19 May 2000
CHAIRMAN'S AGM STATEMENT
IMI plc, the major international engineering group, held its thirty-eighth
Annual General Meeting at 12 noon today. At the meeting Sir Eric Pountain,
'In my statement on the preliminary results, I commented that trading
conditions overall improved in the second half of 1999. I am pleased to
report today that this improvement continued in the first quarter of this
Hydronic Controls benefited from the strengthening of the construction sector
in Germany and the UK, with margins in copper tube and fittings improving.
Demand for our plastic products remained healthy although recent increases in
polymer costs will take time to be fully recovered. We made further progress
in thermostatic radiator and balancing valves and continued our growth in
Drinks Dispense continues to be affected by the weakness in demand which we
referred to in the preliminary results announcement. Sales in the first
quarter were running around 12% below last year. However, we look forward to
seeing an improvement in customer expenditure on soft drinks equipment later
in the year. We were pleased to make further progress in the quick service
restaurant sector helped by the success of new product launches. Our Cannon
business remained strong.
Trading conditions for Fluid Power continued to be encouraging across most of
our key sectors. We increased sales in the first quarter with European demand
further improving and the US remaining buoyant. We saw further benefits from
the steps we took last year to enhance performance and reduce costs.
Energy Controls had a satisfactory first quarter and continued to build a
strong order book on the back of increasing power generation investment.
Returning to 1999, your Board is recommending a final dividend of 9.3p.
raising the total dividend for the year to 15.1p. In terms of operating
performance, our sales rose by 3.2% to £1.5 billion. Our profit before
goodwill amortisation and exceptional items, fell by 5% but this was after
charging £13 million on cost reductions and rationalisation measures in
continuing operations. In addition, we incurred £19 million in exceptional
costs through the closure of copper smelting and the drinks dispense activity
in Brazil. In March, we disposed of the Marston aerospace businesses for
nearly £17 million. Our cash flow continued to be strong with free cash flow
of £77 million after the expenditure of £64 million on fixed capital. We made
significant investments in e-commerce to improve customer service and open new
routes to market.
These measurements have improved our operating performance and will strengthen
the Group in the longer term.
We also enhanced our growth prospects through the acquisition of Polypipe
which, at £350 million, is IMI's largest acquisition to date. Polypipe made
an excellent contribution to the Group, with £23 million operating profit on
sales of £191 million in the period from 19 May to the year-end. The
acquisition of Polypipe further advanced our strategy of adding new products,
materials and market opportunities. Hydronic Controls now has the plastics
technology and materials expertise needed to develop complementary new systems
and products for plumbing and heating applications.
Since the year-end we have spent around £6 million on a number of small
in-fill acquisitions in Hydronic Controls and Drinks Dispense.
The combination of improved trading conditions and the strategic moves which I
have just described augur well and I remain positive about the prospects for
the future development of the Group.'
Shandwick International 020 7329 0096