Morningstar | Green Shoots for Bureau Veritas as Marine and Offshore Back in the Black
Narrow-moat Bureau Veritas’ third-quarter trading update was in line with our expectations for the full year, with organic growth just shy of 5%, supplemented with almost 4% of growth through acquisitions and tempered by negative currency effects to the tune of 3%. We do not expect to make any material changes to our forecasts on the back of this update, nor to our EUR 21 fair value estimate. We see moderate upside from the prevailing share price.Divisionally, there were a couple of standouts. First and foremost, marine and offshore, the business that we see as the main differentiator from peers SGS and Intertek, delivered its first quarter of positive organic revenue growth in over two years. While growth was a modest 1%, the implications are significant, given that this division has been a significant drag on group performance.  This improvement was partly due to a diversification in activities within the business and partly due to a pickup in general activity in the space. The certification business saw organic growth of 15% in the third quarter, bringing the year-to-date growth rate to 12%, driven by revisions in standards such as the ISO range. While we are certainly not extrapolating out this exceptional level of performance, we believe that in the longer term, increased and ever-changing regulation will be a key driver of growth for the testing, inspection, and certification, or TIC, sector.
Bureau Veritas specializes in inspecting, testing, auditing or certifying products, assets (such as buildings, industrial infrastructure, equipment and ships) and management systems (particularly against ISO standards) based on regulatory or voluntarily adopted standards. Co.'s operations can be divided into eight businesses: ship classification; industry services; inspection and verification of equipment in service; construction services; certification of management systems or services; inspection and testing of consumer products; services related to customs control and international trade services; and inspection and testing of commodities.
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