17 December 2004
17 December 2004
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 2004, due to be published on 7 March 2005.
We expect that reported profit before tax and rationalisation costs will be
around £158-£160m. Rationalisation costs are expected to be around £5m leaving
profit before tax and goodwill amortisation, at £153m-£155m, some 12-13% ahead
of last year's £136.9m.
As indicated earlier in the year, the net impact of higher raw material prices
and the translation impact of currency movements, is likely to have reduced
operating profit by around £17m. On a constant currency basis, the expected
profit before tax and goodwill amortisation would be 18-20% ahead of last year.
Cash generation remains strong and borrowings are expected to be lower than at
In September, the European Commission announced the imposition of a fine of
€44.98m on IMI in connection with its former copper tube business sold in 2002.
Pending the outcome of our intended appeal, the full amount of the fine will be
provided in our Financial Statements at 31 December 2004 as an exceptional item.
It is anticipated the fine will be paid in February 2005. The situation
regarding the copper plumbing fittings enquiry is unchanged and it is unlikely
that any decision on this case will be made before the second half of 2005.
In general, the economic climate for our end markets remains positive in the US
and Asia, and to a lesser extent, the UK, while mainland Western Europe remains
subdued. Volumes overall for the year are expected to be around 4% higher than
last year with the second half improvement slower than the first half partly as
a result of the pull-forward referred to in the interim results announcement.
Order intake in our Severe Service business continues to be strong, still
running at some 10% ahead of 2003, with the Asian markets in particular
progressing well. Shipments for the second half are on track reversing the
shortfall in the first half, leaving volumes for the year as a whole ahead of
last year. Fluid Power has continued to benefit from both a strong US
performance and our success in the targeted sectors where growth for the year
will be above 15%. However, European markets remain patchy. With the benefits of
the reduced cost base coming through, results are expected to be significantly
ahead of last year. In Indoor Climate, volumes and orders to date are similar to
2003. Achieving growth in mainland Europe remains challenging but we are
encouraged by our successes outside our traditional markets, particularly
Eastern Europe. Higher selling prices in the second half and lower operating
costs have contributed to margins remaining healthy despite raw material cost
In Beverage Dispense, despite a recent slowdown with one of our major soft
drinks customers, volumes in the US remain encouraging with the food service
sector continuing to improve. Volumes of beer dispense equipment, particularly
in the UK, will be lower than expected for the year showing a marked decline
from a very good 2003. The rest of Europe is still showing modest growth.
Operational improvements continue to benefit margins and despite raw material
cost inflation, results overall will be ahead of last year. In our Merchandising
Systems business, organic growth for the year is expected to be around 3%,
building on the 10% growth achieved in 2003. This is a reflection of the timing
of completion of larger contracts which is increasingly becoming a substantial
part of this business. Artform is on track to produce a good full year's
Sales in Polypipe for the year will be ahead of last year although at a lower
rate of growth than in the first half of the year. Margins are still being
impacted by high raw material costs although this has been partly mitigated in
the second half by price increases already implemented. Further price increases
will take effect in early 2005. Trading results for Polypipe for the year will
however be lower than last year.
2004 will be another year of improvement for the Group and although we are
cautious about the current macro-economic outlook, particularly in Europe with
recent economic indicators pointing to a further weakening, we remain confident
that our businesses will continue to make progress.
Non-executive Director appointment
We are pleased to announce that Lance Browne has been appointed to the Board as
a non-executive director with effect from 1 January 2005. Mr Browne, aged 55, is
non-executive Chairman of Standard Chartered Bank's Chinese operations, of which
he was chief executive between 1996 and 2001, and has held a range of senior
positions in banking and engineering businesses. A British national, he is
resident in Shanghai and has been made an Honorary Citizen of Shanghai and
received a CBE for his work in China. His experience will be particularly
valuable as IMI builds its presence in the area. This appointment is the first
step in strengthening the presence of the independent non-executive directors
and he will be joining the Audit, Remuneration and Nominations Committees.
- Ends -
For further information contact:
Graham Truscott, Communications Director Tel: 0121 717 3712
Weber Shandwick Square Mile
Nick Oborne/ Stephanie Badjonat Tel: 020 7067 0700
Information about IMI plc can be found on the website: www.imiplc.com
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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