional mix, which we understand very well. And frankly, that did help in 2024. What's interesting is, you know, we still have some room for improvement in these, some of our divisions. I mean, if you look at consumer products, we're getting close to our peak in 2019, but we are still not there. Of course, you know, corporate assurance has done extremely well and health and safety is the same, but we still have some opportunities in the world of energy. Speaker 100:46:02So look, when you plan for company of our diversification in terms of revenue stream, you know, we do it business by business and it yields group margin accretion. That's why we are committing to 18.5% plus. But there might be some year where some divisions of lower margin will grow faster than others and will have a bit of, you know, negative possible mix. But I would expect that, you know, the work that we're doing at the, you know, frontline, as I just explained to your colleagues, will enable us to, you know, to manage that. And then we'll take it from there. Speaker 100:46:37So, it's never, you know, a perfect, you know, in a model, But, you know, you've got the opportunities to get there, and and this is, you know, the way, you know, we are planning. As far as, corporate assurance, look, I wouldn't, you know, take Speaker 400:46:57the, the, the, the, the, Speaker 100:46:57what we're seeing in The U. S. As a, as a negative, because frankly speaking, you know, The U. S. Had never basically communicate anything significant in terms of independent non financial disclosures audit, I. Speaker 100:47:11E. You know, a version of CSRD that you were talking about. I'll come to that in a second. Look, in The U. S, we have to differentiate, you know, what's happening at the national level, what's happening at the state level. Speaker 100:47:24And there are some states, you know, taking some some interesting, you know, you know, moves in terms of sustainability. The one thing I would say, you know, for us, the audit of non financial disclosures has never been the key focus for us. You remember, we can do that and we do that, you know, competing with some of the big fours. But for us to focus is helping our clients, you know, benchmarking their sustainability strategy and importantly, addressing the operational civil risk inside their value chain. That's where, you know, we have invested our capital over the years and that's where I think, you know, InterTech has the edge where we have a huge suite of operational sustainable solutions in every single basically business line. Speaker 100:48:09And why is it important? Because reporting progress on sustainability metrics is super important. Stakeholders wants to see that. But what's more important is not what you report, is how you drive progress. And this is what the operational sustainable solutions of Intertek are. Speaker 100:48:24As you know, we take an industry specific approach for every single industry. And you will remember that presentation I did recently where I give example of, you know, light bulb T shirts or, oil and gas. We basically have in every single industry operational sustainable solutions addressing the sustainability risk inside the industry of our clients, not at the generic level. As far as the EU announcement last week, I was not surprised it was to be expected. I think the CSRD has made a huge step forward in terms of modeling what is expected from companies, but it was impossible for medium, small sized companies to basically implement this. Speaker 100:49:05So it means that, you know, the 7,000 companies that have the obligation to do that are big companies or clients. And it doesn't change anything for us. You know, one thing that, you know, I don't know if you know that, but the CSRD, you know, passed by the EU many years ago was supposed to open the, you know, ethic markets to our industry, but only a few countries did so because a lot of countries didn't want to move away from from the financial auditors. So from us, you know, the financial audit the the the audit of nonfinancial disclosures has never been a big expectations. We can do that. Speaker 100:49:40But as I just said, you know, what really matters for us is helping our clients benchmark their value chain, look at the risk and offer the operational sustainable solution in their factories, in their supply chain, in their value chain because that's where the margin is. So no change to my expectations for Assurant moving forward. Speaker 600:49:59Very clear. Thank you. Operator00:50:05Our next question comes from Sylvia Barker with JPMorgan. Please go ahead. Speaker 700:50:12Thank you. Hi, morning, everyone. Speaker 200:50:13Morning. Speaker 700:50:16Two questions for me, please. Question number one, on consumer products and the margins there, could you give us an idea of the range and and maybe the distribution of margins? Clearly, you've got a lot of very granular data, so do you have a lot of sites which have, I don't know, 30% EBIT margins, but then a few which have 10? How do we think about that? And then second question on pricing, especially in consumer products again, can we maybe just understand the dynamics a little bit better? Speaker 700:50:46You touched on that, in the on the last call actually, just around having a pricing level with the brand and then again having to actually find that pricing in reality with the contract manufacturer. What are the dynamics, what's the gap between your I guess, your headline pricing and the pricing agreed locally today? How has that progressed maybe over the last couple of years with inflation? Thank you. Speaker 100:51:16Yeah. So let's start with pricing. I mean, you know, we've explained that to the Capital Market event. You know, we are the industry leader in terms of quality of customer service. Right? Speaker 100:51:29Everybody knows that Intertek offer superior customer service. That means that, you know, from a pricing standpoint, we are very disciplined. We tend to command a premium and we never use price to just drive volume because we're not racing for scale. Right? We want to be the best in terms of returns and it starts with quality revenue growth. Speaker 100:51:53So there is no point in lowering the prices, to get your volume, and therefore revenue growth because it will bite you. And when you are quality leaders, this is obviously, as people know, a commodity trap, for those of us who study economics. The point about, you know, how do we, implement our pricing strategy? As you rightly said, we have, you know, global agreement with certain customers for basically global contracts. And all teams at the local level are basically demonstrating that they are the best in terms of, you know, customer service and and and turnaround times and data they provide to the factories. Speaker 100:52:37But they are not taking the global prices that, you know, we are agreeing with the brands and, you know, applying significant discounts. Of course, you know, we are commercial and then we'll make sure that we respond to commercial challenge to our clients. But this is really, really on the margin. So the way you want to think about the intertech pricing approach, it's a disciplined global and local because we are very focused on superior customer service. And when you're the best in terms of customer service, you don't need to discount to get volume. Speaker 100:53:12So that's the approach we take. And honestly speaking, you know, I wouldn't want you to worry about that. This is a very disciplined industry and you know that. As far as, you know, the margin span of performance within consumer product, I mean, there is no question that, our consumer product margin is the envy of many in this industry, always has been and will stay the envy for many years to come, I guess. I guess so or I hope so. Speaker 100:53:41You know, if I want to be a bit, you know, flippant. We're not going to reveal obviously what the margin is on soft lines, hard lines, electrical and GTS. But everybody knows that soft line and hard lines have the best margin within consumer product. And of course electric always you know pretty strong and making some strong progress. The span of performance you know within the local market is something we manage, but I would, you know, never disclose any of this. Speaker 100:54:11Right? This is proprietary information. As I said, we have a best in class model that is proprietary, that gives us, you know, real time at the end of the month. I know what's the gap between, you know, the profit that an operation has made and the profit that operation could have made if that operation would have performed at the best level within, you know, their clusters on every single line of of the cost, you know, structure. And there is plenty to go for. Speaker 100:54:39Of course, you know, there are some operational variable operational performance opportunities, which is what we're supposed to do. But I'm not gonna disclose any of that. But this is not insignificant. And that's why I believe in the 18.5% plus margin over time because we still have some work to do to get better in certain operations. I mean, we are way not no perfect here. Speaker 100:55:02Right? We're not perfect. Speaker 700:55:07Yeah. Thank you. Operator00:55:09Our next question comes from Alan Wells with Jefferies. Please go ahead. Our next question is from Alan Wells with Jefferies. Speaker 800:55:30Hey, hi Andre. Hi, apologies for being unmuted then. If I could just ask three quick ones please. Firstly, just on the M and A landscape and particularly just generally how you see the competitive landscape for Speaker 400:55:41M and A and deals, like it feels like Speaker 800:55:41some of the other listed peers at least from a, management narrative are maybe been a bit more aggressive on the M and A side. Is that something that you're seeing in terms of Speaker 400:55:55the competitiveness for deals when you're looking at things? Speaker 800:55:55Does that influence your, Secondly, I'd love to just get a quick update on how you guys are seeing and thinking about kind of the broader tariff impact on the business. Obviously, there's been further developments over the last year week and a half. I guess previously the industry's probably talked down a little bit about the impact, you know, you were flagging growth in China. But anecdotally, are you seeing anything at all in terms of customer behavior there? And then third question is just on the comments you made around in some divisions exiting some low margin contracts. Speaker 800:56:32I just wonder, is there much more work to be done there or is that opportunity largely, largely done, in terms of the way you're thinking about and factoring into that 18%, midterm guidance? Thank you. Speaker 100:56:46Thanks. Look, on low margin contract, opportunity moving forward, Look, we've been pretty disciplined at exiting contracts where we are not able to convince the clients that our customer service had a price. And we've done so within AIM, within GTS over the years. Many, many years ago, we did that in the CapEx business. Look, we are very, very focused on that. Speaker 100:57:17And Karl and I review contracts every single time. And it's not that the contract is low margin today. It's also a client saying, you know what? I want to reduce my cost of quality assurance. And we said, you know what? Speaker 100:57:31Not with us. Because the moment you start lowering your your price, you defeat the the de facto of making a commitment to lower your quality. That's what I was talking to, when I about when I talked about the commodity trap. Right. On, the the M and A landscape. Speaker 100:57:48Look, the market is more active today than it was a year ago, but still not back to the level it was pre Covid-nineteen for a very simple reason is the cost of credit is still quite high. And and and you know the private equity you know operators have been also quite quiet if I were to say so. And if you are, you know, the owner of a high quality business out there and you want to command a strong multiple when you sell, you need the market to be active. You need competition. So I think that will improve over time. Speaker 100:58:23It doesn't really matter for us because we are focusing on the high quality asset, as I said earlier. We don't want to raise for scale. We want to be the best and we target businesses that are in the segments where we want to make a difference. I mean, you would be very surprised to know that in all the transaction that we've done over the years, we've rarely been basically competing against all three other listed peers because we all look at the market slightly differently as you know. We have a very different solution mix, right? Speaker 100:58:58We are very big in assurance and testing and the others are very big on inspection. And as you know, I don't believe in inspection. I think it's a low value approach. It's low tech and I want to focus on high value, highly complex quality assurance solutions. So that's what I would say now. Speaker 100:59:21It has obviously not escaped me that, you know, there's been more activities, you know, within our peers recently. If you look, you know, at their disclosures, I think you will understand why. And I'm not going to comment on what they said. I think on the question on tariff, I think that's, that's that's an important, you know, you know, point. We've talked quite a bit in November on the fact that the last time, you know, The US put tariffs on China, it didn't work because we've been operating in mid single digit like for like, you know, revenue growth. Speaker 101:00:00And what I said in November still holds is that, you know, what matters for us is a number of SKUs that we test, the number of factories that we audit. And in all of the cases when we test a t shirt or a light bulb or spare parts is essentially against global market access standards, which means that factory is producing that SKU for multiple markets. And given the huge complexity and economics at play in global supply chain, even if one of destination is more expensive because tariffs have increased, you know, in the case of The U. S, doesn't mean that factory will stop producing because they are still producing for the other countries. Right. Speaker 101:00:41So that's the approach we take in terms of global market access. And this is why I'm not too worried about the impact on short term trends because we're going to keep testing the new product being launched in the markets. Right. And over time, if companies invest in other locations, that's the ITIC opportunity I talked about with China plus one. I mean, that is the way we look at it. Speaker 101:01:09We've not heard much from our from our clients. I know that people are watching the news every single day like we do. But let me also use the opportunity to cover Canada and Mexico, which we obviously announced last night. Both operations are very small for intertech and largely focus on the domestic market. So we don't see anything of importance here. Speaker 101:01:38So we are in a good place overall. Speaker 301:01:44Thank you. Operator01:01:49Our next question comes from Carl Rainsford with Berenberg. Please unmute your line and ask a question. Speaker 901:01:55Good morning Andre. Three from me please. I'll ask the first separately and then the other two afterwards if I may. So the first on the CapEx spend which is up to 4% of revenue from 3.2% last year, I know in the past you've guided for 5% in the longer term and your guidance for 2025 is roughly 4% of revenue at the midpoint, so the question is really has that 5% thought on on CapEx then change and if not would you be able to give us some color on the timing of phasing of that increase? And then further would you be able to share what that extra spend would be targeted towards? Speaker 901:02:29So essentially is it you know is the increase in spend for growth means or is it for kind of equipment replacement in Speaker 101:02:37labs? Look, our guidance, which we've given, consistently over the years is is around, right, 4% to 5%. And and we believe that's right for business. If we don't need to spend, you know, 4.8% or 5%, we'll not spend it. But, you know, we want our shoulders not not not to be surprised. Speaker 101:02:56Where we, increase our investment is on, you know, organic growth opportunities. As I said, we have, you know, well capitalized, high quality, state of the art facilities and maintenance is part of course of what we do. But it's not where the incremental spends are going. The incremental spends are going in innovations, in new lab equipment, in of course opening new labs if need be. And of course, you know, technology for, for the work we do on innovation, which is very, very important. Speaker 101:03:25We talked about it, you know, in one of the other call, you know, we we try to, you know, come up with technology based innovations because that's, you know, a great way of, improving your customer service and making your your relationship very, very sticky. So it's all about organic growth. Speaker 901:03:42Okay. Thank you. I'll take the next two together. So it's on Caleb Brett and World of Energy, some further good progress there on margin. So margin is still about three sixty basis points off of 2019 levels. Speaker 901:03:54So if returning to that margin of 12.8%, twelve point nine % feasible, what are the current headwinds that need to be sort of adapted to return to that level? And then on oil and gas capex, you know that continues to grow well and just wondering if you could give us some color on the sorts of projects that are enabling that growth, is it generally oil or gas And how beneficial would reports of using gas to power the increase in energy demand because data centers be for intertech business in the sort of mid to long term? Speaker 101:04:24Yeah. So look, thank you. On your last question on CapEx, I mean, you've seen that, you know, we have rebranded the business, to Airbus originally, which is Moody, which has a tremendous equity in the marketplace and is the creator of engineering based inspections in highly technological complex energy assets. I'm really pleased about the progress that we've made where our team have grown the pie and our business is much bigger than it used to be. We've seen additional investments in traditional oil and gas, you know, exploration, production, refinery activities. Speaker 101:05:10I'm sure you've seen it. There's been not enough investments pre COVID and there was a bit of catch up there because energy, traditional oil and gas consumption continued to increase and there is a need to invest. And these projects are basically where the energy resources are. So we are seeing a lot of progress in LatAm, of course, in The US, in The Middle East and in some part of Asia. But where the team is making a big difference is obviously taking our Moody expertise into the renewable space. Speaker 101:05:39And, you know, we've invested a lot in a relationship with our clients to help them in, you know, you know, power plants in, of course, you know, we talk about the solar opportunities through both, you know, the quality assurance at the factory level, but the infrastructure that is required, which is where we can help them with the operations. Of course, we are super involved in wind farms and then continue to look at carbon capture opportunities. So we are very, very much you know, in what we call the world of energy, helping our clients to basically continue to invest in the production of trial traditional oil and gas resource because it needs to be, you know, you know, further invested in as well as, renewables. And then from a world of energy standpoint, look, we have three large businesses within that division, Calibrate, Transportation Technology, which is automotive and CA. There is no question that I'm pleased with the progress we've made on transportation technology in 2024 because as you know, the OEMs, the car manufacturers had a very difficult '21 and '22 and '23. Speaker 101:06:54So, we have quite a bit of catch up to do here. And the acquisition that we've made, we see it will help because it's a fast growing business and it's a very, very, very decent margin. And Calibrate is, as you know, the market leader in terms of Oil and Gas inspection and testing, with testing being obviously the biggest majority of the earnings that we get there. What's really interesting, as we talked about it at the Capital Market event, is the fact that greener fuels is going to help with the average price point and margin because the more technology you put in into the formulation of these of these fuels, the more testing that that you need to do. So look, yes, there is quite a bit of work to be done, but we'll get there, you know, step by step. Speaker 901:07:47Very helpful, Andrea. Thank you. Operator01:07:52Our next question comes from Carl Green with RBC Capital Markets. Speaker 1001:08:07Thank you very much. Good morning Andre. Good morning. Speaker 401:08:09This Speaker 1001:08:09is Karl here from RBC. A couple of questions are really just following up on some of the stuff you've already talked about. I think particularly on consumer products, there is some data in the last few days that's suggesting that, The US trade balances, have seen a pull forward of imports. And, you know, I suppose the first question is really the extent to which you think that has fed into that strong CP performance in November and December. And do you think on a very short term view, just thinking about, you know, particularly calendar q two that we could see a little bit of a a kind of reversal of that? Speaker 1001:08:42So that that was my first question. Linked to that, just in terms of various countries trying to play the arbitrage around, the evolution of trade rules, and I think some of the things that Trump was talking about last night seem to be targeting that whole sort of China plus one strategy of some of, the the the big producers. Do you think that the tech industry and InteTech specifically will move towards more flexible commercial arrangements as regards labor, perhaps, lab leases, technology licenses, etcetera? How do you think that, you know, you might you might be able to make the business more, flexible than it than it already is? And then the the second question, again, it's a bit of a follow-up to stuff that's been asked before, just around the the pipeline. Speaker 1001:09:26You've been very clear about the criteria or the fact you're not, in a rush. But just a very specific question, have you got anything brewing? Are there any kind of material deals that may or may not land, on a six to twelve month view? Thank you. Speaker 101:09:40Thank you. Look, you know, the way we communicate, we never speculate on M and As, and we never give any target, which will defy the purposes of being selective and disciplined, if you understand what I'm talking about here. Look, the good news about us, right, is that we know where the assets that we want to buy are because we have a very deep understanding of the industry around the world. And, of course, there are always assets that come that we don't know. We don't know everything. Speaker 101:10:17But, largely, you know, the the bolt on, which are high quality and and and of know, importance to us. We know where they are. And and what we do is we try to to build relationships and and make sure we're there where the, you know, when the owner is ready. And and and the best deal we do are always on bilateral basis. We'll, of course, you know, competitive transaction if if that's what we want to do. Speaker 101:10:40But that's what we focus on. And and I will never say, you know, what's, you know, in the making at the moment. We don't we don't speculate on that. And we don't disclose any of our plans. Look, on consumer products, so again, you know, don't think of the consumer performance of InterTech as as as a performance that is linked to the volume of trade, right, being shipped from one country to the other. Speaker 101:11:09What matters for us, as I said, is a number of SKUs. Right? So there is nothing to read in the data that you just, you know, talked about. I think your question on how is global trade gonna evolve post what we're seeing at the moment is a fair question. I mean, the good news is global trade is never static, right? Speaker 101:11:30There are always challenges in terms of, global trade agreements, etcetera and so forth. The good news about our business is we are capital light. Right? And, you know, as an organization, we are very decentralized. We are very close to our customers. Speaker 101:11:44And we want to anticipate where they want to take their business and move with them with agility, speed, and that's, you know, what we do. Is the change in global trade relationship gonna change the way we organize our business model? I don't think so because it's capitalized, it's decentralized. You know, what matters to us is the skills of our people, right? Because equipment and processes, it's very easy to, you know, to replicate. Speaker 101:12:13So being in a market where our customers are, where they want to go and be ready for them with the right skills and the right, you know, scale operations is what capital allocation is is is all about. And, you know, if you look at, you know, the business we're in, right, this is what it is, right? It's a very, very, you know, customer centric business model. And we spend quite a time with our clients and we always try to anticipate where they want to take their business in terms of supply chain. And as I said in the previous questions, these are very difficult decisions. Speaker 101:12:47I mean, when you have established an ecosystem to produce your t shirts or your shirts in Shaoxing, China, when you do your obviously, you know, computers in Shanghai to change that takes a long time. And that's why, you know, having good customer relationship, being in the conversations, understanding what they want to do and helping them. I mean, we do a lot of assurance work for them, essentially benchmarking the supply chain of where they want to take, you know, their future production. So look, we can always get better, no question about that, but staying close to your customers, having an agile, you know, capitalized business models and being very, very quick at reacting is what it's all about. And I believe that this is what our culture is all about. Speaker 101:13:31We are very customer centric, agile and personally when there are challenges in the global supply chain, I see these as opportunities for Speaker 1001:13:40intertech. Understood. Thank you. Operator01:13:45There are no further questions on this webinar. I will now hand over to management for closing remarks. Speaker 101:13:50Well, Thank you very much to everyone for being on the call. We appreciate your time. It's a busy week for everyone. Of course, if you've got any follow-up questions, you know, Denis is available for any more questions during the day or later in the week. Have a good day, everyone. Speaker 101:14:03Thank you.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallIntertek Group H2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckInterim reportAnnual report Intertek Group Earnings HeadlinesIntertek Group climbs Thursday, outperforms marketApril 10, 2025 | marketwatch.comIntertek Group Full Year 2024 Earnings: EPS Beats ExpectationsMarch 23, 2025 | finance.yahoo.com$2 Trillion Disappears Because of Fed's Secretive New Move$2 trillion has disappeared from the US government's books. The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth.April 26, 2025 | Stansberry Research (Ad)RBC Capital Remains a Hold on Intertek (ITRK)March 14, 2025 | markets.businessinsider.comIntertek Group slides Thursday, underperforms marketMarch 13, 2025 | marketwatch.comIntertek Group's (LON:ITRK) Shareholders Will Receive A Bigger Dividend Than Last YearMarch 12, 2025 | finance.yahoo.comSee More Intertek Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Intertek Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Intertek Group and other key companies, straight to your email. Email Address About Intertek GroupIntertek is a leading Total Quality Assurance provider to industries worldwide. Our network of more than 1,000 laboratories and offices in more than 100 countries, delivers innovative and bespoke Assurance, Testing, Inspection and Certification solutions for our customers' operations and supply chains. Intertek is a purpose-led company to Bring Quality, Safety and Sustainability to Life. We provide 24/7 mission-critical quality assurance solutions to our clients to ensure that they can operate with well-functioning supply chains in each of their operations. Our Customer Promise is: Intertek Total Quality Assurance expertise, delivered consistently, with precision, pace and passion, enabling our customers to power ahead safely.View Intertek Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 11 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to InterTech full year results twenty twenty four. At this time all participants are in listen only mode. Later we will conduct a question and answer session. If you wish to ask a question we ask that you please use the raise hand function at the bottom of your Zoom screen. If you have dialed in, please select 9 to raise your hand and 6 to unmute. Operator00:00:24Instructions will also follow at the time of Q and A. I would like to remind all participants that this call is being recorded. Questions will follow after the presentation. I will now hand over to Andre Le Croix, chief executive officer, to start the presentation. Speaker 100:00:40Good morning to you all and thanks for joining us on our call today here from London. I have, with me, Coram Dizzy, our CFO, and Denis Moreau, our VP of Investor Relations. In 2024, we have delivered a strong performance with earnings slightly ahead of market expectations. And I would like to start our call today by recognizing all of my colleagues around the world for their incredible support. Here are the key takeaways of our presentation today. Speaker 100:01:082024 marks the fourth consecutive year of consistent mid single digit like for like revenue growth in line with the strategic guidance we gave at our capital market event a couple of years ago. Profit conversion was strong with a margin increase year on year of 100 bps. EPS growth at constant currency was 15.2%. We had very strong cash performance and delivered a record adjusted cash flow of GBP $789,000,000. ROIC was outstanding at 22.4%, up year on year by two fifty basis points. Speaker 100:01:41And our dividends to shareholders are up 40.1. Importantly, moving forward, the value growth opportunity ahead of us is significant. We expect a robust financial performance in 2025. We are announcing today an initial share buyback program of GBP $350,000,000, and we are raising our medium term margin targets to 18.5 plus. Let's start with our performance highlights. Speaker 100:02:09We delivered, as I said, a strong financial performance in 2024. Our group revenue was up 6.6% at constant rate and 1.9% at actual rate. Like for like revenue growth was in line with expectation at 6.3% at a constant rate. Operating profit was up 13% at constant rate and 7% at actual rate. Operating margin was excellent, as I said, 17.4% up year on year by 100 basis points. Speaker 100:02:36EPS grew at 15% at constant rate. ROIC 22.4% up two fifty basis points at constant rate. And our free cash flow of GBP $4.00 9,000,000 was up year on year by 8%. In line with our dividend policy, our full year dividend is GBP 156.5 and is up year on year by 40.1%. Our balance sheet is very strong with a net debt to EBITDA ratio of 0.7 times. Speaker 100:03:06Let's now discuss our like for like revenue growth performance. Demand for ATIC Solutions was robust and 2024 marks the fourth consecutive year of mid single digit like for like revenue growth, clearly a higher growth cycle compared to what we saw pre COVID. Our like for like revenue growth of 6.3% at constant rate was driven by both volume and price. And we'll discuss later in the call the performance by division and business lines. The acquisitions we've made are performing extremely well. Speaker 100:03:36We've made six acquisitions in the last five years to strengthen our ATIC value proposition in high growth and high margin sectors. These six investments are value accretive to the group, having delivered in aggregate a margin of 25.1% in 2024. The consolidation opportunities in our industry are very exciting and significant and will remain selective as we continue to invest in organic growth. From a geographic standpoint, our revenue growth was broad based with Americas, EMEA and APAC up respectively by 5.9%, seven point five % and six point seven % at constant currency. There's been a lot of discussion about the economy in China and the impact it has on our business. Speaker 100:04:21Let me give you an update on the performance of our business in China. We have a super strong business in China, which we have built over the last fifty years, where we operate a diversified portfolio with scale positions across all of our business lines. We've delivered a robust like for like revenue growth performance of 6.7% in China in 2024, with growth accelerating to 7.7% in the second half. The growth opportunities ahead in China are significant given the manufacturing excellence that China offers to Western brands, the investment made in existing and new sectors and of course, the untapped opportunities in the domestic market. We provide our clients with total quality assurance given our unique end to end ATIC approach to quality, safety and sustainability. Speaker 100:05:10Our ATIC portfolio is very well diversified with assurance, testing, inspection and certification representing respectively 21, 40 six percent, 20 five percent and eight percent of our total revenue. As you can see on the slide, between 2015 and 2024, our capital light and high margin Assurance business has grown double digit. Let's move to margin. We are very pleased with our margin performance of 17.4%, up 100 basis points at constant currency as I just explained. We benefited, of course, from a portfolio mix, but also from fixed cost leverage linked to our 6% plus organic growth, productivity improvement, our restructuring programs and accretive M and A. Speaker 100:05:55These positive margin drivers were partially offset by cost inflation, as you will expect. And in addition, we've continued to invest in capability to accelerate revenue growth. A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program has delivered $30,000,000 of savings in 2023 and a further $11,000,000 in 2024. We expect a $3,000,000 benefit in 2025 from the restructuring done in 2024. Speaker 100:06:27And of course, we'll continue to look at further cost reduction opportunities. Margin accretive revenue growth, as you know, is central to the way we deliver value at InterTech. We have increased margin by 190 basis points between 2014 and 2024, making us the only global player in the industry with such an impressive track record. Cash was excellent with a cash conversion of 121%. In 2024, we delivered the highest ever cash from operation of £789,000,000 enabling us to invest in organic and inorganic growth. Speaker 100:07:04With free cash flow at GBP $4.00 9,000,000, our net debt declined by GBP 111,000,000 to GBP 500,000,000, and our net debt to EBITDA ratio improved to 0.7. I will now hand over to Carm to discuss our full year results in detail. Speaker 200:07:19Thank you, Andre. In summary, in 2024, the group delivered a strong financial performance. Total revenue grew to £3,400,000,000 up 6.6% at constant currency and 1.9% at actual rates. Sterling strengthened compared to major currencies impacting our revenue growth by 470 basis points. Operating profit at constant rates was up 13% to £590,000,000 with operating margin of 17.4% up year on year by a hundred basis points at constant currency and 80 basis points at actual rates. Speaker 200:07:58Diluted earnings per share were at two forty point six p with double digit growth of 15.2% at constant rates and 7.9 at actual rates. Turning now to cash flow and net debt. As you have heard from Andre, the group delivered record adjusted cash from operations of £789,000,000 compared to £749,000,000 last year, growth of 5.4%. Adjusted free cash flow of £409,000,000 was higher year on year by £30,000,000 reflecting the growth in operating cash. We finished 2024 with financial net debt of just £500,000,000 1 hundred and 11 million pounds lower than 2023 and represents financial net debt to adjusted EBITDA of 7.7 times. Speaker 200:08:52Turning to our financial guidance for '25, we expect net finance costs to be in the range of 42 to £44,000,000 excluding FX. We expect our effective tax rate to be between 2526%. Our minority interest to be between 23 and 24,000,000, and CapEx investment to be in the range of a hundred and 35 to a hundred and 40 5 million pounds Our financial net debt guidance excluding future change in f FX rates, m and a, or the buyback is £470,000,000 to £520,000,000 I will now hand back to Andre. Speaker 100:09:28Thank you, Con, and I will go through the performance division by division. There is, of course, more detail in our RNS, and all the comments I will make in these, next few minutes will be at constant currency. Let's start with consumer product, very important division for InterTech, as you know very well, where we've delivered a revenue of GBP $959,000,000 a year on year by 7.6%. Our high single digit like for like revenue growth was driven by double digit like for like in soft lines, mid single digit like for like in hard line, high single digit like for like in electrical and low single digit like for like revenue growth in GTS. Operating profit was super strong at GBP $269,000,000 with a margin of 28%, up year on year by 170 basis points. Speaker 100:10:19As you can imagine, we benefit from a strong operating leverage, productivity gains and of course, portfolio mix. In 2025, we expect Consumer Products division to deliver mid single digit like for like revenue growth. Let's move now to Corporate Assurance, a very important division also for Intertek. Revenue grew by 8.6% to GBP496 million. Our high single digit like for like revenue growth was driven by high single digit like for like in business insurance and mid single digit like for like in insurance. Speaker 100:10:51Operating profit was excellent at GBP 117,000,000, up year on year by 13% with a margin of 23.6%, an improvement of 80 basis points, where we benefited of course from operating leverage, productivity gain and mix. In 2025, we expect our Corporate Insurance division to deliver high single digit like for like revenue growth. Health and Safety delivered a revenue of £337,000,000 an increase of 9%, very commendable. Our high single digit like for like revenue growth of 8% was driven by high single digit like for like in agri world and food, mid single digit like for like in chemical and pharma. Benefiting from operating leverage and productivity gains, our operating profit rose by 14% to 46,000,000 with a margin of 13.6% up year on year by 50 basis points. Speaker 100:11:43In 2025, we expect our Health and Safety division to deliver mid single digit like for like revenue growth. Revenue in Industry and Infrastructure increased by 2.4% to GBP $844,000,000 after a growth of 7.9% in 2023, as you would remember. Our low single digit like for like revenue growth was driven by mid single digit like for like in industry services with a strong double digit like for like revenues in our CapEx business, partially offset by negative like for like revenue in OpEx due to the exit of non profitable contracts as we discussed throughout the year. Within Minerals, we delivered a mid single digit like for like revenue growth after a high single digit in 2023 and double digit in 2022. We saw low single digit negative like for like in building construction as expected due to the temporary slowdown of large project, which happens during election years in North America and as we discussed in November, severe weather conditions in The United States. Speaker 100:12:42Operating profit of GBP 81,000,000 was down 2% with a margin of 9.6%, forty bps lower than last year. The progress we made on margin within Industry, Services and Minerals was more than offset by lower margin in Building Construction. In 2025, we expect our industry and infrastructure related business to deliver mid single digit like for like revenue growth. Let's move to the world of energy, where we delivered an 8% revenue growth year on year and saw $75,000,000 of revenue for the total division. Our high single digit like for like revenue growth was driven by high single digit like for like in Calibrate and our TT business and double digit like for like in our CA business, the industry leader in solar panel quality assurance. Speaker 100:13:29Operating profit was GBP 78,000,000, up 25%. And the margin rose 140 bps to 10.2, reflecting operating leverage, productivity gains and portfolio mix. In 2025, we expect our World of Energy division to deliver mid single digit like for like revenue growth. In 2023, we've introduced our AAA strategy to unlock the significant value growth opportunities ahead. And today, I would like to give you an update on the progress we are making on the ground executing our AAA strategy. Speaker 100:14:04In March and August, I shared with you six deep dives on what we call AAA strategy in action. Today, we'd like to give you an update in three important areas. First, we'll discuss why China is not running out of growth and why China plus one is an ATIC growth opportunity, which is very exciting for InterTech. We'll then talk about what AAA performance really means concretely for each of our stakeholders. And then I'll spend time on how we create superior value for our shareholders. Speaker 100:14:38Let's first discuss why China exports will continue to grow. The Chinese export economy was up 5.8% in 2024 and is up 43.1% compared to where it was in 2019. China has a track record of manufacturing excellence and strong customer service with fast turnaround times and a highly efficient logistic ecosystem. Importantly, China's consistent investments in new end markets has resulted in a strong diversification of the export revenue streams, with APAC now being their largest export partners and growing at double digit rate. As we all know, China share in the global export economy has increased consistently with export growing on average by 12% per year since the beginning of the century. Speaker 100:15:26We are confident about the growth opportunities of the China export economy. Given the manufacturing excellence that China offers to Western brands, the continued expansion in new industry and the increased investment in R and D. In our business, supply chains never stand still and we have seen structural change in the operations of our clients in the last few decades. Our mantra at Intertek is very simple: We always try to anticipate where our clients are taking their supply chain. Our global footprint and capital light business model means that we are very agile, giving us the ability to move fast if we need to build additional ATIC capability for clients in existing or new markets. Speaker 100:16:09There have been a lot of discussions about brands exiting their manufacturing footprint in China. Over the years, we've seen only a handful of brands doing so because charging production locations is indeed a high risk decision for any business. What we have seen is companies pursuing a China plus one strategy, which consists in building their supply chain for new businesses in a new country to operate a more diversified footprint. That has resulted in additional investments in countries like Vietnam, Cambodia, India and Bangladesh. We also have seen investment in neosharing to reduce the time to market and CO2 emissions, with the main beneficiaries being Egypt, Turkey, Portugal, Morocco, Guatemala and Mexico in The Americas. Speaker 100:16:52Finally, we are seeing onshoring investment in the renewable sectors, with manufacturing investments in energy storage, solar and wind, which are important for the energy security of the European and North American markets. What really matters to us is first, the number of SKUs in the global market that need to be tested and certified and second, the number of factories and Tier one, two and three suppliers that we need to audit and inspect. In summary, China Plus One is making the ATIC market larger for intertech with an increase in number of products to test and factories to audit. APAC and The Americas will be the main beneficiaries from China Plus One. These are the two most vibrant regions in terms of investments, in terms of additional supply chain capability. Speaker 100:17:40These two regions represent 68% of global manufacturing and 85% of the global investments that are currently made in supply chain. We operate a scale Ethic portfolio with leading market position in EPAC. And EPAC represents 35% of our revenues over the years. We've built a strong portfolio of business lines in 22 countries, and that position us well to benefit from future supply chain investments. The Americas is our largest region, contributing 39% of the group revenue. Speaker 100:18:14As I mentioned, we've invested significantly in the last few years to take advantage of the ATIC demand acceleration. In The Americas, we operate scale operations in all of our business lines and we are extremely well positioned to take advantage of future investment in supply chain capability. Let's now discuss how we are delivering AAA value for each of our stakeholder groups. The main goal of our AAA strategy is very clear: We want to be the best in the industry by being the best every day for customers, employees, communities, and shareholders. That's what AAA is all about, being the best for every stakeholders all the time. Speaker 100:18:57Being the most trusted partner for our clients is, of course, where it starts. To do so, we capitalize on our unique competitive advantage, science based customer excellence. We offer, as you know, a unique value proposition with ATIC. We operate well capitalized state of the art operations. We recruit from the best universities and offer unlimited opportunities. Speaker 100:19:18We invest in powering innovation largely technology based. And we rigorously monitor our customer service performance. Let's now talk about these five differentiators in more detail. Our superior customer service is based on our unique end to end ATIC offering, which we call risk based quality assurance. Our clients expect much more than our TIC solutions to manage their complex sourcing, manufacturing and distribution operations. Speaker 100:19:44That's why a few years ago, we have really found a value proposition adding assurance to help our clients identify the intrinsic risks in their operations. Reinventing ourselves by offering our clients new solutions to address their unmet needs is paramount to stay ahead. That's why we never stop pioneering innovation to step up the quality of our customer service with an increased focus on technology based solutions. We've highlighted numerous examples in the ARNS, and there are more details on our website, intertech.com. I'm really proud of the work our teams have done over the years to strengthen our network of local operations around the world. Speaker 100:20:24We've invested more than a billion in CapEx in the last decade, and we operate a well capitalized state of the art operations, given the opportunity to our colleagues to leverage their scientific expertise and deliver the best IT customer experience to all of their clients. Let's now discuss what we do to be the employees of choice. Our approach is simple. We always treat our employees the way we want them to treat our customers. That's how we've built a high performance organization by energizing our colleagues to take our company to new heights. Speaker 100:20:56We take, as you can see on the slide, a very comprehensive approach and put people at the heart of our growth strategy. Our 10X culture is our DNA, the glue that binds us all together and is a major driver of high performance. We are really proud of the progress we've made on the metrics that define a high performance organization, as you can see on the slide. We've made progress on revenue per employee, profit per employee, cash flow per employee, employee turnover, and engagement. Sustainability is an exciting growth driver for Intertek and internally we are focused on sustainability excellence in every single operation. Speaker 100:21:37We are targeting net zero emission by 02/1950 and we have reduced our CO2 emission by 17% in 2024 and by 47% since 2019. Of course, sustainability is much more than achieving net zero. We continue to make progress on customer satisfaction, diversity and inclusion, health and safety, compliance and engagement. I'm particularly pleased by the commitment that our colleagues make every single day in their community. Let's now discuss how we are creating super value for our stakeholders. Speaker 100:22:12We operate a high quality cash component earnings model that has created significant value over the years, as you can see on the slide. Between 2014 and 2024, we have grown revenue by 62% and have increased operating profit by 82%. Our margin has increased, as we talked earlier in the call, by 190 basis points. Our EPS has grown by over two third. Our cash on operation has grown by GBP $385,000,000 and our ROIC has improved by six ten bps to over 22%. Speaker 100:22:42Of course, we are extremely proud of the value we have created for shareholders over the years. But more importantly, we are super excited about the future ahead of InterTech. The value growth opportunity ahead is significant. And let me explain how our AAA strategy will accelerate value creations for many years to come. First and foremost, we are now operating in a higher organic growth market with very attractive ATIC growth opportunities. Speaker 100:23:12Companies have increased their investment in risk based quality assurance in the last two decades. And moving forward, based on the growing challenge they face in their supply chain and more and more demanding stakeholders or clients will continue to increase their investments. That's why we expect to deliver mid single digit light for our revenue growth through the cycle. Our high quality portfolio positions us very well to deliver faster organic growth with industry leading margin, implementing our laser focused portfolio strategy which always prioritize high growth and high margin ethics spaces where we can be leader with scale. We have built over the years a unique suite of industry leading ethics solutions in each of our five divisions, and all of our global business lines enjoy a scale leadership position, both at the local and global level, to deliver sustainable and profitable growth. Speaker 100:24:05In addition to the exciting growth opportunities ahead, our portfolio has strong intrinsic defensive characteristics. The ATIC solutions we offer to our clients are mission critical. Our clients cannot operate with these. We operate a highly diversified set of revenue streams and we enjoy strong and lasting relationships with our clients. Let's move to the next important topic, remuneration and incentive in the group. Speaker 100:24:32Our organization is very aligned with what matters to our shareholders in terms of value creation. All of our colleagues share the same annual incentives throughout the group with 70% of the earning opportunities linked to the delivery of margin equity revenue growth, 15% to progress on ROIC and 15% to reduction of CO2. At a senior level, our long term incentive program is based on consistent EPS growth delivery, additional free Class IV generation and progress on ROIC. To deliver sustainable growth and create value for our shareholders, we'll continue to strengthen our high quality cash compound earnings model, benefiting year after year from the compounding effect of mid single digit like for like revenue growth, margin accretion, strong free cash flow and disciplined investments in high growth and high margin sectors to deliver high quality revenue growth with a superior ROIC. Margin accretive revenue growth is central, as you know, to the way we deliver value and performance at Intertek. Speaker 100:25:37We have effectively delivered the 17.5% target we set in 2023, faster than we expected. And today, we are announcing a new margin target. We are confident we'll achieve our medium term ambitious targets of 18.5% plus for three very simple reasons. We expect to operate with mid single digit like for like revenue growth moving forward, and that will drive a strong operating leverage. We'll continue to streamline costs and drive productivity improvements through to our ever better approach to business. Speaker 100:26:10And as you would expect, we'll stay very, very focused in terms of capital allocation and we'll invest in high growth and high margin segments provided we can deliver margin accretive revenue growth and a superior ROIC. Let's move to capital allocation because disciplined capital allocation is also a key element of how we deliver sustainable growth and value for shareholders. In 2024, we've increased our investments in CapEx. We've spent SEK135 million in organic opportunities. In line with the dividend policy, we've announced a 40.1% increase in the full year dividend to 156.5 p. Speaker 100:26:48As you know, we've acquired base Met Labs, a high quality operators in the minerals business in North America, and our year end leverage was excellent at 0.7 times. Our high growth cash component earnings model is getting stronger every year, giving us the opportunity to further reward our shareholders while still investing organically and looking for value accretive M and A opportunities. Given the strength of our earnings models, our performance track record, our confidence in future growth opportunities and the current level of leverage, we have announced today an initial $350,000,000 share buyback program to be completed during the current financial year. Subject to compelling organic and inorganic investment opportunities to deploy capital, to leverage remaining sustainably below the bottom of our target range and to any relevant external macro economic factors, we expect our share buyback program to remain a core element of our capital allocation policy and to recur regularly. Before taking any questions, I'd like to share our guidance for 2025. Speaker 100:27:52We're entering 2025 with confidence and we expect the group will deliver mid single digit like for like revenue growth at constant currency. Driven by mid single digit like for like in consumer product, health and safety, industry infrastructure and the world of energy, we expect high single digit lag for lag in corporate assurance. We are targeting further margin progression. Our cash discipline will remain in place to deliver a strong free cash flow. We'll invest in growth with a CapEx of circa million to million. Speaker 100:28:22We expect our financial net debt to be in the range of $470,000,000 to $520,000,000 before any M and A or ForEx movement and of course the impact of share buyback. A quick update on currencies for your model. The average sterling exchange rate in the last three months applied to the full year results of 2024, would be broadly neutral at the revenue and operating profit level in 2025. In summary, the value growth opportunities ahead of us at Intertek is significant. We are seeing higher demand for ATIC solutions creating exciting organic and inorganic opportunities. Speaker 100:28:58We are very focused on converting revenue growth into stronger profit growth targeting 18.5 plus operating margin in the medium term. Our strong cash generation will enable us to invest in growth while providing our shareholders with strong returns. All of us at Intertek are committed to being the best all the time for every single stakeholder. This is what our AAA differentiated growth strategy is all about. We'll now take any question you might have. Operator00:29:30We will now start the Q and A. We will take our first question from Rory McKenzie with UBS. Speaker 300:29:47It's Rory McKenzie here. Two questions, please. Firstly, consumer products. Firstly, consumer products accelerated through the year and I think was in double digit growth in November, December. Can you just help us understand what's within that growth? Speaker 300:30:02For example, how much of it is due to client activity still rebounding? Are you taking share? And maybe can you say how much of that growth is coming from Asia outside of China? And then obviously in terms of outlook, you're guiding for mid single digit growth in that division. Are you seeing any signs today that client activity is slowing perhaps, lating to a tariff uncertainty? Speaker 300:30:27And then secondly, on capital allocation, the stats you gave show a very good return on your inorganic investments. But we've only seen smaller bolt ons past couple of years and it's the deleveraging. How do you see the environment or the landscape, the more the strategic acquisitions such as Alchemy or SAI, you made in the past? Thank you. Speaker 100:30:51Thanks, Rory. The last bit of your question was not super clear. Can you because the the the the volume of, was down. Can you repeat? Speaker 300:31:01Yeah. I saw on capital allocation. You know, you could could stats on the return on your acquisitions overall. For the past couple of years, we've only seen smaller bolt ons. But can you talk about the landscape or perhaps larger, more strategic deals as we saw with SAI Global Alchemy? Speaker 100:31:21Yeah. Look, maybe let let let's start with capital allocation and we'll go back to consumer. Look, we have always had a very strategic selective approach to M and A. You know, we we believe that it's very important to fewer, bigger, better M and A, if I could say, and deliver returns that we just talked about. And for sure, the landscape has been a bit quite post COVID, especially in 2021 and '22. Speaker 100:31:51We've seen the environment becoming a bit more, you know, open to to to to activities. We've done obviously one transactional last year. And what I said in a call is what matters for us is the returns you get on all these investments that we make inorganically. So we've been very, very consistent of always investing in high growth, high margin sectors. Most of, you know, our investments, have been in the fast growing, high margin, you know, sectors. Speaker 100:32:26As you know, sometimes we've used investments to get into new sectors. And then for us, the focus is really in attractive, you know, inorganic opportunities. And and if you look at what we've done, I mean, largely, all of our businesses has been of a bolt on nature, and this is what what we are focused on. We don't want to basically raise for scale and and make a large acquisition that will basically, you know, dilute the margin of the group. So I think it's very important that, you know, the acquisition that we made augment the IT value proposition by getting additional coverage like we've done in the case of SEI or additional solutions, but that position us in the high growth high margin sectors. Speaker 100:33:07Otherwise, you know, you you we're not true to our accretive capital allocation policy. That's, what we need to do. M and A is here to augment the organic performance on revenue growth, margin and of course, capital returns over time. As far as consumer products, of course, we had a very strong growth. You rightly said it was double digit and it was across the board, frankly. Speaker 100:33:35We've seen a very strong rebound in GTS. As you know, we had exited a few contracts, so we're expecting that. Electrical remained super strong and soft line was double digit, but was a very strong double digit, if I may say so. And hard line, you know, was, you know, very, very strong, high single digit, very close to double digit in November, December. Essentially, we should remember that we had a low base in 2023. Speaker 100:34:04You remember we saw retailers reducing their activities. So that was to be expected. But it was better than I thought because the retailers have seen very strong traffic in bricks and mortars operation, but also Speaker 400:34:20online. Speaker 100:34:20And the confidence has been super strong during the year. And we've seen a lot of additional new product development, which obviously benefited our soft lines and hard line electrical operations. Are we getting share? I would believe so, but equally, in our business, this is a very different way of measuring shares. You have to do it based on your own intel. Speaker 100:34:40There is no independent market composite out there. Do we see any cars pull demand into Q4? No. I mean, in the consumer products, this is not possible. When you know, a client develop a new SKU for a new product. Speaker 100:34:56There is a significant planning that needs to get in place. They need to have the specs clearly, you know, communicate to the factory. The factory need to put the tools in place. Then they need to get the tier one, tier two, tier three suppliers ready for production. So this inertia in terms of supply chain management planning makes it very complicated for anyone to say, you know what, we're gonna increase, you know, the number of new products when they launch because tariffs are coming our way. Speaker 100:35:23And as you know, for us, what matters is not the number of t shirts being produced, but the number of SKUs being produced in the factory. So now it was a very, very strong, you know, finish for consumer products. I'm I'm delighted for the team, and it's across the board. Speaker 300:35:38Great. Thank you, Audrey. Operator00:35:42Our next question comes from Neil Tyler with Redburn Atlantic. Please go ahead. Speaker 500:35:50Yes. Good morning. Andre, good morning, Con. Speaker 100:35:52Good morning. Speaker 500:35:53Two questions, please. Firstly, on the margin outlook, the increase that you in the medium term that you're framing. In your prepared remarks, you talked about principally operating leverage contributing to that. If I look at the mix of your sort of growth expectations, it looks as though divisional mix will act against that operating leverage a little bit. And then within the performance this year, you've also had some, I suppose, product mix improvements as you've been shedding unprofitable contracts, I think, in industry and infrastructure. Speaker 500:36:33So could you sort of help us sort of piece those components back together and in sort of as we bridge those 100 basis points or so over the next couple of years, think about the relative contributions of the various pieces I described, please. Speaker 100:36:50Yes. Look, we did do a deep dive recently, and it's in one of the presentation that we made on how we are driving margin equity revenue growth. You would recall, we did several examples looking at, you know, by business lines. And, and essentially, you know, we do have our own, of course, strategic plan that obviously computes all the drivers that that you just talked about, but there are more than that. You get in terms of drivers of margin, you got, of course, operating leverage linked to faster organic growth, which is, of course, linked to disciplined fixed cost management. Speaker 100:37:33You got productivity, which is how you start getting productivity improvements on the additional revenue that you get. You got, as we said, the investments in the sectors that you want, gross and margin accretive. You got, as you said, the mix effect, which you look at from your perspective at the global level, rightly so. But I look also at the mix effect at the local level. I'll come back to that in a second because I think that's the most important part of the iceberg that none of you can see. Speaker 100:38:04But for us, this is what we do. And I'll spend a few minutes on that in a second. And then, you know, finally, as, we should not underestimate the fact that we have a span of performance. Right? Doesn't matter, you know, you know, if we are proud about the fact that we're only the only one to have made such a progress in margin in industry, We still have significant opportunities because not every single operation is firing on all cylinders. Speaker 100:38:26And this span of performance means that, you know, we need to be very robust in terms of performance management. You heard me talk about that. I managed, you know, margin in three dimension against last year, against budget, but also against best in class, which is a property model we have, where we can quantify line by line on the P and L, the delta between the actuals and what best in class look like in that business. But let me talk about the area that I think is, for me, you know, fundamental and why, you know, we are doing a pretty good job is essentially volume price mix at the local level. That's where it all starts. Speaker 100:39:05And let me just give you a very simple example that I've used in meetings to make it simple. We are, you know, a people based business. When you run a lab with hundred engineers, how you allocate the available hours of these hundred engineers will have a significant impact on your growth, but also on your margin. So let me give you a very concrete example. Within our electrical business, in North America, which is a super strong business, you know, we have an excellent margin in North America. Speaker 100:39:37It happens that, you know, one of our best performer in terms of margin is a site called Bogsboro in the North Of Boston. Why is that? It's because our team, of course, does the certifications for, you know, light bulbs for electrical appliances, for HVACs, does EMCs, does, you know, all, testing you can imagine in, you know, machinery equipment for factories. But in addition, they've invested in a very important sector called medical device, which a few years ago was nascent and now is scaled and is a high margin sector. Where it really starts in terms of margin management at InterTech, and that's why I talked about the incentive schemes where everyone inside the company is incentivized on ROIC and CO2 reduction, but on revenue growth and margin accretion. Speaker 100:40:26Because that, you know, site manager in Bogsborough has got the opportunity to make a difference. If she or he allocate a certain amount of available engineer hours to that growing segment, it's gonna basically accelerate roles because they are starting to take share in a niche segment that will come very, very big. And in addition, they are getting margin accretion on top of the other sectors. If I were to summarize in a very simple story, if you're a law firm in New York City or London here, and if all of your talent lawyers, your hundred lawyers, only do rental contracts for one bedroom apartment, they're going to make some margin of X. If they do this, plus restructurings and M and A, they're going to make a much higher margin. Speaker 100:41:09And that's the power of margin equity revenue growth. That's why we focus on what I call quality revenue growth because I want every single site operator and therefore regional operators, business lighters to focus on the available revenue and available margins margins that are basically true to Speaker 400:41:26our Speaker 100:41:26strategy. And you can imagine that the opportunities are very significant because essentially that's how you, basically deploy capital and invest in future growth. Right. So yes, 18.5% plus is ambitious. Yes. Speaker 100:41:42You know, it's going to take us some time, but we're going to get there because I've got tremendous confidence in our performance management or capital allocations or mix management. But first and foremost, on the operational power of our volume price mix management at the local level. Speaker 500:42:00That's very helpful. Thank you. And then the second question, just if I compare your FY twenty twenty five divisional guidance and the medium term targets, specifically consumer and industry divisions, one is a bit higher than medium term, the other is a bit lower. Can you just sort of bridge those expectations short and medium term in your mind for us? And what's making the difference in each Speaker 400:42:27case? Thank you. Speaker 100:42:28Yeah. Look, I think it's a fair question. When we did, you know, medium term guidance at the capital market event that we had here in London in May, we gave essentially several ranges for each of the five divisions. Now we're not going to do that on the call because we'll be too much details. But you would be surprised, I've done the analysis because I was expecting the question. Speaker 100:42:52You'll be surprised if you look at, you know, the 22, 20 three, 20 four, 20 five margin that we are guiding and you do a CAGR, you'll be surprised how close, the, you know, three year numbers is to the guidance we've given. And this is a guidance we're giving, you know, through the cycle. Right? This is a guidance that's meant to be true till twenty twenty, thirty. So there will be differences from one year to the other. Speaker 100:43:15Like, of course, you know, in 2024, industry infrastructure was low at 1.7%, but it was 6.7% in 2022 and seven point nine percent in 2023. I'm guiding for mid single digit. And then if you take mid single digit as mid single digit, you will see that the CAGR is banging in the range. So there is precision in the long term guidance that we've given. But there will be some change from one year to the other. Speaker 100:43:45That's what you expect in business. But you will see through through the cycle, you know, it's pretty well calibrated. Speaker 500:43:52Okay. Super. That's very helpful. Thank you, Andre. Operator00:43:56Our next question comes from Annalise Vermillion from Morgan Stanley. Please go ahead. Speaker 600:44:04Hi good morning Andre, I have two questions, good morning, I have two questions please. So firstly just on the high single digit guidance for corporate assurance this year, could you talk a little bit about the drivers of that? And I'm asking that question particularly in light of the recently simplified omnibus package in Europe, as well as President Trump's very clear anti ESG stance. So how do you think about the sort of headwinds and tailwinds to that guidance for this year, if any? And then just a follow-up on the margin progression and your medium term target. Speaker 600:44:39Could you give a little bit more detail on the divisional contribution to that? I mean, it sounds like what you're talking around, you know, the the the volume price mix and so on is is broad based, but given the progress you've already made in your high margin divisions of consumer and corporate assurance, I'm just wondering where that incremental margin uplift will come from on a divisional level. Thank you. Speaker 100:45:02Yeah. So let's just start with margin. The reality is that we expect every single site, every single business, local level, every single country, every single division, every single business lines to drive margin equity revenue growth. That's the way people are targeted. And that's where, you know, we do business as I just explained. Speaker 100:45:23Of course, you know, if the higher margin businesses like consumer product and corporate assurance grow faster, you got a you get a divisional mix, which we understand very well. And frankly, that did help in 2024. What's interesting is, you know, we still have some room for improvement in these, some of our divisions. I mean, if you look at consumer products, we're getting close to our peak in 2019, but we are still not there. Of course, you know, corporate assurance has done extremely well and health and safety is the same, but we still have some opportunities in the world of energy. Speaker 100:46:02So look, when you plan for company of our diversification in terms of revenue stream, you know, we do it business by business and it yields group margin accretion. That's why we are committing to 18.5% plus. But there might be some year where some divisions of lower margin will grow faster than others and will have a bit of, you know, negative possible mix. But I would expect that, you know, the work that we're doing at the, you know, frontline, as I just explained to your colleagues, will enable us to, you know, to manage that. And then we'll take it from there. Speaker 100:46:37So, it's never, you know, a perfect, you know, in a model, But, you know, you've got the opportunities to get there, and and this is, you know, the way, you know, we are planning. As far as, corporate assurance, look, I wouldn't, you know, take Speaker 400:46:57the, the, the, the, the, Speaker 100:46:57what we're seeing in The U. S. As a, as a negative, because frankly speaking, you know, The U. S. Had never basically communicate anything significant in terms of independent non financial disclosures audit, I. Speaker 100:47:11E. You know, a version of CSRD that you were talking about. I'll come to that in a second. Look, in The U. S, we have to differentiate, you know, what's happening at the national level, what's happening at the state level. Speaker 100:47:24And there are some states, you know, taking some some interesting, you know, you know, moves in terms of sustainability. The one thing I would say, you know, for us, the audit of non financial disclosures has never been the key focus for us. You remember, we can do that and we do that, you know, competing with some of the big fours. But for us to focus is helping our clients, you know, benchmarking their sustainability strategy and importantly, addressing the operational civil risk inside their value chain. That's where, you know, we have invested our capital over the years and that's where I think, you know, InterTech has the edge where we have a huge suite of operational sustainable solutions in every single basically business line. Speaker 100:48:09And why is it important? Because reporting progress on sustainability metrics is super important. Stakeholders wants to see that. But what's more important is not what you report, is how you drive progress. And this is what the operational sustainable solutions of Intertek are. Speaker 100:48:24As you know, we take an industry specific approach for every single industry. And you will remember that presentation I did recently where I give example of, you know, light bulb T shirts or, oil and gas. We basically have in every single industry operational sustainable solutions addressing the sustainability risk inside the industry of our clients, not at the generic level. As far as the EU announcement last week, I was not surprised it was to be expected. I think the CSRD has made a huge step forward in terms of modeling what is expected from companies, but it was impossible for medium, small sized companies to basically implement this. Speaker 100:49:05So it means that, you know, the 7,000 companies that have the obligation to do that are big companies or clients. And it doesn't change anything for us. You know, one thing that, you know, I don't know if you know that, but the CSRD, you know, passed by the EU many years ago was supposed to open the, you know, ethic markets to our industry, but only a few countries did so because a lot of countries didn't want to move away from from the financial auditors. So from us, you know, the financial audit the the the audit of nonfinancial disclosures has never been a big expectations. We can do that. Speaker 100:49:40But as I just said, you know, what really matters for us is helping our clients benchmark their value chain, look at the risk and offer the operational sustainable solution in their factories, in their supply chain, in their value chain because that's where the margin is. So no change to my expectations for Assurant moving forward. Speaker 600:49:59Very clear. Thank you. Operator00:50:05Our next question comes from Sylvia Barker with JPMorgan. Please go ahead. Speaker 700:50:12Thank you. Hi, morning, everyone. Speaker 200:50:13Morning. Speaker 700:50:16Two questions for me, please. Question number one, on consumer products and the margins there, could you give us an idea of the range and and maybe the distribution of margins? Clearly, you've got a lot of very granular data, so do you have a lot of sites which have, I don't know, 30% EBIT margins, but then a few which have 10? How do we think about that? And then second question on pricing, especially in consumer products again, can we maybe just understand the dynamics a little bit better? Speaker 700:50:46You touched on that, in the on the last call actually, just around having a pricing level with the brand and then again having to actually find that pricing in reality with the contract manufacturer. What are the dynamics, what's the gap between your I guess, your headline pricing and the pricing agreed locally today? How has that progressed maybe over the last couple of years with inflation? Thank you. Speaker 100:51:16Yeah. So let's start with pricing. I mean, you know, we've explained that to the Capital Market event. You know, we are the industry leader in terms of quality of customer service. Right? Speaker 100:51:29Everybody knows that Intertek offer superior customer service. That means that, you know, from a pricing standpoint, we are very disciplined. We tend to command a premium and we never use price to just drive volume because we're not racing for scale. Right? We want to be the best in terms of returns and it starts with quality revenue growth. Speaker 100:51:53So there is no point in lowering the prices, to get your volume, and therefore revenue growth because it will bite you. And when you are quality leaders, this is obviously, as people know, a commodity trap, for those of us who study economics. The point about, you know, how do we, implement our pricing strategy? As you rightly said, we have, you know, global agreement with certain customers for basically global contracts. And all teams at the local level are basically demonstrating that they are the best in terms of, you know, customer service and and and turnaround times and data they provide to the factories. Speaker 100:52:37But they are not taking the global prices that, you know, we are agreeing with the brands and, you know, applying significant discounts. Of course, you know, we are commercial and then we'll make sure that we respond to commercial challenge to our clients. But this is really, really on the margin. So the way you want to think about the intertech pricing approach, it's a disciplined global and local because we are very focused on superior customer service. And when you're the best in terms of customer service, you don't need to discount to get volume. Speaker 100:53:12So that's the approach we take. And honestly speaking, you know, I wouldn't want you to worry about that. This is a very disciplined industry and you know that. As far as, you know, the margin span of performance within consumer product, I mean, there is no question that, our consumer product margin is the envy of many in this industry, always has been and will stay the envy for many years to come, I guess. I guess so or I hope so. Speaker 100:53:41You know, if I want to be a bit, you know, flippant. We're not going to reveal obviously what the margin is on soft lines, hard lines, electrical and GTS. But everybody knows that soft line and hard lines have the best margin within consumer product. And of course electric always you know pretty strong and making some strong progress. The span of performance you know within the local market is something we manage, but I would, you know, never disclose any of this. Speaker 100:54:11Right? This is proprietary information. As I said, we have a best in class model that is proprietary, that gives us, you know, real time at the end of the month. I know what's the gap between, you know, the profit that an operation has made and the profit that operation could have made if that operation would have performed at the best level within, you know, their clusters on every single line of of the cost, you know, structure. And there is plenty to go for. Speaker 100:54:39Of course, you know, there are some operational variable operational performance opportunities, which is what we're supposed to do. But I'm not gonna disclose any of that. But this is not insignificant. And that's why I believe in the 18.5% plus margin over time because we still have some work to do to get better in certain operations. I mean, we are way not no perfect here. Speaker 100:55:02Right? We're not perfect. Speaker 700:55:07Yeah. Thank you. Operator00:55:09Our next question comes from Alan Wells with Jefferies. Please go ahead. Our next question is from Alan Wells with Jefferies. Speaker 800:55:30Hey, hi Andre. Hi, apologies for being unmuted then. If I could just ask three quick ones please. Firstly, just on the M and A landscape and particularly just generally how you see the competitive landscape for Speaker 400:55:41M and A and deals, like it feels like Speaker 800:55:41some of the other listed peers at least from a, management narrative are maybe been a bit more aggressive on the M and A side. Is that something that you're seeing in terms of Speaker 400:55:55the competitiveness for deals when you're looking at things? Speaker 800:55:55Does that influence your, Secondly, I'd love to just get a quick update on how you guys are seeing and thinking about kind of the broader tariff impact on the business. Obviously, there's been further developments over the last year week and a half. I guess previously the industry's probably talked down a little bit about the impact, you know, you were flagging growth in China. But anecdotally, are you seeing anything at all in terms of customer behavior there? And then third question is just on the comments you made around in some divisions exiting some low margin contracts. Speaker 800:56:32I just wonder, is there much more work to be done there or is that opportunity largely, largely done, in terms of the way you're thinking about and factoring into that 18%, midterm guidance? Thank you. Speaker 100:56:46Thanks. Look, on low margin contract, opportunity moving forward, Look, we've been pretty disciplined at exiting contracts where we are not able to convince the clients that our customer service had a price. And we've done so within AIM, within GTS over the years. Many, many years ago, we did that in the CapEx business. Look, we are very, very focused on that. Speaker 100:57:17And Karl and I review contracts every single time. And it's not that the contract is low margin today. It's also a client saying, you know what? I want to reduce my cost of quality assurance. And we said, you know what? Speaker 100:57:31Not with us. Because the moment you start lowering your your price, you defeat the the de facto of making a commitment to lower your quality. That's what I was talking to, when I about when I talked about the commodity trap. Right. On, the the M and A landscape. Speaker 100:57:48Look, the market is more active today than it was a year ago, but still not back to the level it was pre Covid-nineteen for a very simple reason is the cost of credit is still quite high. And and and you know the private equity you know operators have been also quite quiet if I were to say so. And if you are, you know, the owner of a high quality business out there and you want to command a strong multiple when you sell, you need the market to be active. You need competition. So I think that will improve over time. Speaker 100:58:23It doesn't really matter for us because we are focusing on the high quality asset, as I said earlier. We don't want to raise for scale. We want to be the best and we target businesses that are in the segments where we want to make a difference. I mean, you would be very surprised to know that in all the transaction that we've done over the years, we've rarely been basically competing against all three other listed peers because we all look at the market slightly differently as you know. We have a very different solution mix, right? Speaker 100:58:58We are very big in assurance and testing and the others are very big on inspection. And as you know, I don't believe in inspection. I think it's a low value approach. It's low tech and I want to focus on high value, highly complex quality assurance solutions. So that's what I would say now. Speaker 100:59:21It has obviously not escaped me that, you know, there's been more activities, you know, within our peers recently. If you look, you know, at their disclosures, I think you will understand why. And I'm not going to comment on what they said. I think on the question on tariff, I think that's, that's that's an important, you know, you know, point. We've talked quite a bit in November on the fact that the last time, you know, The US put tariffs on China, it didn't work because we've been operating in mid single digit like for like, you know, revenue growth. Speaker 101:00:00And what I said in November still holds is that, you know, what matters for us is a number of SKUs that we test, the number of factories that we audit. And in all of the cases when we test a t shirt or a light bulb or spare parts is essentially against global market access standards, which means that factory is producing that SKU for multiple markets. And given the huge complexity and economics at play in global supply chain, even if one of destination is more expensive because tariffs have increased, you know, in the case of The U. S, doesn't mean that factory will stop producing because they are still producing for the other countries. Right. Speaker 101:00:41So that's the approach we take in terms of global market access. And this is why I'm not too worried about the impact on short term trends because we're going to keep testing the new product being launched in the markets. Right. And over time, if companies invest in other locations, that's the ITIC opportunity I talked about with China plus one. I mean, that is the way we look at it. Speaker 101:01:09We've not heard much from our from our clients. I know that people are watching the news every single day like we do. But let me also use the opportunity to cover Canada and Mexico, which we obviously announced last night. Both operations are very small for intertech and largely focus on the domestic market. So we don't see anything of importance here. Speaker 101:01:38So we are in a good place overall. Speaker 301:01:44Thank you. Operator01:01:49Our next question comes from Carl Rainsford with Berenberg. Please unmute your line and ask a question. Speaker 901:01:55Good morning Andre. Three from me please. I'll ask the first separately and then the other two afterwards if I may. So the first on the CapEx spend which is up to 4% of revenue from 3.2% last year, I know in the past you've guided for 5% in the longer term and your guidance for 2025 is roughly 4% of revenue at the midpoint, so the question is really has that 5% thought on on CapEx then change and if not would you be able to give us some color on the timing of phasing of that increase? And then further would you be able to share what that extra spend would be targeted towards? Speaker 901:02:29So essentially is it you know is the increase in spend for growth means or is it for kind of equipment replacement in Speaker 101:02:37labs? Look, our guidance, which we've given, consistently over the years is is around, right, 4% to 5%. And and we believe that's right for business. If we don't need to spend, you know, 4.8% or 5%, we'll not spend it. But, you know, we want our shoulders not not not to be surprised. Speaker 101:02:56Where we, increase our investment is on, you know, organic growth opportunities. As I said, we have, you know, well capitalized, high quality, state of the art facilities and maintenance is part of course of what we do. But it's not where the incremental spends are going. The incremental spends are going in innovations, in new lab equipment, in of course opening new labs if need be. And of course, you know, technology for, for the work we do on innovation, which is very, very important. Speaker 101:03:25We talked about it, you know, in one of the other call, you know, we we try to, you know, come up with technology based innovations because that's, you know, a great way of, improving your customer service and making your your relationship very, very sticky. So it's all about organic growth. Speaker 901:03:42Okay. Thank you. I'll take the next two together. So it's on Caleb Brett and World of Energy, some further good progress there on margin. So margin is still about three sixty basis points off of 2019 levels. Speaker 901:03:54So if returning to that margin of 12.8%, twelve point nine % feasible, what are the current headwinds that need to be sort of adapted to return to that level? And then on oil and gas capex, you know that continues to grow well and just wondering if you could give us some color on the sorts of projects that are enabling that growth, is it generally oil or gas And how beneficial would reports of using gas to power the increase in energy demand because data centers be for intertech business in the sort of mid to long term? Speaker 101:04:24Yeah. So look, thank you. On your last question on CapEx, I mean, you've seen that, you know, we have rebranded the business, to Airbus originally, which is Moody, which has a tremendous equity in the marketplace and is the creator of engineering based inspections in highly technological complex energy assets. I'm really pleased about the progress that we've made where our team have grown the pie and our business is much bigger than it used to be. We've seen additional investments in traditional oil and gas, you know, exploration, production, refinery activities. Speaker 101:05:10I'm sure you've seen it. There's been not enough investments pre COVID and there was a bit of catch up there because energy, traditional oil and gas consumption continued to increase and there is a need to invest. And these projects are basically where the energy resources are. So we are seeing a lot of progress in LatAm, of course, in The US, in The Middle East and in some part of Asia. But where the team is making a big difference is obviously taking our Moody expertise into the renewable space. Speaker 101:05:39And, you know, we've invested a lot in a relationship with our clients to help them in, you know, you know, power plants in, of course, you know, we talk about the solar opportunities through both, you know, the quality assurance at the factory level, but the infrastructure that is required, which is where we can help them with the operations. Of course, we are super involved in wind farms and then continue to look at carbon capture opportunities. So we are very, very much you know, in what we call the world of energy, helping our clients to basically continue to invest in the production of trial traditional oil and gas resource because it needs to be, you know, you know, further invested in as well as, renewables. And then from a world of energy standpoint, look, we have three large businesses within that division, Calibrate, Transportation Technology, which is automotive and CA. There is no question that I'm pleased with the progress we've made on transportation technology in 2024 because as you know, the OEMs, the car manufacturers had a very difficult '21 and '22 and '23. Speaker 101:06:54So, we have quite a bit of catch up to do here. And the acquisition that we've made, we see it will help because it's a fast growing business and it's a very, very, very decent margin. And Calibrate is, as you know, the market leader in terms of Oil and Gas inspection and testing, with testing being obviously the biggest majority of the earnings that we get there. What's really interesting, as we talked about it at the Capital Market event, is the fact that greener fuels is going to help with the average price point and margin because the more technology you put in into the formulation of these of these fuels, the more testing that that you need to do. So look, yes, there is quite a bit of work to be done, but we'll get there, you know, step by step. Speaker 901:07:47Very helpful, Andrea. Thank you. Operator01:07:52Our next question comes from Carl Green with RBC Capital Markets. Speaker 1001:08:07Thank you very much. Good morning Andre. Good morning. Speaker 401:08:09This Speaker 1001:08:09is Karl here from RBC. A couple of questions are really just following up on some of the stuff you've already talked about. I think particularly on consumer products, there is some data in the last few days that's suggesting that, The US trade balances, have seen a pull forward of imports. And, you know, I suppose the first question is really the extent to which you think that has fed into that strong CP performance in November and December. And do you think on a very short term view, just thinking about, you know, particularly calendar q two that we could see a little bit of a a kind of reversal of that? Speaker 1001:08:42So that that was my first question. Linked to that, just in terms of various countries trying to play the arbitrage around, the evolution of trade rules, and I think some of the things that Trump was talking about last night seem to be targeting that whole sort of China plus one strategy of some of, the the the big producers. Do you think that the tech industry and InteTech specifically will move towards more flexible commercial arrangements as regards labor, perhaps, lab leases, technology licenses, etcetera? How do you think that, you know, you might you might be able to make the business more, flexible than it than it already is? And then the the second question, again, it's a bit of a follow-up to stuff that's been asked before, just around the the pipeline. Speaker 1001:09:26You've been very clear about the criteria or the fact you're not, in a rush. But just a very specific question, have you got anything brewing? Are there any kind of material deals that may or may not land, on a six to twelve month view? Thank you. Speaker 101:09:40Thank you. Look, you know, the way we communicate, we never speculate on M and As, and we never give any target, which will defy the purposes of being selective and disciplined, if you understand what I'm talking about here. Look, the good news about us, right, is that we know where the assets that we want to buy are because we have a very deep understanding of the industry around the world. And, of course, there are always assets that come that we don't know. We don't know everything. Speaker 101:10:17But, largely, you know, the the bolt on, which are high quality and and and of know, importance to us. We know where they are. And and what we do is we try to to build relationships and and make sure we're there where the, you know, when the owner is ready. And and and the best deal we do are always on bilateral basis. We'll, of course, you know, competitive transaction if if that's what we want to do. Speaker 101:10:40But that's what we focus on. And and I will never say, you know, what's, you know, in the making at the moment. We don't we don't speculate on that. And we don't disclose any of our plans. Look, on consumer products, so again, you know, don't think of the consumer performance of InterTech as as as a performance that is linked to the volume of trade, right, being shipped from one country to the other. Speaker 101:11:09What matters for us, as I said, is a number of SKUs. Right? So there is nothing to read in the data that you just, you know, talked about. I think your question on how is global trade gonna evolve post what we're seeing at the moment is a fair question. I mean, the good news is global trade is never static, right? Speaker 101:11:30There are always challenges in terms of, global trade agreements, etcetera and so forth. The good news about our business is we are capital light. Right? And, you know, as an organization, we are very decentralized. We are very close to our customers. Speaker 101:11:44And we want to anticipate where they want to take their business and move with them with agility, speed, and that's, you know, what we do. Is the change in global trade relationship gonna change the way we organize our business model? I don't think so because it's capitalized, it's decentralized. You know, what matters to us is the skills of our people, right? Because equipment and processes, it's very easy to, you know, to replicate. Speaker 101:12:13So being in a market where our customers are, where they want to go and be ready for them with the right skills and the right, you know, scale operations is what capital allocation is is is all about. And, you know, if you look at, you know, the business we're in, right, this is what it is, right? It's a very, very, you know, customer centric business model. And we spend quite a time with our clients and we always try to anticipate where they want to take their business in terms of supply chain. And as I said in the previous questions, these are very difficult decisions. Speaker 101:12:47I mean, when you have established an ecosystem to produce your t shirts or your shirts in Shaoxing, China, when you do your obviously, you know, computers in Shanghai to change that takes a long time. And that's why, you know, having good customer relationship, being in the conversations, understanding what they want to do and helping them. I mean, we do a lot of assurance work for them, essentially benchmarking the supply chain of where they want to take, you know, their future production. So look, we can always get better, no question about that, but staying close to your customers, having an agile, you know, capitalized business models and being very, very quick at reacting is what it's all about. And I believe that this is what our culture is all about. Speaker 101:13:31We are very customer centric, agile and personally when there are challenges in the global supply chain, I see these as opportunities for Speaker 1001:13:40intertech. Understood. Thank you. Operator01:13:45There are no further questions on this webinar. I will now hand over to management for closing remarks. Speaker 101:13:50Well, Thank you very much to everyone for being on the call. We appreciate your time. It's a busy week for everyone. Of course, if you've got any follow-up questions, you know, Denis is available for any more questions during the day or later in the week. Have a good day, everyone. Speaker 101:14:03Thank you.Read morePowered by