Intertek 2025 results: fattening margins, double‑digit EPS, and a guidance lift
Intertek has posted another record year, keeping the momentum in its AAA strategy. The headline story is simple: earnings are compounding, margins are marching higher, cash generation remains strong, and Consumer Products – the biggest profit engine – has earned a guidance upgrade for 2026.
Key numbers investors should know
| Metric | 2025 | YoY change |
|---|---|---|
| Revenue | £3,431.6m | +1.1% at actual rates, +4.3% at constant currency |
| Like‑for‑like (LFL) revenue | £3,416.3m | +0.7% at actual, +3.9% at constant currency |
| Adjusted operating profit | £619.6m | +5.0% at actual, +9.3% at constant currency |
| Adjusted operating margin | 18.1% | +70bps at actual, +90bps at constant currency |
| Adjusted diluted EPS | 253.5p | +5.4% at actual, +10.1% at constant currency |
| Adjusted operating cash flow | £762.3m | Cash conversion 110% |
| Adjusted free cash flow | £352.2m | (13.8%) |
| Dividend per share | 165.0p | +5.4% (c.65% payout) |
| Net financial debt | £996.8m | Leverage 1.3x net debt/EBITDA |
| ROIC | 21.3% | Organic ROIC 23.0% |
My take: quality earnings doing the heavy lifting
- Margins are the star. At 18.1%, adjusted margin is up 90bps at constant currency, helped by mix, pricing, operating leverage and productivity. That is exactly what you want to see in a high‑quality testing, inspection and certification (ATIC) group.
- EPS is compounding. 2025 marks a third straight year of double‑digit EPS growth at constant currency (+10.1%). Currency headwinds clipped the reported numbers, but the underlying engine is clearly humming.
- Cash still strong, though FCF eased. Cash conversion was a robust 110%, but adjusted free cash flow fell to £352.2m, reflecting higher interest, higher tax and stepped‑up capex.
- Shareholder returns remained punchy. Intertek returned £602m to shareholders in 2025, including a 165.0p dividend and completion of the £350m buyback.
- Balance sheet healthy. Leverage sits at 1.3x after £156–157m of acquisitions and £145m of capex. That leaves room to keep investing and, if needed, to keep buying back shares in future cycles.
Divisional performance: who drove the year
- Consumer Products – Revenue £983.4m (+6.2% cc); margin 30.4% (+250bps cc). All four lines contributed, with Government & Trade Services delivering double‑digit LFL growth. This is why guidance for 2026 is upgraded to mid‑single digit LFL growth.
- Corporate Assurance – Revenue £514.0m (+6.8% cc); margin 22.6% (‑90bps cc) after a strong 2024 and investment in growth. Demand stayed firm for supply chain resilience and sustainability assurance.
- Health and Safety – Revenue £347.1m (+5.5% cc); margin 13.0% (‑40bps cc). Food testing was double‑digit, while Chemicals & Pharma softened on tough comps and temporary R&D pauses.
- Industry and Infrastructure – Revenue £858.1m (+5.3% cc); margin 11.1% (+170bps cc). Minerals and energy‑linked inspections were strong, with good operating leverage.
- World of Energy – Revenue £729.0m (‑1.3% cc); margin 8.7% (‑140bps cc). A comedown after a strong 2024; Transportation Technologies and Intertek CEA faced tougher comparatives and some client spending pauses.
Notably, recent bolt‑ons in higher‑growth, higher‑margin niches contributed £35.5m of revenue at a handsome 34% margin. That is the right kind of M&A.
2026 guidance and medium‑term targets
Management expects mid‑single digit LFL revenue growth, continued margin progression, strong earnings growth and strong free cash flow in 2026. Segment outlook:
- Consumer Products: mid‑single digit LFL (upgraded)
- Corporate Assurance: high‑single digit LFL
- Health and Safety: low‑single digit LFL
- Industry and Infrastructure: mid‑single digit LFL
- World of Energy: low‑single digit LFL
Financial guideposts for 2026: capex £150‑160m; net finance costs £71‑72m; tax rate 25.5‑26.5%; minority interests £21‑22m; targeted payout c.65%; year‑end net financial debt £930‑980m (pre‑FX/M&A).
Medium term, Intertek reiterates mid‑single digit LFL growth, margin of 18.5%+ and strong cash/ROIC. Given 240bps of margin accretion achieved since 2023 and this year’s 90bps step‑up, that 18.5%+ looks very reachable.
Why this matters for shareholders
- Compounding machine – Intertek’s model throws off high‑quality cash with attractive returns on invested capital (21.3%). That supports both dividends and selective M&A without over‑gearing the balance sheet.
- Mix moving the right way – More recurring assurance work, expanding Consumer Products margin, and high‑margin bolt‑ons provide structural tailwinds to group margins.
- Balanced capital allocation – Capex at 4.2% of revenue, value‑accretive M&A, a 65% payout and completed buyback show discipline and a focus on per‑share value creation.
The watch‑outs
- Free cash flow – Down 13.8% year‑on‑year. Management points to higher interest, higher tax and higher capex. With net finance costs guided up to £71‑72m in 2026, interest remains a headwind.
- World of Energy softness – The pullback after a strong 2024 dragged group growth and margin. The 2026 guide implies stabilisation, but it remains a swing factor.
- FX and SDIs – FX reduced reported growth by 320bps. Separately Disclosed Items rose to £77.3m, including £37.1m of restructuring, which investors should track for duration and benefits.
Quick jargon buster
- Like‑for‑like (LFL) – Growth excluding the first 12 months of acquisitions and any disposals/closures, so you see the underlying run‑rate.
- Constant currency – Prior year restated at current exchange rates to strip out FX swings.
- Adjusted – Excludes items such as amortisation of acquired intangibles and restructuring to show underlying performance.
- ROIC – Return on invested capital: adjusted profit after tax divided by the capital employed. A key measure of value creation.
- Cash conversion – How much operating profit turns into operating cash. 110% is excellent.
Bottom line: momentum with discipline
Intertek delivered what long‑term holders want: higher margins, double‑digit EPS growth at constant currency, and strong cash generation – all while investing in high‑return niches and keeping leverage sensible. The upgraded Consumer Products outlook is a clear positive and supports the medium‑term margin target of 18.5%+.
On the flip side, free cash flow stepped down and World of Energy had a tougher year. Even so, the 2026 guide points to another year of steady growth, better margins and strong cash. For investors who like high‑ROIC compounders with pricing power and defensible positions, this is solid execution.
