16 December 2005
16 December 2005
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 2005, due to be published on 6 March 2006.
Underlying growth for the second half will be similar to the first half
resulting in estimated organic growth for the year of around 4%.
Our Severe Service business continues to enjoy strong end markets in both power
and oil and gas. New valve projects remain the principal growth driver with the
Asian markets, particularly China, and the Middle East maintaining their
momentum. Customer Service growth, although modest in comparison, remains
healthy. In Fluid Power we expect to achieve double digit growth in our chosen
sectors with global truck leading the way in the US, UK and Germany. The general
end markets in the US and Asia remain positive with the UK and European markets
still somewhat mixed. In Indoor Climate the second half has been similar to the
first half with growth in balancing valves offset by lower sales in Germany of
thermostatic radiator valves. We continue to make progress in the UK, Eastern
Europe and the US.
In Beverage Dispense, the US, despite continued lower spend by one of our major
customers, remains positive and will be ahead of last year. The momentum in the
UK beer market continues to improve although Europe is still subdued. During the
year our operational and sourcing initiatives have continued to make good
progress. In Merchandising Systems, overall second half volumes will be similar
to last year. Sales to the US automotive sector continue to run at a rate
considerably lower than in 2004. Elsewhere the cosmetics sector volumes have
been good and the beverage and bulk food display systems sales remain very
We would expect reported profit before tax, exceptional items and intangible
asset amortisation to be in the range £168-172m compared to £161.1m last year.
In arriving at this estimate, we have included around £19m (2004: £27.2m)
operating profit from discontinued businesses and assumed a £0-2m loss arising
from the change in fair value of financial instruments (IAS39).
Our current view on the trading outlook remains similar to that expressed in
September with our businesses continuing to experience consistent growth in the
US, Middle East and Asia, and still no significant signs of an upturn in the UK
and European end-markets.
The actuarial valuation of the UK IMI Pension Fund at 31 March 2005 resulted in
a deficit of £51m, largely as a result of revised mortality assumptions. The
Company has decided to eliminate this deficit by annual payments of around £16m
over four years starting in December 2005.
When we announced the sale of Polypipe in September, we indicated that the £39m
vendor loan note could be repaid through a buyer refinancing in the high-yield
debt market or else that IMI could exercise its right to sell the note at a time
consistent with realising best value. To date, no repayment or sale has been
Since our interim results announcement, we have completed the acquisition of the
control valve business of ABB in Japan (Severe Service); GT Developments (Fluid
Power), a leading designer and supplier of pneumatic controls to the US
heavy-duty truck industry; and Northern Parts (Beverage Dispense), a US food and
beverage equipment parts distributor. All these acquisitions add to our
strengths in our chosen sectors and should contribute well in 2006. The total
expenditure on acquisitions in 2005 has been around £70m.
To date we have purchased 16.8m shares through the on-market share buy-back
programme at an average price of £4.21 and a total cost of £71m.
- 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 (Severe
Service, Fluid Power, Indoor Climate) and Retail Dispense (Beverage 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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