Good day, ladies and gentlemen, and welcome to Intertek H1 2025 results. 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. 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.
Good morning and thanks for joining us on our call today. Colm, Denis, and I are delighted to be with you and discuss our H1 2025 results. Intertek has demonstrated once again its high performance through the passion, innovation, and the drive of its people. I wouldn't want to start our call today without recognizing all of my colleagues for having delivered a strong set of results in customer service, revenue growth, margin accretion, earning growth, cash generation, and ROIC progression. Here are the key takeaways of our call today. H1 2025 marks the ninth consecutive six-month period of mid-single-digit like-for-like revenue growth and the fifth consecutive six-month period of double-digit EPS growth at constant currency. Our profit conversion was strong with operating margin up by 80 bps. Our cash conversion was 118%, and we've delivered a strong operating cash flow.
Our ROIC was excellent at 22.5%, up by 170 bps. We are increasing our interim dividend in line with our EPS growth at actual rates. Moving forward, the value growth opportunity is significant. We expect a strong financial performance in 2025, and we remain confident in our medium-term targets of mid-single-digit like-for-like revenue growth, margin of 18.5% plus, and strong cash generation. We will continue to operate with our creative discipline capital allocation policy, investing in organic growth, rewarding our shareholders with our progressive dividend policy, pursuing high-quality M&A opportunities, and returning surplus cash to shareholders. Let's start our presentation today with our performance highlights. We have delivered indeed a strong financial performance in the first half of 2025. Our like-for-like revenue growth was 4.5% at constant currency. Operating profit was up 9.7% at constant currency and 4.2% at actual rate.
We've delivered a 16.5% operating margin, up 80 bps at constant currency. EPS growth was 12.6% at constant currency and 6.3% at actual rate. CapEx investment was up 11%. ROIC of 22.5% was up 170 bps at constant currency. The interim dividend of £0.573 is up year on year by 6.3%, and our balance sheet remains strong with a net debt-to-EBITDA ratio of one time. Let's now discuss our like-for-like revenue growth performance. The global demand for Intertek Solutions was robust, and our like-for-like revenue growth of 4.5% at constant currency was driven by both volume and price. We'll discuss later in the call the performance by division and by business line, but we are pleased to see the consistent delivery of mid-single-digit like-for-like revenue growth, resulting in a three-year like-for-like revenue growth of over 13%. We are benefiting from attractive structural growth drivers.
Our clients are increasing their investment in quality assurance to improve their competitiveness. We are seeing a higher regulatory standard for quality, safety, and sustainability. We are seeing an increase in testing and certification activities in our Consumer Products and Health and Safety divisions as consumers want more choices and higher quality choices. Companies are increasing their focus on risk management, making our Assurance business the fastest growing division. The increased investments in oil and gas exploration and production, as well as the electrification of society, are creating structural growth opportunities in our Industry and Infrastructure and World of Energy divisions. Last but not least, our superior customer service drives extremely high customer retention rates and excellent client relationships, driving revenues that are largely recurring and giving us good visibility on new growth opportunities. The consolidation opportunities in our industry are significant, and we are excited about the M&A opportunities.
We've made seven acquisitions in the last five years to strengthen our Etique value proposition in high growth and high margin sectors. These acquisitions are performing very well, and the integration of Thesys, our recent acquisition, is on track. Moving forward, we'll capitalize on our strong M&A track record of selecting and executing transactions that are delivering strong returns. We are also very pleased with our margin performance of 16.5%, up 80 bps at constant currency. Margin accretive revenue growth is central to the way we deliver value. We have increased H1 margin in each of the last three years, and I want to spend a few moments to discuss the building blocks underpinning our three-year 240 bps margin progression. We have benefited from our portfolio mix and strong pricing power. We have delivered consistent mid-single-digit like-for-like revenue growth, driving good operating leverage. We have reduced our fixed costs.
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 £13 million of savings in 2023, £11 million in 2024, and £2 million in the first half of 2025. We expect a further benefit of £3 million in the second half. We truly believe in continuous improvement, and we never stop reinventing ourselves to increase our productivity based on process reengineering and technology investments. Our CapEx and M&A investments were made in high growth and high margin sectors and have delivered through that period margin accretive revenue growth. These positive margin drivers were partially offset by the investment we have made in people, process, and technology to execute our Triple-A growth strategy. I will now hand over to Colm to discuss our H1 results in detail.
Thank you, André. In H1 2025, the group delivered a strong financial performance. Total revenue growth was 4.5% at constant currency and 0.2% at actual rates, as sterling strengthened compared to the major currencies that impacted our revenue growth by 430 bps. Operating profit at constant rate was up 9.7% to £276.3 million, delivering a margin of 16.5%, up year on year by 80 bps at constant currency and 60 bps at actual rates. Diluted earnings per share were £1.115, growth of 12.6% at constant rates and 6.3% at actual rates. Our cash conversion was strong. We delivered an adjusted cash flow from operations of £265.8 million, and we finished H1 2025 with a net debt of £800.6 million, including the £187 million spent on the share buyback to the end of June. This represents a financial net debt-to-adjusted EBITDA ratio of 1 times.
Now, turning to our guidance for 2025, we expect net finance costs to be in the range of £51 to £52 million. We expect our effective tax rate to be between 25% and 26%, and our minority interest to be between £22 and £23 million. CapEx investment will be in the range of £135 to £145 million. Our financial net debt guidance, excluding future change in FX rates or M&A, will be £820 to £870 million. I will now hand back to André.
Thank you, Colm. Let's discuss our performance by division. All the comments I will make will be at constant currency. Our Consumer Products division delivered a revenue of £482 million, up 7.5%. Our high single-digit like-for-like revenue growth was driven by double-digit like-for-like in Softlines, mid-single-digit like-for-like in Hardlines, high single-digit like-for-like in Electrical, and double-digit like-for-like in GTS. Operating profit was £135.6 million, up 15.8% year on year, and our margin of 28.2% was up year on year by 210 bps. In 2025, we now expect the Consumer Products division to deliver high single-digit like-for-like revenue growth. We grew revenue in our Corporate Assurance division by 8.2% to £251 million. Our like-for-like revenue growth was driven by high single-digit like-for-like in Business Assurance, low single-digit like-for-like in Assurance. Operating profit was £55.6 million, up 11.2%, and our margin of 22.1% was up year on year by 60 bps.
In 2025, we continue to expect our Corporate Assurance division to deliver high single-digit like-for-like revenue growth. Health and Safety delivered a revenue of £164 million. Our low single-digit like-for-like revenue growth of 3.2% was driven by double-digit like-for-like in Food, mid-single-digit like-for-like in Agri-world, which was partially offset by negative low single-digit like-for-like in CNP due to a baseline effect. Profitability was impacted by mix, and we've delivered a margin of 11.8%, down 10 bps year on year. In 2025, we now expect our Health and Safety division to deliver low single-digit like-for-like revenue growth. Revenue in Industry and Infrastructure increased 3.7% to £417 million. Our low single-digit like-for-like revenue growth reflects mid-single-digit like-for-like in Industry Services, mid-single-digit like-for-like in Minerals, and stable like-for-like revenue in Building Construction. Operating profit of £36 million was up 4.6% year on year, with a margin of 8.7%, up 10 bps.
In 2025, we now expect our Industry and Infrastructure-related business to deliver low single-digit like-for-like revenue growth. Revenue in our World of Energy division were £359 million. Our stable like-for-like revenue performance was driven by stable like-for-like revenue in our Calibrate business, low single-digit like-for-like revenue growth in our TT business, which was offset by a mid-single-digit like-for-like revenue in our CA business due to a baseline effect. Profitability was impacted by a mix, and our margin of 8.2% was 60 bps lower than last year. In 2025, we continue to expect our World of Energy division to deliver low single-digit like-for-like revenue growth. A few years ago, we introduced our Triple-A differentiated strategy for growth to unlock the significant value growth opportunity ahead. Today, I would like to give you an update on the progress we are making on the ground.
Our Triple-A strategy is about being the best for every stakeholder with laser focus on our medium-term goals of mid-single-digit like-for-like revenue growth, 18.5%+ margin, and strong cash generation. In the last two years, I've shared with you several deep dives called Triple-A strategy in action, which you can see on the slide. Today, I would like to cover three important areas: the attractive growth model of Consumer Products, the exciting global growth strategy of Electrical, and the outstanding business poise for fast growth we have built in India. Let's start with Consumer Products, our largest and most profitable division, where structural growth drivers are both unique and exciting. Our revenue growth model is essentially based on the number of SKUs or product type we test, the number of tests we do per SKU, and the price we charge for these tests.
We operate in a world where consumers want more choices, which means companies need to innovate constantly to gain market share. The global SKU expansion that we've seen in the last few decades has resulted in more SKUs for Intertek to test. Consumers also want higher quality choices, which means companies need to upgrade the performance of their products in quality, safety, and sustainability. This means more tests per SKU for Intertek. The higher performance standards we need to test against mean that we benefit from a higher price per report. Over the years, we've increased our scale leadership position in Softl ines, Hardl ines, and Electrical, and we've delivered consistent revenue and margin progression. Moving forward, we are confident we'll continue to benefit from these three strong growth drivers.
Now, I would like to give you a few examples on how customer expectations for higher quality in Soft lines, Hard lines, and Electrical have resulted in a higher number of tests per report and a higher price per report. On these slides, you can see the progression of the number of tests per report for four types of Soft lines products: T-shirts, a running shoe, denim jeans, and a hat. Here, we are showing four product examples in the Hard lines business: a toy, a stroller, a sofa, and a chair. Finally, the same data for four different product types in the Electrical business: a large battery for energy storage, Electrical fans, lighting certifications, and cooking equipment. Let's now focus on the exciting growth opportunity for the Electrical business, which represents half of our Consumer Products division.
Our global Electrical footprint is excellent, and over the years, we've built large-scale operations, delivering our Etique service across 11 industries in 23 countries. Our track record has been excellent. Revenue growth CAGR was 7% between 2015 and 2024, as the electrification of society increased its growth momentum and as we benefit from continuous regulatory upgrades. Our Electrical business is truly mission-critical to society. In 2020, a year of massive global supply chain disruption due to COVID, our like-for-like revenue grew by 2% on a global basis. We are very excited about the growth opportunities ahead, and we are confident that we'll continue to benefit from the electrification of society and regulatory upgrades. We pursue a very disciplined organic and inorganic investment strategy within Electrical, targeting, as you would expect, high growth and high margin space.
Over the years, we've pioneered the industry with our cyber assurance solutions, and a few weeks ago, we've launched AI Square, the first global AI assurance program. In addition, we've expanded our footprint to increase our capacity in HVACs, renewables, and grid management. Let's now turn to India, where we've built a well-diversified scale business with market leadership positions in most of the business lines we operate in. We operate in state-of-the-art operations, and we have a good national coverage of 18 sites, positioning us well for the exciting growth opportunities ahead. Our business was founded in 1993 and has delivered an excellent performance over the past 10 years, with a revenue growth CAGR of 9.5%. We have leveraged our scale, of course, and benefited from our disciplined performance management, enabling us to deliver a high margin, strong cash, and excellent ROIC performance on a sustainable basis.
India is one of the fastest-growing economies in the world, with very strong fundamentals underpinning the future. Given our track record and growth potential, we expect India to deliver high performance for many years to come. We see opportunities to increase our Etique revenue with existing customers as brands increase the number of products they manufacture in India and upgrade the quality, safety, and sustainability performance of these products. What is equally exciting in India is the number of companies being created every day to seize the domestic market opportunities, as well as the number of international companies setting up operations in India. We have a highly talented organization in India, and we continue to invest in growth. We've opened the Center of Excellence in Gurgaon for our Soft lines operations, which is the flagship of the industry.
We've launched recently our global market access program, SupplyTech, to help factories improve their global market access, and we are leading in the space of sustainability assurance and bio-degradability. Let's now discuss our guidance for the full year. Given the strong performance we've delivered in H1, we are entering H2 with confidence and expect to deliver a strong performance in 2025. We expect the group will deliver mid-single-digit like-for-like revenue growth at constant currency, driven by high single-digit like-for-like growth in Consumer Products and Corporate Assurance, low single-digit like-for-like growth in Health and Safety, Industry and Infrastructure, and the World of Energy. We are targeting year-on-year margin progression. Our cash discipline will remain in place to deliver strong free cash flow, and we will invest in growth with our CapEx investment being circa £135 to £145 million.
We expect our financial net debt to be in the range of £820 to £870 million. A quick update on currencies for your model. Currencies have been very volatile, and the average selling rate in the last three months applied to the full-year results of 2024 would reduce our full-year revenue and operating profit by circa 350 bps and 500 bps, respectively. We believe in the value of accretive discipline capital allocation. Our first priority is to support organic growth, and we target CapEx investments of circa 4% to 5% of revenues to expand our footprint geographically, develop industry-winning innovations that are largely technology-based, maintain our state-of-the-art global network, and invest in technology to digitize and streamline our processes. Our second priority is to reward our shareholders with a progressive dividend policy, and we target a 65% payout ratio.
We are very excited about the inorganic investment opportunities, and our M&A investments will continue to be made with the same discipline, ROIC-driven approach. Our leverage target is 1.3x to 1.8x net debt-to-EBITDA. Given the increasing strength of our high-quality cash component earnings model, we announced in March a £350 million share buyback program to return the surplus cash we do not need to run the company for growth. At the end of June, we have bought 4 million shares for a value of £187 million. In summary, the value growth opportunity ahead is significant.
Our highly engaged, customer-centric organization is laser-focused to take Intertek to greater heights to deliver sustainable growth and value for our shareholders, both capitalized on our high-quality cash component 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. Before I take your questions, let me summarize the economic drivers of our high-quality cash component earnings model. We operate in a highly attractive industry where we've delivered mid-single-digit like-for-like revenue growth for the last three years, and we have good visibility on the structural growth drivers moving forward to deliver mid-single-digit like-for-like revenue growth.
Margin accretive revenue growth is central to the way we manage performance, and we are confident that we'll deliver our medium-term margin targets of 18.5% plus, focusing on our proven margin accretion building blocks. We have step-changed the cash generation of the group and now operate a highly cash-generative earnings model. We'll continue to operate with our accretive discipline capital allocation policy and reward our shareholders with our progressive dividend policy. We'll continue to invest in high growth and high margin sectors with superior execution to deliver an excellent ROIC. In summary, Intertek has created significant value in the last 10 years, and we are well positioned to create significant value moving forward.
To do so, we'll capitalize on our five strengths: our high-quality global growth portfolio, our science-based customer excellence, Etique Advantage, our disciplined performance management, our high-performance organization, and of course, our doing business the right way operating culture. Thank you for being on our call today, and we'll now take any questions you might have.
We will now start the Q&A. If you are dialed into the call and wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. If you've dialed in by phone, please select *9 to raise your hand and *6 to unmute. We'll take our first question from Rory McKenzie of UBS. Please go ahead.
Good morning. It's Rory here.
Morning.
Two questions, please. Firstly, on Consumer Products. Thanks for that deep dive into the growth model. It was really interesting. How does the current environment affect your growth? For example, are you seeing some clients reduce ranges because of consumer challenges? Are there other clients who maybe are speeding up launches before tariffs come in fully? Also, have you seen much acceleration yet in supply chain consulting and those kinds of services? Secondly, I appreciate cash conversion was still strong, but cash flow was a bit below last year. I know there's seasonality, but could you give us any more detail on the working capital outflow in H1 and maybe especially comment on what's within the $30 million change in provisions? Thank you.
Why don't we start with the $30 million provision question? It's a very, very simple answer. Colm McDonagh .
Morning, Rory. We have moved, as we finalized the 2024 EBITDA on a recent acquisition, from a contingent liability into payables. The number is still on the balance sheet; it's just moved between lines. On cash flow, cash from operations is broadly flat. On free cash flow, there's a couple of movements in there around higher CapEx, higher cash tax paid on the back of bigger profits last year. Of course, the weakening of the dollar will have led to some cash outflow on the hedge program. Broadly, conversion is very strong, and we don't have any concerns on the outlook for net debt for the year.
Thanks, Colm. Look, on Consumer Products, our clients, right, are taking the time, Rory, to understand what the tariff change could imply for their economics. That's basically what we are seeing throughout the world. Nobody is rushing or panicking. As you know, our volume of testing and certification is linked to a number of SKUs we test and a number of test SKUs. To set up a yearly production program for any brand, this is a planning that takes a long time. Brands didn't have the time nor the desire to basically advance new product launches, right? We've not seen any demand being pulled forward from a testing and certification standpoint. It just doesn't work like this in Soft lines, in Hard lines, in Electrical, and in GTS, right? Companies set up their supply chain for the next 12 months based on their new product strategy.
They need to get the tier one, the tier two, the tier three supplies organized. They need to get the CapEx approved and implemented in the factories. There is a huge inertia in supply chain planning, as you can imagine. That's super complex. Companies cannot just say, look, we're going to just launch this new product three months before because of the tariff. This doesn't work like this. The, I think, important point for us is that when we basically do a product test or a product certification, it doesn't matter if it's Electrical, if it's Hard lines, and Soft lines. Companies have built scale manufacturing operations around the world that produce not for one geographic destination. Of course, some of the brands importing into the United States might feel some increased cost in the short term. Where they produce that SKU, they produce for multiple destinations.
That's why they're taking the time to understand what the true economics are going to be and what are the options. What's really, really interesting is that we are seeing a significant interest for our SupplyTech assurance program because companies want to take the time to understand what the options available to their product lines are. If you are, let's just say, producing batteries in China or in Korea, and you might want to change your production location for tariff consideration, I just explained it's complicated to set up the supply chain to run it. To change it, it's not easy. They're going to need to look at the entire ecosystem, right? Do they have the raw materials, the components, the logistics infrastructure? This is super complex.
Of course, customers have been very, very positive about the fact that we've reached out to them to say, look, we can help you understand the potential new routes that you could eventually invest in. For us, what it's going to mean if new routes are being established is going to create new opportunities because we'll have more factories to audit and inspect and more products to test and certify. That's the state of play. We are not seeing anyone, anyone, you know, overreacting, which is what I would have expected.
Very interesting times. Thank you, André.
We'll take our next question from Suhasini Varanasi of Goldman Sachs. Please go ahead.
Hi. Good morning.
Good morning.
Just a couple from me, please. Can you discuss what's changed versus your previous expectations in Health and Safety, Industry and Infrastructure, that caused the downgrade to full-year expectations on revenues? The second one, on M&A, there has been a larger deal done in the space in the U.S. I just wanted to get a sense of whether you took a look at that transaction and decided not to pursue it, and how is the pipeline looking today? Thank you.
On M&A, the pipeline is increasingly more active. That's the good news. This is what we've talked about in the last few years. We continue to look at opportunities that make sense for Intertek. Of course, we saw the prospectus on this transaction you're referring to, but I would never have considered that for Intertek. It doesn't make sense for us. As far as the slight change of outlook for Health and Safety and Industry and Infrastructure, this is really a small change around the edge, I would say. We basically are recognizing the H1 performance. We've seen a few project delays with some of our large pharma customers in CMP that will not happen in the second half. Also, with Moody, that's why we are basically adjusting the guidance accordingly. Nothing to worry about. These are just project delays, not cancellation.
Thank you.
We will take our next question from Karl Green of RBC. Please go ahead. If you would like to press *6 to unmute.
Thank you very much. Good morning. Just following up on the provision movements, Colm. If I heard you correctly, you said that that was largely due to a reclassification from a consideration payable to a hard payable. I just wanted to be clear in terms of the cash flow adjustment that's come from that. Did you say it was still payable, so the cash is yet to go out, or the cash has gone out? I'm just trying to reconcile what's happening in terms of the change in provisions of $31 million in the cash flow statement, please.
Good morning, Karl. There's $32 million from contingent consideration once we finalize the EBITDA on the acquisition, and it's now in payables. It won't be in the cash flow because it's separately disclosed as well. Happy to go through more detail with you after the call if you'd like.
Yeah, I mean, one of the questions that's floating around this morning is it's a big cash movement in the provisions in the cash flow. If people just want to understand, you know, is that just kind of timing issues, or has there been provision releases to the P&L?
Yeah. Karl, I'm not sure if there's some crosswires here. The provision movement wouldn't be in the cash flow. The movement of the cash flow is driven by three key factors: it's the higher CapEx, the higher cash tax paid, and the outflow on the H program. I'm not sure why we're linking the two together.
Yeah. On your question, Karl, about P&L, I'm going to assure you that has no impact on the P&L. If you take this reclass, the provision is up year on year.
All right. Okay, thanks.
is no impact on EPS, no impact on cash flow. Thank you.
We'll take our next question from Neil Tyler of Redburn Atlantic. Please go ahead.
Good morning. Thank you. Just returning back to the...
Morning.
Yeah, Morning, André. Returning back to Consumer Products and the themes that you described, and thanks also from me for the detail in the slides. Can you talk a little bit about how that might be changing the competitive landscape more broadly? I'm not just thinking, obviously, of the larger listed players, but more broadly how that complexity is altering that, perhaps, in the major regions. Secondly, you talked about in your comments about pricing power. Now, are you referring again to mix, i.e., more higher-priced tests being performed, similar to the comment you made on the previous call, or are you talking about sort of, I guess, sort of price over cost per item? Thank you.
I mean, look, if I understand your first question, you want to explore would brands or companies open new trading routes because of different tariff considerations? How would that change the testing competitive landscape? That's what your question is, right?
That's right, yes.
Very important question. This is what I was trying to clarify. When a company decides to produce in a country A or B and C, it's a very, very, very strategic and risky decision. Therefore, a lot of building blocks need to be in place: access to the right raw materials, the right CO2 consumptions, not only costs. As you can imagine, companies are really, really focused on CO2 emissions. The right, of course, quality factories, the right logistic infrastructure because you need capacity in the ports, the right, of course, ability to recruit and train. Of course, they need partners in quality assurance because, as you know, these brands and companies don't own the factories. They need our independence. That's why we at Intertek always have a very clear mantra, right, to anticipate where our clients will take the supply chain in the future.
We expand our laboratory network in these locations that make sense. If I were to give you, for instance, an example, we are the only TIC global player in Egypt. We have almost 100% of the market. Why? Because we recognize the importance of the Egypt market in terms of manufacturing in Egypt, but also proximity with a country like Jordan, right? Take another example. Another market where we've invested ahead of the curve is Guatemala, where we are also the market leader because we recognize that there will be some investments from U.S. brands, but also Latin American brands, to produce in Guatemala, which has all the big blocks I was talking about. From our perspective, our job at Intertek is to make sure we stay connected to our clients.
We understand where they want to take the supply chain, and we build the infrastructure they need to expand the supply chain activities. The advantage we have, of course, is that we have a global network. We are the market leader within Electrical. We are the market leader within Soft lines. We know where the supply chains are evolving. I'm not worried about it. If anything, I'm super excited because all these investments we have made, all the skills that we've built in our teams, we are ready. Our clients can rely on our technical expertise as well as our testing and inspection and assurance capability. For us, it's really, really good news because the more factories our clients operate in, the more SKUs we will test and certify, and the more factories we'll audit and inspect. The Etique pie, said differently, will get bigger.
Having said all of that, this is not going to happen overnight, right? Companies are going to need to take the time to study clearly the economics and all the options they need to consider to make a change in their supply chain. This is a very, very complex decision process. This is going to be additive to our growth moving forward. No question.
Thank you. Perhaps before we move on to the second question, given that conclusion you reached, and obviously, a lot of these complexities have arisen subsequent to your issuing the medium-term guidance for that division, which you're tracking above, can I sort of try and tempt you to reframe your medium-term guidance for Consumer Products testing from low to mid, which you've been achieving substantially ahead of that?
Look, it's a fair question. We've done our capital market event a few years ago, and that's true that we're doing better in Consumer Products. Some of you did ask the question at the time. We've just upgraded Consumer Products for the year, and then we'll consider the point moving forward. We are tremendously, tremendously proud of our Consumer Products business. As you know, this is our highest margin business and compounding effect of revenue and margin growth. The one thing I would say is that the performance in H1 has been better than I thought because we had one less working day, right? If you look at the two-year H1 like-for-like of Consumer Products, it's very impressive. It's not like we had a weak 2024, as you would recall, right? Our two-year like-for-like adjusted for one working day less in H1 is close to 15%.
This is very impressive, right?
Yeah.
We'll take our next question from Arthur Truslove of Citi. Please go ahead.
Can you hear me okay?
Of course. Hi, Arthur.
Good morning. A couple of questions from me. First one, you obviously bumped up your guide for Consumer Products for the year. I know that Electrical and Connected World is about half that division. Are you able to just tell us what have been the key drivers of the acceleration within Electrical and Connected World? Can you also just give us an idea of how much of what goes on in Electrical and Connected World is actually linked in any way to trade? I guess also to what extent is it linked to electricity demand and all that we've heard about that in recent times? Second question, I think I'm right in saying your employee costs have fallen. I just wondered how FTE count had evolved. Obviously, you have managed to grow the business very nicely. I just wondered how you've managed to do that. Thank you.
All right. On the Electrical question, this is an important question, right? When we talk about Consumer Products, we always think of Soft lines and Hard lines for the right reasons, right? This is what we've been talking about for many years, but we tend to forget that Electrical is another crown jewel at Intertek, right? We operate the ETL brand. We are a very strong player in North America. We are the global leader outside of North America. It's a science-based operation where having the right scale, the right skills, and of course, the right investment and the right technology makes a big difference. It's not, if you want, one industry, right? It's made of 11 industries. You would recall the presentation that Sonny did at the capital market event where he talked about the various industries we are investing in.
The mega trend behind the incredible performance, which I talked about this morning, even in 2020, it was the only global business line that really continued to grow, is essentially driven by the electrification of society, which is the mega trend of the century, right, with the decarbonization of the world and the way our lifestyles are evolving. That applies to every single industry that we operate in, and higher, of course, regulatory standards, and of course, innovation driving higher functionality and a higher performance. What's, of course, important to state is that the global supply chain in the Electrical industry is different than, for instance, in Hard lines and Soft lines that tend to be concentrated in fewer markets. It is truly global.
We do not expect as much changes potentially in trading routes in Electrical that potentially there will be in other categories if people decide to do so because the supply chain ecosystems are not just local, but are in most of the cases local. This is a very exciting business. We continue to deliver strong performance. What is basically behind the performance we basically delivered this first half? It's essentially we're getting more SKUs to test and certify from our clients in medical devices, in, of course, appliances. We are seeing some investment in battery because energy storage is a very, very big driver of future growth if you want to electrify the society. We are seeing, of course, some really important opportunities with manufacturing as factories need to open. We certify, of course, the machinery, the equipment that goes into these factories.
The work that we've done on cybersecurity over the years is also compounding, right? This is what we are seeing. People talk about AI, which is, of course, a very, very important driver of technology-based innovations. The impact that AI is having on the data center is significant. Guess who is involved in certifying the Electrical equipment that gets into data centers in the United States, for instance? It's ETL, right? It is a testing laboratory brand. This is a very, very, very, very exciting opportunity. The key is we are seeing the benefits of the investment that we have made in grid management, in HVAC capabilities, in renewables. This is a very, very, very strong business for us. All right.
As a reminder, if you would like to ask a question, please use the raise hand function at the bottom of your Zoom screen. If you have dialed in by phone, please select *9 to raise your hand and *6 to unmute. We have another question from Arthur Truslove of Citi. If you would like to go ahead.
I didn't fully catch your response to the question about the employee costs coming down. If you wouldn't mind, we just wondered how you've managed to do that. Thank you.
Good morning, Arthur. Arthur, André has already referenced our cost reduction program. There will be some staff movement associated with that. I don't think we'd go into any further detail.
All right, thank you.
We'll take our next question from Neil Tyler of Redburn Atlantic. Please go ahead.
Hello again. I just wanted to follow up on the previous question about pricing in Consumer Products, André, and ask whether your optimism around pricing and your comments around pricing in the pre-prepared remarks were relating to absolute sort of prices rising on a per-product basis more quickly than they have done in the past, or whether that's more a mix-related question. I have a follow-up question as well around Corporate Assurance. Can you just talk a little bit about the sort of forward visibility in that business and how you're looking at the pipeline of work to be done there and have confidence over that? Thank you.
Yeah. Look, I think let me decompose your question of mix between what I really call portfolio mix and pricing power because I think they are, of course, linked. We look at it slightly differently. When I talk about portfolio mix, right, and it starts at the site level, staying with Electrical, if our site manager's in Boxborough, right, has got 100 engineers and he applies these available engineering hours to one product category, let's just say lighting certification, is going to make a margin of X based on the price he charged, the cost he operates in, etc. Really, the mix management from a portfolio standpoint at Intertek starts with the choices that our site managers make to basically focus on the good growth, good margin opportunities. In the case of Boxborough, which is our highest margin Electrical business in North America, of course, they're very strong in lighting.
They're very strong in HVACs. They're very, very strong in battery testing. They have invested because there's been a significant investment in this region in medical devices, which is a higher margin business because we are basically charging the hours at a higher price point, right? It is pricing power, but it is not a price increase. When I talk about the mix, essentially, it's growing businesses that have scale, strong pricing power, and higher margin faster than the rest. That applies at your site level. That applies at the regional level. If you look at the region like Europe, that applies at the global level. When I talk about the mix effect having impacted our margin in the last three years, it's essentially purely the portfolio. When it comes to pricing, how do we increase the price at Intertek? There are obviously several considerations to take.
One is our price points, right? The hours that we charge for an auditor or for an engineer or for a chemist. Here we've talked in the past about our policy. Our policy is to basically increase price reasonably. In a period of high inflation, we just passed 50% of the wage cost increase to our customers so that we show a real partnership and over time we'll catch up. When I said earlier today, you know we had both volume and price in our like-for-like revenue growth, and it's about one-third, two-thirds, we are still taking prices because we say we would do so because in 2022 and 2023, in the high inflation period globally, we didn't price the full wage cost increase. In addition to your price point that you put in your contract with the customer, there are other ways to increase price.
One of them is, of course, to sell solutions of higher price, which are what we call margin accretive innovations. The one that you're referring to is what I just talked about today in Consumer Products, which is essentially increasing the number of tests per report. When we look at our volume, our volume is a test report, and the price per test report is a function of the price point we charge per hour, as I just explained, but also the number of tests we do per report. That's why you've seen the performance that you've seen in Consumer Products. Does it make sense?
That makes perfect sense. That's really helpful. Thank you.
Yeah. That's why you would have noted in the presentation I've talked about portfolio mix and pricing power. As far as Corporate Assurance is concerned, this is a business where you have, of course, extremely good visibility, like in many of our businesses, because when we do audits for our clients, this is typically a three-year cycle. When we basically win a new business opportunity, it's pretty easy to plan for it. The visibility is very good. There is a concept that we use in our industry called backlog, essentially the orders that you have on the books, right? We look at this data precisely to underpin our forecast and, of course, what we share with you in terms of guidance.
Great. That's very helpful. Thank you very much.
You're welcome.
There are no further questions on the webinar. I will now hand over to management for closing remarks.
Thank you very much for being on the call today. Of course, Denis is available for any more questions you might have. Thank you very much.
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