Interim Management Statement

RNS Number : 2965E

IMI PLC

09 May 2013

 



9 May 2013

IMI plc ('IMI' or 'the Group')

Interim Management Statement

IMI, the global engineering group, issues the following Interim Management Statement, which covers the period from 1 January to 8 May 2013. 

Current trading and outlook

Overall trading in the first four months of the year has been in line with management expectations as communicated at the time of our Preliminary Results on 7 March 2013.  Group revenues in the four months to April were down 1% on a reported basis and 3% on an organic basis, after adjusting for exchange rate movements and acquisitions.  Based on current market conditions, we remain confident that the Group will deliver progress over the full year in 2013. 

Severe Service

Revenues in Severe Service were flat on a reported basis and down 2% on an organic basis in the first four months of the year.  This reflects a positive performance given the very strong start we had in 2012, when shipments included a catch up in backlog that existed at the end of 2011.

Order intake has been encouraging, up around 20% in the period to the end of April.  There has been continued good momentum in the Oil & Gas sector, where we have secured a particularly large order in the Middle East and where LNG remains very buoyant.  Quotation activity remains high in the Petrochemical sector, with the US market rejuvenated on the back of low cost shale gas.  We have also won a couple of good contracts for new equipment in the Nuclear sector.  Order intake in the Fossil Power sector is broadly flat year on year, whilst Iron & Steel markets remain difficult in a challenging environment.

As previously indicated, there are some lower margin contracts still being shipped in 2013, mainly in the first half.  However, margins are expected to improve in the first half benefitting from productivity gains in our Brno manufacturing facility and to show progressive improvement thereafter as the lower margin shipments complete. 

Fluid Power

Revenues in Fluid Power were down 4% on a reported basis and 5% on an organic basis in the four months to April.  As expected, we saw a slow start to the year in the Commercial Vehicle sector against a strong first quarter last year.  Commercial Vehicle revenues are down 11% year to date with European and North American markets weak as customers adjusted stock levels down in the first quarter. We now expect Fluid Power revenues in the first half to be at similar levels to or slightly ahead of the second half of 2012.  We are seeing an improvement in industry demand data in the US market and have recently received notification of an impending uplift in production schedules from a number of major truck manufacturers in Europe.  This positive news on Commercial Vehicles, together with improving momentum in our order intake and an acceleration in contribution from a number of recently launched new products, supports our expectation of a return to growth for Fluid Power in the second half.

Margins are expected to be slightly down in the first half compared to the first half of last year as a result of lower activity levels.  However, there continues to be good underlying margin momentum with ongoing value engineering initiatives, supplier rationalisation and further transfers of production lines to lower cost sites. 

Indoor Climate

Indoor Climate revenues were up 1% on a reported basis and down 1% on an organic basis in the first four months of the year.  European markets continue to be mixed with good growth in the Nordic region, France and Switzerland offset by a weaker performance in the Benelux area.  Performance in North America is improving whilst progress in the emerging markets is more mixed, with good progress in Asia offset by weaker sales in the Middle East and Eastern Europe.   Growth is expected to improve in the second half benefitting from the recent launch of a number of new products.    

Beverage Dispense

Revenues in Beverage Dispense were down 4% on a reported basis and 5% on an organic basis in the first four months of the year.  This mainly reflects a slower start to the year in the US and Latin American markets and the impact of the exit from a large, low margin contract in the UK in the middle of last year.  We continue to focus on improving the quality of the sales mix in Beverage and are making good progress on a number of new product opportunities for customers to meet their growing demand for innovative solutions for a wider variety of drinks focused on health and indulgence. 

Merchandising

Merchandising has had a strong start to the year.  Revenues were up 14% on a reported basis and 13% on an organic basis in the first four months of the year.  We have continued to see further good growth in our European cosmetics business and good activity levels in US automotive, where dealers are investing in our merchandising solutions for their showrooms.

As indicated in the preliminary results announcement, the beverage activities of Merchandising were transferred into Beverage Dispense at the beginning of the year and we have started a process to divest the majority of the balance of the Merchandising Group. 

Financial position

The Group retains a strong balance sheet with good cash generation in the year to date.  In the preliminary results in March the Group announced a share buyback programme of up to £175m with the aim of maintaining balance sheet efficiency.  As at the 8 May 2013, the Group had spent £31.2m on the repurchase of shares.     

IMI will announce its interim financial report for the six months ending 30 June 2013 on 22 August 2013.

Enquiries to:

Will Shaw                                            IMI plc                          Tel:      [phone]

Rollo Head / Charlie Chichester         RLM Finsbury              Tel:      [phone]

Cautionary statement:

This announcement contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group.  By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.  The forward-looking statements reflect knowledge and information available at the date of preparation of this announcement and IMI undertakes no obligation to update these forward-looking statements.  Nothing in this interim management statement should be construed as a profit forecast. 

Notes to editors:

IMI is a global engineering group focused on the precise control and movement of fluids in critical applications.  It delivers innovative solutions, built around valves and actuators, custom engineered for leading international companies to help them respond to global trends such as climate change, resource scarcity, urbanisation and ageing populations. It has manufacturing facilities in more than 20 countries and a worldwide service network.  IMI employs over 15,000 people, is listed on the London Stock Exchange and is a member of the FTSE100.  Further information is available at www.imiplc.com.

 

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