-- Intertek Group (ITRK.L) shares climbed over 12% higher on Tuesday, buoyed by robust first-quarter trading results and the announcement of a strategic review aimed at potentially separating its energy infrastructure and testing divisions.
The British assurance, testing, and certification company is evaluating the potential separation of its Intertek Energy & Infrastructure and Intertek Testing & Assurance. The review aims to determine if separate, specialist entities would drive faster market execution and better long-term shareholder returns.
The move, which will be implemented by mid-2027 through either a sale or demerger, is intended to help accelerate the businesses' growth in a "highly attractive and growing" quality assurance sector.
RBC Capital Markets held a positive sentiment over the "leftfield" strategic review, as it noted that buyers are "likely to tread carefully" amid a challenging geopolitical landscape.
"A demerger runs the risk of cost duplications and less liquid entities with a smaller investor audience, but we think many investors will view the prospects for sustained independence as limited given the appetite for consolidation by the biggest global players," RBC said in a quick-take report, adding that investor focus is likely to shift quickly to potential acquirers and whether standalone units could command higher valuation multiples.
Intertek also reported an increase in group revenue for the three months ended March 31 at 838.5 million pounds sterling, up 3.7% at actual rates and 6.7% at constant currency. The company's like-for-like revenue came in at 828.3 million pounds, 2.4% higher year-on-year at actual rates and 5.4% at constant exchange rates.
Chief Executive Officer André Lacroix said the group made a "strong start" to 2026, driven by Consumer Products, double-digit growth in risk-based assurance within Corporate Assurance, and solid demand across Health and Safety and Industry and Infrastructure. "Operating cash flow and free cash flow were strong which, combined with our strong balance sheet, enables us to continue to invest to seize the exciting growth opportunities ahead," he added.
Within this context, Intertek affirmed its full-year 2026 outlook, saying it is "on track" to deliver mid-single digit like-for-like revenue growth on a constant currency basis, sustained margin expansion, and "strong" earnings growth and free cash flow.