30 June 2005
30 June 2005
In accordance with its normal practice, IMI plc is today issuing a trading
update in advance of its interim results announcement for the six months ending
30 June 2005, due to be published on 5 September 2005.
Underlying trading has continued much as outlined in our Annual General Meeting
statement with the US and Asia still reasonably robust but the UK and, in
particular, mainland Europe markets offering little encouragement.
In Severe Service, energy related markets continue to demonstrate positive
momentum with both power and oil & gas again delivering good order growth.
Overall order intake is up by around 15% in the first half, with the Asian
region, particularly the Chinese fossil power sector, leading the way. Our share
in the growing LNG market remains healthy.
The strongest growth in Fluid Power continues to be in our targeted sectors,
where the global truck sector in particular remains buoyant. Overall our
targeted sectors again recorded double-digit order growth. Elsewhere, the end
markets for our general pneumatics business remain patchy, with the US and Asia
continuing to show growth but the UK and, more significantly, mainland Europe,
remaining soft with little sign of any improvement. Syron, acquired in February
2005, and FAS have performed well.
Indoor Climate sales overall are expected to be flat. Modest growth in balancing
valves and markets outside the core European heartland is being offset by a
deteriorating construction market in Germany. TRV sales, which in the first half
of last year benefited from the pull-forward by some distributors ahead of price
increases, are likely to be around 4% lower.
In Beverage Dispense, the US again performed strongly with both the food service
sector and brand-owner business carrying forward the growth seen in 2004. We
continue to make good progress in sales of non-carbonated beverage equipment. As
expected, the UK beer dispense market weakened further. In mainland Europe both
the soft drinks and beer businesses are lower on the back of generally weak
consumer spending. Focus on improving operational and purchasing efficiencies
continues to drive the cost base lower.
In Merchandising Systems, cosmetics, beverage and grocery are all performing
well and are ahead of last year. Automotive is expected to return to its more
normal seasonal pattern in 2005 with first half sales around 40% of annual
sales. Underlying automotive sales are on track for another good performance,
although the £8m included in the first half of 2004 from the Toyota Scion
project will not be repeated.
In Building Products, although the underlying market for the main Polypipe pipes
businesses is fairly flat, the pricing environment has improved, the impact of
which should begin to show in margin recovery in the second half. A number of
the smaller businesses continue to face market pressures and further cost
reduction measures have been necessary.
As previously reported we are engaged in discussions with parties interested in
acquiring Polypipe. An update will be given in due course.
Since the year end we have, at an aggregate cost of around £80m, paid the
European Union fine, acquired Syron and purchased shares by way of the on-market
share buy-back programme. We also expect to see the normal seasonal outflow of
working capital in the first half of the year. As a result, borrowings at the
end of June are likely to be around £25m higher than at the same time last year.
We expect first half profit before tax, goodwill amortisation and exceptional
items, to be around £80m compared with £74.4m last year, before applying the
changes resulting from the adoption of the International Financial Reporting
Standards (IFRS). As stated previously, we do not expect IFRS to have a material
impact on the Group's reported profit before amortisation of goodwill.
- Ends -
Graham Truscott, Communications Director Tel: 0121 717 3712
Weber Shandwick Square Mile
Nick Oborne/Susanne Walker/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 an 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
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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