Interim Management Statement

RNS Number : 0062X

IMI PLC

14 November 2014

 



14 November 2014

IMI plc ("IMI" or "the Group")                 

Interim Management Statement

IMI, the specialist engineering company, issues the following Interim Management Statement, which covers the period from 1 July to 31 October 2014. 

Current trading and outlook

On an organic basis, after adjusting for acquisitions, disposals and exchange rate movements, revenues for the four months to the end of October were 1% ahead of last year and 2% higher year to date.  On a reported basis, revenues were 6% down for the four months to the end of October and 5% down year to date reflecting the ongoing adverse impact of exchange rate movements. 

Overall results for the year are still expected to be broadly in line with current market expectations, despite market conditions being more difficult than anticipated particularly in Germany.  In the second half of the year we expect to deliver modest organic revenue growth and, as outlined in the Interim Results, our investments for growth are expected to result in margins being slightly lower compared to the same period last year.    

The Group is making good progress with the initiatives that we set out in the strategic review in August which include simplifying the organisation structure, investing in new products and improving our operational performance.     

IMI Critical Engineering

Order intake was up 10% in the four months to the end of October and down 5% year to date reflecting the impact of the very large HIPPS order taken in the first half of 2013. The Oil & Gas sector has been particularly strong in the period with a number of good project wins.  Revenue in the four months to the end of October, on an organic basis, was flat having been impacted by customer delays and in the year to date revenues are up 2% on an organic basis. 

The division has a strong schedule of projects which are due to ship in November and December and overall, on an organic basis, we continue to expect to deliver revenue, profit and margin growth in the second half.   

We have announced separately today the acquisition of Bopp & Reuther for an enterprise value of €152.6m (£120m).  The acquisition will enhance our presence in the power sector, extend our Critical Engineering division's product range and increase exposure to emerging market growth opportunities and the higher margin aftermarket.  The acquisition will be earnings accretive in 2015 and be funded from the Group's existing bank facilities and is expected to complete around the end of the year. 

IMI Precision Engineering

Precision Engineering revenues increased 3% in the period on an organic basis and are up 3% year to date.  In Industrial Automation activity levels in North America and Asia Pacific have held up well, while markets have been weaker than anticipated in Europe and in particular Germany.  In Commercial Vehicles we continue to see good growth in our European business which is benefiting from the introduction of the new Euro VI engines this year. 

Based on current market conditions we still expect the Precision Engineering division to deliver improved margins in the second half when compared to the first half of the year.  We also continue to expect the division to deliver organic revenue growth in the second half albeit at a slightly lower rate than in the first half. 

IMI Hydronic Engineering

Revenues in the Hydronic Engineering division were down 2% in the period on an organic basis and down 1% year to date.    New product developments continue to progress well and have largely offset the impact of lower activity levels in many of our European construction markets which have been impacted by abnormally high autumn temperatures.   

Assuming current market conditions continue we expect Hydronic Engineering to deliver second half organic growth broadly in line with the first half of the year. The division's margins are also expected to exhibit their normal seasonal improvement in the second half albeit at lower levels than in the second half of last year due to the previously announced investment and rebranding costs.

Financial position

The Group retains a strong and flexible balance sheet and continues to show good cash generation from operations.  On 6 October the Group sold its non-core Eley and Accles & Shelvoke businesses to LDC for an enterprise value of £42m.  The cash proceeds will be utilised to support the growth initiatives laid out in the strategic review in August.

Senior management update

Brendan Colgan, Managing Director of the Precision Engineering division, has resigned for personal reasons. A search for his successor is underway and, in the interim, Mark Selway, supported by other members of the Group's Executive Committee, will oversee the management of the division.  The Board would like to thank Brendan for his efforts during his time with the business and wish him all the best for the future. 

Preliminary results

IMI will issue its preliminary results announcement in respect of the year ending 31 December 2014 on 27 February 2015.

A conference call for analysts and investors will be held at 08:30 GMT today to discuss this statement and the acquisition of Bopp & Reuther.  To access the call, please dial [phone] Toll Free (UK) 0800 694 0257 - Conference Call id: 21256779#.

Enquiries to:

Will Shaw                    IMI                                           Tel: [phone]

Suzanne Bartch /        StockWell Communications   Tel: [phone]
Rob Morgan

Notes to editors

Cautionary Statement:

This Interim Management Statement contains forward-looking statements which are made in good faith based on the information available at the time of its approval.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward-looking statement which could cause actual results to differ materially from those currently anticipated.

IMI plc

IMI plc, the specialist engineering company, designs, manufactures and services highly engineered products that control the precise movement of fluids.  Its innovative technologies, built around valves and actuators, enable vital processes to operate safely, cleanly, efficiently and cost effectively.  The Group works with industrial customers across a range of high growth sectors, including energy, transportation and infrastructure, all of which are benefiting from the impact of long-term global trends including climate change, urbanisation, resource scarcity and an ageing population.  IMI employs over 12,000 people, has manufacturing facilities in more than 20 countries and operates a global service network.  The Company is listed on the London Stock Exchange.  Further information is available at www.imiplc.com.

 

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