15 December 2006
15 December 2006
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 2006 due to be published on 5 March 2007.
The underlying growth in sales in the second half, excluding acquisitions and
the impact of exchange rates, is expected to be around 5% resulting in estimated
organic growth for the year of around 4%.
Our Severe Service business continues to benefit from strong end markets in power
and particularly in oil and gas. New construction project orders for European
and Middle East markets have maintained their first half momentum. The order
book continues to lengthen as order growth is expected to exceed shipment growth
in the full year. In Fluid Power the commercial vehicle market has continued to
perform strongly and our other sector businesses are growing at double digit
rates. End markets for industrial pneumatics generally are performing well in
Asia and much of Continental Europe, and remain positive in North America.
Indoor Climate has made good progress in its targeted growth markets of Asia,
Eastern Europe and the US, as well as enjoying improved momentum in much of
Continental Europe. The thermostatic radiator valve business has shown pleasing
growth in its core German market, though possibly benefiting from the impending
January 2007 VAT increase.
Beverage Dispense sales have shown some recovery, with second half volumes
generally in line with last year's levels. However, reinvestment in the US quick
service restaurant sector has been slower to recover than expected. The UK and
European beer markets are stable, although margin pressures remain. Within
Merchandising Systems the consumer electronics, cosmetics, beverage and bulk
food display spends remain broadly healthy. Our sales into the US automotive
market remain some 20% below historic long term levels. The dairy and newspaper
sectors, faced in the US with higher interest rates and a slowdown in consumer
confidence, have postponed some capital investment programmes, leaving overall
volumes marginally down on the year as a whole.
All recent acquisitions, including Truflo, continue to perform well.
The translation effect of exchange rates on our results is likely to see the
favourable 2% impact on sales and profit in the first half reverse, resulting in
a 1% adverse impact on both sales and profit for the full year.
We would expect reported profit before tax on continuing businesses before
exceptional items, intangible amortisation and restructuring charges to be in
the range of £188-£192m compared to £160.9m last year. In arriving at this
estimate, a profit of between £0-£2m has been assumed to arise from the change
in fair value of financial instruments (IAS39). Our restructuring plans are on
target, resulting in expected costs of around £20m compared to £4.2m last year
with benefits starting to flow in 2007. Adjusted earnings per share are expected
to show a 20%+ increase over the prior year.
In September the European Commission fined IMI €48.3m in relation to its former
copper fittings business, which was sold in 2002. An appeal is being lodged. The
expected profit for 2006 discussed above is stated before expensing this fine,
which will be accounted for separately as a loss on a previously disposed
The overall climate remains broadly positive. Notwithstanding some short term
headwinds resulting from the much anticipated downturn in the US truck market
and continuing softness in the US automotive market, we remain confident in
respect of underlying trends and momentum across the Group.
- Ends -
Graham Truscott, Communications Director Tel: 0121 717 3712
Weber Shandwick Square Mile
Nick Oborne/Stephanie Badjonat Tel: 020 7067 0700
Notes to editors
IMI is a dynamic, worldwide company delivering innovative engineering solutions
to leading global customers in clearly defined niche markets. Its five
businesses share a common goal - to convert their industry knowledge and market
insight into customised, design-engineered solutions which create customer
advantage and value. These include severe service valves, motion and fluid
control systems, indoor climate controls, beverage dispense systems, and
merchandising display systems for retail operations.
Close customer relationships, strong positions in growing markets and clear
differentiation through technological innovation or service are the defining
characteristics of all IMI businesses.
IMI is quoted on the London Stock Exchange. Information about IMI plc can be
found on the website: www.imiplc.com
This information is provided by RNS
The company news service from the London Stock Exchange