Earnings call transcript: Intertek Q3 2025 sees revenue growth and strategic expansion

Intertek Group PLC reported a 4.6% revenue growth at constant currency for the first ten months of 2025, driven by strategic initiatives and strong market performance in key sectors. The company’s stock fell by 4.39% following the earnings announcement, reflecting investor sentiment on the financial results and future outlook.

Key Takeaways

• Revenue growth of 4.6% at constant currency, 1.2% at actual rates.
• Completion of £328 million share buyback program.
• Strong performance in Consumer Products and Corporate Assurance sectors.
• Launch of AI Squared, enhancing the company’s position in AI assurance.

Company Performance

Intertek demonstrated solid performance in Q3 2025, with a total revenue of £2,850 million for the first ten months. The company achieved a 4.6% revenue growth at constant currency, reflecting its strategic focus on divisional mix, pricing initiatives, and disciplined cost controls. This growth was further supported by strong momentum in Consumer Products and Corporate Assurance, while Industry and Infrastructure sectors also showed improvement.

Financial Highlights

• Total revenue for 10 months: £2,850 million
• Revenue growth: 4.6% at constant currency, 1.2% at actual rates
• Like-for-like revenue growth: 4.3% at constant currency

Outlook & Guidance

Intertek expects mid-single-digit like-for-like revenue growth, with high single-digit growth anticipated in Consumer Products and Corporate Assurance. The company is targeting an operating margin of over 18.5%, driven by increased demand for ATIC solutions and a more supportive macroeconomic environment.

Executive Commentary

CEO André Lacroix emphasized the company’s focus on converting revenue growth into stronger profit growth, stating, "We are laser-focused on converting revenue growth into stronger profit growth." He also expressed confidence in the company’s future performance, citing increased demand for ATIC solutions and supportive macroeconomic conditions.

Risks and Challenges

• Potential restructuring in Transportation Technology could impact short-term performance.
• Macroeconomic fluctuations may affect demand in key markets.
• Competitive pressures in the AI assurance space require continuous innovation.
• Changes in regulatory environments could pose compliance challenges.

Q&A

During the earnings call, analysts inquired about the growth in the minerals sector, which was attributed to technology and capacity expansion. Questions also focused on the company’s pricing strategy, which balances price and volume to drive growth. The demand for AI Squared in medical devices, robotics, and retail was highlighted as a key growth area.

Full transcript - Intertek Group PLC (ITRK) Q3 2025:

Conference Operator: Good day, ladies and gentlemen, and welcome to Intertek November 2025 Trading Update. 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 star nine to raise your hand and star six to unmute. Instructions will also follow at the time of Q&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 André Lacroix, Chief Executive Officer, to start the presentation. Thank you.

André Lacroix, Chief Executive Officer, Intertek: Good morning to you all, and thanks for joining us on our call. I’m with me, Colm Deasy, our CFO, and Denis Moreau, our VP of Investor Relations. There are essentially five key takeaways from our call today regarding our July-October trading statement. First, we have benefited from a robust growth in our two highest-margin divisions, Consumer Products and Corporate Assurance, in the July-October period, where we’ve delivered a 5.8% like-for-like revenue growth on a combined basis, despite a very demanding base last year. Second, we saw trading momentum improve in Industry and Infrastructure, with a strong acceleration in Minerals and a good pickup in Building and Construction. Third, important message on Transportation Technology, the restructuring in the automotive sector in Q3 resulted in double-digit negative like-for-like revenue growth in Transportation Technology.

The group like-for-like performance in July-October ex transportation technology was in line with the run rate we had in the first half. Of course, we continue to invest in growth with the three acquisitions that we’ve made in 2025 in high growth and high-margin sectors, and we have launched several industry-leading innovations like Supply Tech and AI Squared. Final message for today: given our strong margin and excellent cash performance, we are on track to meet the earnings expectations for 2025. These are the key takeaways for our calls today. Let me just start our call today by answering the three most frequently asked questions in our investor meetings. The first question we get is, what are your growth expectations in Consumer Products?

We are extremely pleased with the performance of our Consumer Products division, which has delivered a 6.9% like-for-like revenue growth in the first 10 months of the year after an excellent year in 2024, where we saw 8% revenue growth. The global consumer continues to expect more choices of high quality, triggering more innovation with existing brands and, of course, the emergence of new brands. We are very confident about the growth outlook of our Consumer Products division, and we do not expect that mega trend to change. What I’d like to do now is give you a few examples of what our passionate and innovative colleagues do every day in our Consumer Products division. Within our softline teams, our global sales organization has won several new contracts with existing and new clients.

Our hotline colleagues continue to expand the portfolio and recently created a breakthrough by opening a pet toy center of excellence in Hong Kong. Our electrical colleagues are continuing to invest in fast-growing space like energy storage, EMC, HVAC. They are at the cutting edge of total quality assurance for AI-based products and services. Our GDS colleagues have won numerous new contracts in the Middle East and Africa. The second question we get is, what are the building blocks that you have in place to deliver your 18.5-plus % margin target? As you know, margin equity revenue growth is central to the way we manage performance at Intertek. We have a strong track record of consistent margin progression and expect to reach 18.5% margin in the next few years, with plenty of further opportunities beyond. We drive margin equity revenue growth based on five distinct priorities.

First, the portfolio effect at the site level linked to volume, price, and mix management. Second, fixed cost leverage linked to revenue growth. The faster revenue grows, the better leverage you have. Third, variable cost productivity improvement. We never stop reinventing ourselves to find new productivity opportunities. Fourth, targeted fixed cost reduction. We continuously remove unnecessary costs in the business. Fifth, of course, margin equity investments when we do innovation, technology, and M&A. We do this based on the best-in-class capability that we have built step by step over the years. We are indeed managing performance on a daily, weekly, and monthly basis with digital operating systems that give us real-time visibility. We have a strong pricing discipline and take price increases regularly, leveraging our superior customer service. Our site benchmarking tool gives our operation a precise quantitative analysis of where the opportunities are.

We pursue a disciplined growth and margin equity capital allocation policy. Importantly, 70% of our annual incentive scheme is based on margin equity revenue growth. The third question we get is, what are your growth investment priorities? We operate in a very exciting industry, and we are laser-focused on the investments that we can make to seize the attractive growth opportunities ahead. Our number one priority is, of course, to invest in our local operations. We’ve invested more than GBP 1 billion in CapEx in the last decade, close to circa 30% of cumulative adjusted free cash flow, and we operate a state-of-the-art lab network around the world. Last month, we opened our footwear center of excellence lab in Bentonville, Arkansas, the home of Walmart, and have witnessed firsthand how these investments have already created immediate growth opportunities.

Our second priority is to reinvent ourselves by offering our clients new solutions to address the needs that are not met in the industry today. We believe in the importance of technology to augment the strengths of ATIC solutions. Let me give you a few examples of what we do in tech. Our people assurance business provides a comprehensive suite of audit and training solutions with a SaaS delivery platform reaching close to 5 million frontline workers today. Within our softline and online businesses, we have strengthened our customer value proposition with the digitization of our testing solutions with high care and inspection services with I2Q. Recently, we have partnered with Trace4Good to offer a digital platform for our clients that need to manage their data to get their digital passports ready.

A few months ago, we’ve launched AI Squared to help our clients identify and manage the risks intrinsic to what they do with AI when they try to augment the value of their products or services. Our third priority is to invest in M&A to expand our ATIC portfolio. Our acquisition strategy targets companies that have a strong track record in high growth and high-margin sectors. We made six acquisitions between 2020 and 2024, and these six investments have delivered an aggregate margin of 25.1% in 2024. This year, we’ve acquired three excellent companies: TASIS in Brazil, EnviroLab in Australia, and SupliLab in Costa Rica. We are seeing a good pipeline of M&A opportunities, and we remain selective to identify the right M&A opportunities.

Before I turn to our trading performance, I just want to let you know that in our investor website, you can now access three new types of information: an interactive financial modeling tool, the answers to the frequently asked questions, and a dedicated, you will be amazed web page where you can discover what we do every day for our clients. Let’s now turn to trading in the last four months. The group has delivered a robust trading performance with a 4.1% like-for-like revenue growth at constant currency. We have seen a robust like-for-like revenue growth in Consumer Products and Corporate Assurance against a demanding prior year comparator. Like-for-like revenue growth in Health and Safety was in line with expectations. We saw a trade momentum improvement in Industry and Infrastructure, while in the World of Energy, we saw a stable performance.

Our Consumer Products division delivered like-for-like revenue growth of 5.4% at constant currency, driven by double-digit like-for-like revenue growth in GTS, a high single-digit like-for-like revenue growth in Softline, and a mid-single-digit like-for-like revenue growth in our Lines and Electrical. The 2024 base was very demanding for Consumer Products. Over two years, we’ve delivered a 15.1% like-for-like revenue growth at constant currency. Our Corporate Assurance division delivered a like-for-like revenue growth of 6.6% at constant currency, driven by a high single-digit like-for-like revenue growth in Business Assurance and a stable like-for-like revenue in Assurance. The 2024 base was also very demanding for Corporate Assurance. In the past two years, we’ve delivered a 16.9% like-for-like revenue growth at constant currency. Our Health and Safety division reported a like-for-like revenue growth of 0.8% at constant currency.

Double-digit like-for-like revenue growth in food and a low single-digit like-for-like in agri world was partially offset by negative mid-single-digit like-for-like revenue performance in chemical and pharma due to a strong comparator and some temporary project delays. On a two-year basis, we delivered a 9.1% like-for-like revenue growth at constant currency in health and safety. Industry and infrastructure reported a 6% like-for-like revenue growth at constant currency, which was a 300 basis points acceleration compared to what we saw in H1, driven by an improved momentum in minerals, where we delivered double-digit like-for-like revenue growth and improved building construction performance with a low single-digit like-for-like revenue performance, while industry services continued to deliver a mid-single-digit like-for-like revenue performance.

The World of Energy delivered a stable like-for-like revenue growth at constant currency, driven by double-digit like-for-like revenue growth in CEA and a low single-digit like-for-like revenue growth within Clean Energy Associates, while transportation technology saw a double-digit negative like-for-like revenue performance due to a baseline effect and a temporary reduction of investments for some of our clients as they focus on reducing their cost base in what is the more challenging market for them. Turning now to the performance at the group level on a year-to-date basis, our revenue for the 10 months to the end of October was GBP 2,850,000, a growth of 4.6% at constant currency and 1.2% at actual rate. Our like-for-like revenue growth of 4.3% at constant currency benefited both from volume and pricing. Our recent acquisitions are performing well and contributed GBP 9 million revenue on a year-to-date basis.

Margin progression was strong as we benefited from our divisional mix, pricing initiatives, good operating leverage, disciplined cost controls, and productivity improvements. We delivered an excellent free cash flow performance, and ROIC was also excellent. We have completed GBP 328 million of our GBP 350 million share buyback program that we announced in March, and we are basically now going to discuss our guidance for 2025. We continue to expect that the group will deliver mid-single-digit like-for-like revenue growth at constant currency, high single-digit like-for-like performance in Consumer Products and Corporate Assurance, mid-single-digit like-for-like performance in Industry and Infrastructure, low single-digit like-for-like performance in Health and Safety, and a stable like-for-like performance in the World of Energy. Given our strong margin performance in H1 and a strong quarter of earnings in the July-October period, we are targeting strong margin progression.

Our cash discipline will remain in place to deliver an excellent free cash flow. We’ll invest in growth with circa GBP 135 million-GBP 145 million of CapEx. We now expect our financial net debt to be in the range of GBP 925 million-GBP 975 million, reflecting the two additional acquisitions made in the second half. Our interim currency guidance remains unchanged. Net net, we are on track to meet the earning expectations for the full year. We are seeing high demand for ATIC solutions, and the value growth opportunity ahead is significant. We are laser-focused on converting revenue growth into stronger profit growth, targeting our 18.5% plus operating margin targets. Our strong cash generation will enable us to invest in growth while providing our shareholders, of course, with strong returns.

We are confident in the sustainability of the strong performance that we’ve seen in the last few years, and we look forward to another strong performance in 2026. Our confidence is based on the continuing increased demand for ATIC solutions and our expectations for a more supportive macroeconomic backdrop. Let me summarize the highlights of our trading statements today before taking your questions. In the last four months, we’ve delivered quality growth with our two highest margin divisions, Consumer Products and Corporate Assurance, delivering a robust like-for-like performance. We are converting revenue growth into strong profit and excellent free cash flow, and we are on track to deliver strong performance in 2025, and we are well positioned to deliver another strong performance in 2026. Thank you for joining us on our call today. We’ll answer any questions you might have. We will now start the Q&A.

If you have dialed into the call and wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. The first question is from Rory McKenzie at UBS. Please unmute yourself and begin with your question. Morning all. It’s Rory here. First question I wanted to ask about was on Consumer Products, where it’s still delivering good organic growth, but obviously softlines and electricals have slowed a bit since H1. Is that just the higher comparison base you’ve hit so far in H2, or are you seeing any hesitancy from brands at all, given the uncertainty in some of the consumer markets? I think you commented that you were very confident in the growth outlook for Consumer Products. I just wanted to understand if that means we’re at a fair run rate or whether you expect any changes in that one going forwards.

Secondly, in transport technologies, can you just give a bit more detail on your exposure here? Have you seen a slowdown across the auto space in the U.S., Europe, or China? Where is your biggest business there? Maybe a bit more on where exactly you’re involved in their projects. Thank you. Thanks, Rory. Look, I wouldn’t call the like-for-like performance in July-October in softlines and electrical and outlines or consumer product a slowdown. I just want to remind everyone that last year in July-October, we did 9.5% like-for-like revenue growth in consumer product with an exceptionally strong performance in softlines and electricals. Look, it’s compounding. The demand continues to increase. We are winning quite a lot of new business with existing and new clients. The team is doing a great job in terms of customer service, innovation, and of course, assurance solutions.

This is a very, very, very good place to be in, and we’re not worried about demand within Consumer Products in the next few years. Everything is basically in line with our expectations. As far as transportation technology, it’s a relatively small business for Intertek. We are only present in three regions: the U.S., Europe, and China. We are seeing essentially a significant level of restructuring activities, and everything is public. You can see it obviously on the web. All major OEMs in Europe and in the U.S. have basically announced significant cost cutting in Q3 to deal with a few things. One is they are facing intense competition in one of their important markets called China from the local OEMs. Of course, the cost of doing business in the U.S. is increased with the new tariff situation.

They are trying to basically rebase their cost structure to make sure they continue to deliver the right cash flow that they need to invest in growth. We do not worry about the long-term prospect in transportation technology because we all know this is an industry where innovation in technology is paramount, and they will obviously start investing again after this temporary reduction in new project funding. Where we are invested in, we essentially invest in greener fuels, hybrid electrical technology in both Europe and the US and in China. We are really front and center in the engine development, being combustion engine for greener fuels or hybrid or electrical powertrains. Thank you. Great. Thank you, André. The next question is from Suhasini Varanasi from Goldman Sachs. Please unmute yourself and begin with your question. Hi. Good morning. I hope you can hear me.

Just a couple of questions from me, please. I think this is the first time in a while that you’ve talked about the next year’s outlook with the three-year results. Just wanted to understand the rationale behind this. I know you mentioned a supportive macro backdrop, but are you calling out a change in consumer or customer sentiment given that most of the tariff deals have been reached? Just want to understand that, please. Secondly, in Industry and Infrastructure, can you maybe provide some color on the recovery that you’ve seen in building and construction and minerals and your expectations for 2026? Thank you. Yeah. Thank you. This is something that we also did last year. We announced our trading statement for July-October and started talking about 2025. This is not new.

As you know, we basically presented our strategy a few years ago, which has a very clear outlook in terms of mid-single-digit like-for-like revenue growth through the cycle with a target of 18.5% plus margin and strong cash and disciplined capital allocation. Our narrative, if I were to say so, in our trading statement is in line with what we did last year and in line with the capital market event. We see a much better environment in terms of growth across all divisions for the next few years, and there is nothing more than that. Of course, the point that we are making on the statement about a slightly better supportive macro backdrop, there is no question that there have been some uncertainties in certain industry driven by some of the tariff increases where companies have been obviously being a bit more careful with investment.

We’ve not seen much of that in the Consumer Products division, but there is no question that with the tariff situations being what it is at the moment, i.e., clearer and certainly very, very, very precise now for each of the operators, I think that should remove some of this uncertainty away. That’s basically what we are basically saying. As far as Building Construction, look, we expected an acceleration of demand in Building Construction in the United States. This is where we operate, as you know. When there is an election year, there is always a bit of a pause before and after the election year. What we are seeing is with the lower interest rate environment, an increased confidence in future spendings.

We are obviously benefiting from the activities in data centers to power the AI transformation in society, which is a business that we are well positioned to benefit from because we have essentially a building construction operation that can basically get involved in the design phase, the building phase, but also when we do the commissioning. Also from an operational standpoint, our electrical business is highly involved with the certification of the equipment that goes into the data center. There is no question that that continues to be a driver for us. The other important driver is, of course, the investments that are happening in the United States in terms of large projects and infrastructure. As you know, the previous administration passed two important bills, the Infrastructure Bill and also the Inflation Reduction Act.

There is close to $1 billion of investment that have been approved that are basically being obviously invested at the moment. Largely, we’re benefiting from that. Finally, the move towards greener buildings continues to be very beneficiary for us. We expect building and construction to continue to do well. Thank you. The next question is from Alan Wells at Jefferies. Please unmute yourself and begin with your question. Hey, good morning, André. Good morning, Tom. Just a couple for me. I just thought, could you provide a little bit more kind of regional color on the business? You’ve alluded to some of the benefits coming through in North America. Maybe you can expand on that a little bit beyond the BNI side, what else you’re seeing in North America.

Maybe a comment on China and exactly how the business in China is doing there. Maybe following on from Suhasini’s question on the industry and infra business and the growth pickup there, what does the pipeline look like on the CapEx side of that business as we think about 2026 as well? Thank you. Thank you. Look, we will give the data on a regional basis, but I mean also a full-year basis, full-year results, sorry. Essentially, in North America, the key trends are BNC improving its run rate because essentially our BNC business is largely in North America. You got the data. We are seeing a better second half within credit breadth as expected. Your question about the pipeline and industry infrastructure, look, it’s looking good for next year. We are positive. China continued to motor ahead.

I mean, we had another mid-single-digit like-for-like revenue performance. We are not seeing any slowdown whatsoever. The team is doing a great job there. Thank you. The next question is from James Roland Clark at Barclays. Please unmute yourself and begin with your question. Thank you. Second, my question is, my first is just on minerals. It has obviously had a pickup in performance in double-digit growth in the last four months. Can you talk about the drivers behind that and how sustainable you think that is going into next year? Then secondly, on M&A, a couple of deals announced in the second half that has raised your net debt target. Could you also just talk a little bit about the multiple on those deals, the rationale, and the sort of dilution or accretion to EPS? Thank you. Of course. Thank you.

Look, on minerals, a few years ago, you might recall we invested in a center of excellence in Perth that has been obviously operational now for a few years at truly ramp-up. We have increased essentially our capacity. Through technology, we have also increased our productivity. We have an incredible operations in Australia. I am not going to talk about the other regions in a second, but starting with the biggest one. Essentially, the team is getting market share. We have been winning lots of new clients because we have got the superior quality and the right turnaround time, and the center of excellence is working. It is essentially investment in capability to provide an even better customer service and getting market share.

There is no question that with gold being at the level it is, the exploration in gold is also helping, but it’s not the only driver of our growth in Australia. If you look at the other businesses where we are strong in minerals, we have very strong operations in Africa, a very strong operation in the Philippines, very strong operations in China. These three markets continue to benefit from the investments in iron ore infrastructure, which is, of course, an important theme in these developing regions. This is all positive for us. Clearly, I know I said it’s a double-digit, but as you know, it’s a strong double-digit performance. Very pleased with the performance of minerals in H2. As far as M&A, as you know, we are very selective.

We only invest in transactions that are going to be either growth and margin accretive to the group. This year, we have selected three individual businesses that are high-quality business. This is in Brazil, which is a premium product testing business with an excellent management team and very, very strong delivery platform, which has delivered consistent growth and really, really good margin. I had the opportunity to spend quality time after the acquisition was announced with the team. This is definitely an asset that will help us capitalize on our building construction expertise and expand in Brazil and potentially in Latam. The other important news in Latam is the acquisition of SupliLab. This is more recent. This is a gold-standard food and medical device laboratory in Costa Rica.

This is a market that we wanted to be in because we got tremendous expertise in food in the region. Not only is it a market where we have opportunities in Costa Rica, but also this is essentially a gateway to expand our solutions in Central America. This is a region where we see tremendous growth. Again, top-notch operators, fantastic delivery platform, high margin, and really, really good growth opportunities. The third acquisition we made this year is called EnviroLab in Australia. I had the opportunity to spend time with the team a few weeks ago. Excellent, excellent infrastructure, scale lab in Sydney, scale lab in Perth, plus a few other regional labs. They are one of the top three operators. They have the reputation of being the best in terms of quality, customer service, and certainly turnaround time. I understand why.

This is a very, very, very top-notch operation, tremendous margin, and excellent cultural fit. I mean, when you acquire a business and the management team tells you, "The owner had to make a decision on who to sell the business," where they said to you, "We were pushing for Intertek because there is the best cultural fit with your science-based approach and ours," right? These are three really fantastic acquisitions. In terms of earnings potential, look, they are all above the group margin. They are going to be very, very critical to our margin performance. Very, very pleased. The pipeline of opportunities is looking better than it was a year ago and two years. Having said all of that, we’re always going to be very selective. We only want to bring top-notch assets.

I talked earlier in the call today about the performance of the acquisition that we made between 2024, and they have all delivered a significant margin performance well ahead of the group. That is what we like to do. Thank you. The next question is from Virginia Montosi at Bank of America. Please unmute yourself and begin with your question. Good morning. Thank you for taking my question. Could you just talk a little bit more about how you are thinking about buybacks into next year? I think you clearly have the visibility and the flexibility on the cash to do more. Could you just help us understand how to think about it for next year? Thank you. Yeah.

Look, when we announced our share buyback program for 2025, we obviously recognized several important points that the earnings models of the group have got so much stronger over the years that we have the opportunity to invest in organic growth and organic growth. If we do not need the cash that is on a balance sheet, we basically return it to our shareholder. That is basically how we make the decision. We have not made the decision for next year yet. It is going to be a decision that will be made by the board later. Essentially, we want to grow. We are investing in organic and inorganic growth. Based on the opportunities that we have, if we do not need the cash, then we will return it to our shareholders. That is as simple as that. Thank you very much. The next question is from Annelies Vermeulen at Morgan Stanley.

Please unmute yourself and begin with your question. Hi, good morning. I wanted to ask about AI in particular and your AI Squared product or solution. Could you talk a little bit about how fast that’s growing? Where are you seeing demand from customers? What type of customers are asking for these solutions? Perhaps how does that offering compare to your competitors? Given the amount of investment that’s going into AI, what are you doing to ensure that that solution stays relevant? As a follow-up to that, is this also a focus area for acquisitions in terms of increasing your capabilities around AI? Thank you. Yeah, thanks for asking the question. Essentially, our clients today are looking at AI, as you can imagine, in, I would say, three types of areas, right?

The first obvious area is how they use AI to augment the performance of their product and services and customer activities. The second, obviously, use of AI is how they use AI to develop their own algorithm and essentially improve their productivity. You know exactly what it’s all about being in the banking sector. The third area, which is obviously a bit more nascent, is a lot of companies are letting their employees get access to third-party large language algorithm. This is an additional risk for corporations because people will be uploading data on these large language models, right? Essentially, AI Squared, as you know, is an end-to-end independent AI assurance program. I do not think there is anything like that in the market. I have seen, of course, some of the tactical moves of our peers, but there is nothing that basically is end-to-end like ours.

It starts with governance. Essentially, it’s helping companies put the right risk management framework. It’s including an ISO 42,000 certification program. It’s obviously including training as well as risk management. We focus on what we call transparent AI, so making sure that our clients have the right technical documentation that meets existing and future regulatory standards so that they are compliant with what’s required. We want to make sure that there is always a human oversight when they develop algorithm. Of course, looking at any issues with data quality, which could influence the output of the algorithm, as we know so well, and of course, bias. The other area that we focus on is what we call secure AI. There is a lot of concerns within the AI industry when it comes to cybersecurity.

We basically make sure that we do all what we do for our clients in terms of cybersecurity when they use AI algorithm, red teaming exercise, for instance, looking at security threats, and that is very important. The final, of course, important area we focus on, which is what we call safe AI, is essentially making sure that the functional safety of the algorithm is delivering what it’s supposed to do. It’s about, obviously, managing the performance of the machine learning, but also looking at data verification and validation. Essentially, we go to our clients when we have our C-suite meetings and present AI Squared, like I just did today to you. The reaction is obviously very, very positive because this is a new technology that people do not understand very well, with the exception of the big tech companies. Let’s be clear about it.

This is an area where, with our assurance and testing activities, we can make a big difference. Look, I am very, very optimistic. This is bang in line with what we have been doing in cybersecurity and connected device and integrated cyber networks over the years. There are tremendous synergies. The type of industries that are obviously high in demand for us at the moment, medical devices, where AI is part of the customer solutions, robotics, very, very, very important. Of course, all the retailers that are obviously starting to augment the performance of their product with AI. Very, very exciting. Of course, we will keep you updated. Perfect. Thank you. Just a reminder, if you wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. The next question is from Will Curtness at Bernstein.

Please unmute yourself by pressing star six and begin with your question. Hi, there morning. Two questions, please. I’m really happy with the margin progress. You list a number of factors. I just wondered if you could perhaps identify which ones are most material, if they are, with that sort of savings leverage, M&A flowing into the mix. Secondly, if you could give the rough split of price versus volume and how you see the business being able to continue to push for price into next year. Thank you. Thank you. Look, I think on pricing, I mean, our revenue performance is about one-third price, two-thirds volume. As you know, we took a very partnership approach base when we saw the inflation in 2022 and 2023.

There is a bit of catch-up because we did not obviously increase the price by the same amount that we saw in terms of wage increase in this period. Our policy is that we basically believe in pricing power based on superior customer service, innovation, and taking regular prices that are fair to your customers. If we invest in quality, our customers will, of course, see the difference and then basically are okay with continuous pricing. We are in a good place here. As far as the margin progression, look, there is no one silver bullet, right? It is about doing what I just talked about in the past.

It starts first and foremost at the site level, where every site has got the opportunity to drive margin, equity, revenue growth based on the portfolio approach they take, which is management and, of course, making sure that they charge the right price for what they do. There is no question that organic growth. If you’ve got a high organic growth, you get better operating leverage. We are very demanding ourselves. We have a culture of better continuous improvement of Kaizen and Japanese. We never stop looking at ways to basically improve our productivity. I talked about the example of how automation is accelerating our turnaround time in Perth, our minerals site in Australia. This is, of course, having a big impact on margin. Each time we can use technology to basically improve productivity, that has a benefit on margin.

I mean, you’ve seen it over the years. We never stop looking at how we can reduce non-essential layers, deck out fixed costs that are basically not necessary. As you probably know, we run the company through a global business line, organizations, and a regional organization. We do not have country management at Intertek anymore. We took that out over the years because there is a strong premium to industry expertise. Our regional heads have got industry experts working with our global heads. We felt that. That obviously has made a big difference over time in terms of overheads. Lastly, we are very disciplined when we invest our capital, right? We do not want to basically dilute our returns. It is about disciplining capital allocation. Essentially, this is what it is all about.

There is no question that the database that we’ve built side by side, looking at financial, non-financial metrics for several years now, gives us a huge data advantage. We’ve got incredible visibility on where is the margin improving. Equally, where are the opportunities to get better? As I’ve said on this call in the past, span of performance, which is how the various sites perform in a certain country within the same business lines, remains a significant opportunity. It will always be an opportunity because when you drive margin equity revenue growth, the best will get better. The laggards will improve, but there will be still a gap. Look, this is central to the way we create value for our shareholders. We believe in high-quality like-for-like revenue growth, which is mid-single digit with margin accretion and strong cash and disciplined capital allocation.

The compelling effect of this is what you see in, obviously, the EPS performance of the group over the years. Great. Thanks very much. There are no further questions on the webinar. I will now hand back to management. Many thanks for attending our training call today. Of course, Denis is available if you have. I wish you a great day. Thank you.

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