IMI PLC IMI Interim Management Statement

  IMI PLC (IMI) - Interim Management Statement

RNS Number : 2756R
IMI PLC
16 November 2012
 



 

 

 

 

 

 

 

 

16 November 2012

 

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 July to 15 November 2012. 

 

Current trading and outlook

Overall trading in the second half is in line with management expectations  as 
communicated at the  time of our  Interim Financial Report  in August.  On  an 
organic basis, after adjusting for  acquisitions and exchange rate  movements, 
revenues for the four months to the end  of October are 3% ahead of last  year 
and 4% ahead for the  10 months year to date.   On a reported basis,  revenues 
are 5% and 6% ahead respectively.

 

Severe Service

Shipments in our Severe Service business have remained strong with revenues on
an organic basis 15% ahead of last year in the four months to October and  16% 
ahead year to  date.  Second half  bookings momentum is  similar to the  first 
half, around 4% down on last year,  impacted by lower activity in the  nuclear 
sector and  reduced bookings  for new  construction fossil  power projects  in 
China and India  as we  continue to  exercise greater  selectivity on  project 
bids.

 

As communicated in the Interim results,  we expect margins in the second  half 
to be at similar  levels to the  first half.  Margins in  the order book  have 
continued to  improve as  the  backlog of  lower  margin projects  secured  in 
earlier periods  is shipped,  and is  replaced by  new projects  with  margins 
closer to historic norms.  This improved  mix in the order book, coupled  with 
ongoing improvements in productivity at the Brno manufacturing facility in the
Czech Republic underpin our expectation of a healthy improvement in margins as
we progress through next year.

 

Fluid Power

As anticipated, Fluid  Power volumes have  weakened in the  second half,  with 
revenues for the four months to the end of October down 4% on an organic basis
compared to the same period last year and 2% down year to date.  The principal
contributor to  this decline  has  been the  commercial vehicle  sector,  most 
notably in the US,  with revenues down 8%  for the four months  to the end  of 
October.  Elsewhere the sector business remains resilient, with sales into the
oil & gas sector in particular continuing  to show good momentum.  In the  non 
sector business, activity levels in the US and Asia Pacific have continued  at 
similar levels to the first half,  whilst European volumes have weakened by  a 
further 3%.

 

On margins we  continue to  demonstrate good underlying  momentum, with  value 
engineering and  supplier  rationalisation initiatives  delivering  a  healthy 
contribution to cost reduction.  We expect  second half margins to be  similar 
to first half levels despite the lower levels of activity.

 

Indoor Climate

Indoor Climate  volumes  have  held  up  well  despite  a  difficult  European 
construction environment with  revenues on an  organic basis up  2% over  last 
year for the four months to  the end of October, and  up 1% year to date.   We 
have seen a return to more normal  trading patterns as we enter the  important 
heating season  in  Europe,  following  the anomaly  last  year  arising  from 
unseasonably warm autumn weather.  We are continuing our investments in  sales 
and engineering to drive long term  growth outside our core European  markets, 
and to take advantage of the positive market trends on energy efficiency.   As 
previously indicated we expect Indoor Climate margins to exhibit their  normal 
seasonal improvements in the second half.

 

Beverage Dispense

Activity levels in Beverage Dispense are  higher than anticipated at the  time 
of the Interims, with strong demand for  a number of new products in Asia  and 
improving momentum  in  the US.   Despite  exiting a  significant  low  margin 
contract in the UK at  the end of June, revenues  on an organic basis for  the 
four months to  the end of  October are flat  on last year,  compared to a  1% 
reduction in the first half.  Margins in the second half are expected to  show 
further progress  over last  year as  the product  mix continues  to  improve, 
supported by higher  sales of  new products  at better  margins and  continued 
exits from lower margin, more commoditised product lines.

 

Merchandising

Merchandising revenues on an organic  basis are up 6%  over last year for  the 
four months  to October,  and up  10% year  to date  following a  particularly 
strong first  half.  We  continue to  see good  growth in  our North  American 
automotive business  and  in our  European  cosmetics business  where  we  are 
starting to benefit from two large  multi-year contracts secured in the  first 
half.  We expect operating margins to show the normal seasonal improvement  in 
the second half and for full year margins to be similar to last year. 

 

Financial position

The Group retains a strong balance sheet.  Year end net debt is expected to be
£150m to £170m following a seasonally stronger second half cash performance. 

 

IMI will issue  its preliminary results  announcement in respect  of the  year 
ending 31 December 2012 on 7 March 2013.

 

 

Enquiries:

IMI plc

Will  Shaw                                                                     
Tel: 0121 717 3712

 

RLM Finsbury

Rollo Head / Charles  Chichester                                Tel: 020  7251 
3801

 

 

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.

 

Notes to editors:

IMI is a global engineering group focused on the precise control and  movement 
of fluids  in  critical applications.   It  works with  leading  international 
companies in over  50 countries to  deliver innovative engineering  solutions, 
built around valves and  actuators, to address global  trends such as  climate 
change, resource scarcity, urbanisation and an ageing population.  Its  shares 
are listed on the London  Stock Exchange and it is  a member of the  FTSE100.  
Further information is available at www.imiplc.com.

 

 

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