19 December 2003
19 December 2003
TRADING UPDATE AND MANAGEMENT CHANGES
In accordance with its normal practice, IMI plc is today issuing a trading
update in advance of its preliminary results announcement for the twelve months
ending 31 December 2003, due to be published on 8 March 2004.
Overall, on a like for like basis, sales for the second half of the year are
expected to be around 3% higher than last year. With the first half similar to
last year on the same basis, this would result in the year being 2% ahead.
Whilst not uniform across all our businesses, there are signs of a modest
improvement in underlying end markets. Fluid Power is beginning to build
momentum in order intake in the US. The positive trend reported in September in
Merchandising Systems has continued, and in Indoor Climate, the decline in sales
in the German market is showing some signs of abating. The growth arising from
the investment made in Severe Service has continued. In Beverage Dispense the
food-service sector remains difficult and, despite another healthy contribution
from new products, second half sales will be lower than last year. Polypipe's
core pipes business remains steady.
Operating profit will be ahead of last year and with lower interest costs it is
expected that profit, before rationalisation costs, goodwill amortisation,
exceptional items and tax, will be in the range £136m-£140m compared to £131.5m
in 2002, which included a £5m pension credit.
Rationalisation costs for the year should be less than £7m (2002: £32m).
Cash generation remains healthy and, after corporate activity and exchange rate
changes, year-end borrowings will be similar to last year.
Movements in average exchange rates in 2003 will not have a significant impact
on the overall reported results. If the current spot rates of exchange for the
US dollar and the Euro had applied throughout 2003, the translation effect would
be to reduce profits by around £3m.
We reported in September that we received a Statement of Objections in respect
of copper plumbing tube from the European Commission setting out complaints of
alleged anti-competitive practices among a number of parties including IMI. The
Commission's investigation is expected to result in a fine during the first half
of 2004. As regards the Commission's investigation in respect of copper plumbing
fittings, a Statement of Objections is expected within the next twelve months
with a decision on any possible fine likely to be made by the Commission in late
2004/early 2005. We continue to co-operate with the Commission in respect of
both investigations. IMI disposed of its copper plumbing tube and fittings
businesses during 2002 but retains responsibility for these investigations and
any resulting fines. It is not possible to give any reliable indication of the
likely level of fines.
2003 has seen a continuation of the improvement brought about by our
repositioning and we will end the year with a strong balance sheet. If the
recent improvement in general economic conditions gathers momentum, this should
provide added opportunity to make further progress. The management changes
referred to below will help us in the next stage of the long term development
and growth of IMI.
The following management changes will take effect in March 2004:
David Nicholas will join the Board as Executive Director with responsibility for
Fluid Controls, which comprises IMI's Fluid Power, Indoor Climate and Severe
Service businesses. Aged 54, he will be based in the UK and report to Martin
Lamb. He is currently Managing Director of Tyco Flow Control Europe and has
extensive experience in managing engineering businesses.
Wayne Whitney will join the Board as Executive Director with responsibility for
Retail Dispense, which comprises IMI's Beverage Dispense and Merchandising
Systems businesses. He joined IMI in 1987 and held a number of operational
management positions before becoming President of Merchandising Systems in 2001
and, in October 2003, President of the wider Retail Dispense businesses. Aged
54, he will continue to reside in the USA and report to Martin Lamb.
Barry Pointon, having served on the Board for 9 years and significantly
contributed to the recent restructuring of IMI, has decided to retire at the age
Martin Lamb, Chief Executive, will assume direct responsibility for major
business development initiatives, including mergers and acquisitions, innovation
and emerging markets.
Trevor Slack continues in his role as Finance Director.
Commenting on the changes, Gary Allen, Chairman, said:
'The changes announced today strengthen the executive team and will enable
Martin Lamb to focus on the strategic development of the Group with strong
operational and financial support.
In the past three years Barry Pointon has played a key role in IMI's corporate
activity and the move to lower cost manufacturing and I thank him for his 22
years' service in the Group.
We have largely completed the first phase of our repositioning programme
announced in 2001. The need now is to drive forward with the development of
IMI's businesses and realise the growth potential within them.'
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Information about IMI plc can be found on the website: www.imiplc.com
For further information contact:
Graham Truscott, Communications Director Tel: 0121 717 3712
Weber Shandwick Square Mile
Nick Oborne / Peter Corbin Tel: 020 7067 0700
Note to editors:
IMI plc is a dynamic international engineering business specialising in
innovative solutions and services for a wide range of industrial and retail
customers. Its future growth is being built on the two business areas of Fluid
Controls and Retail Dispense.
IMI's operations in these two business areas share the following core
characteristics: strong market positions in growing markets; the ability to be
clearly differentiated from their competitors through technological innovation
or after-sales service; and the provision of 'added value' through bespoke
solutions rather than a high manufacturing or material content.
IMI is quoted on the London Stock Exchange and is capitalised at approximately
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The company news service from the London Stock Exchange