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Monday 09 November, 2009


Interim Management Statement

RNS Number : 1771C
09 November 2009
The following amendment has been made to the 'Interim Management Statement' announcement released today at 07:16 under RNS No 1765C.
Footnote references have been included after the Balance sheet heading.
All other details remain unchanged.
The full amended text is shown below.

9 November 2009

IMI plc ("IMI" or "the Group")


In expectation that forecast earnings for 2009 are likely to be materially ahead of current consensus, IMI plc has brought forward to today its Interim Management Statement for the period from 1 July to 8 November 2009.

Current trading

The early management actions taken to mitigate the profit impact of lower revenues continue to deliver encouraging results. Selling prices generally remain resilient although we are beginning, as expected, to experience some downward pressure within Severe Service on a number of larger oil & gas projects. Low cost sourcing initiatives and value engineering programs have reduced material prices in the year to date by around 5%. Lower average metal prices have also produced margin benefits, particularly within our Indoor Climate business. Actions to right size the business, and accelerate moves to transfer more production to low cost economies continue to bear fruit and we have brought forward some additional plans scheduled for 2010-2011, which will result in a higher rationalisation charge for the year of around £35m (compared to the £30m indicated at the half year).  

As a result of the success of these various programs, we expect operating margins1 for the second half of the year to be better than previously expected and in excess of 14%. We expect earnings per share for the year as a whole, on an adjusted basis,2 to be in the region of 43p to 45p per share (2008: 54.1p), of which around 2p per share arises from one-off pension curtailment benefits.

Overall levels of demand remain broadly stable, with continuing signs of recovery in Asia, some modest improvement in North America and European markets generally remaining subdued.

Group revenues for the ten month period to the end of October are around 18% lower than the corresponding period in 2008, on a constant currency basis. Six week moving average order intake is around 12% lower than last year, reflecting some modest improvement in Asia and North America, and a weakening comparable in the last quarter of 2008.

The Group's effective tax rate for 2009 is expected to be 30%, one point below the 31% reported for the first half of the year.

Balance sheet

Cashflow remains strong, with debtor day performance at similar levels to last year, despite the difficult economic environment, and inventories having been reduced by nearly 15%. We anticipate operating cash conversion3 in excess of 120% for the full year, and net debt levels (subject to further movement in exchange rates used for valuing year end currency denominated debt) of less than £220m.


As previously announced the Group successfully issued $175m of US loan notes in July 2009 with maturities extending to 2019. Following this issue the Group has a balanced portfolio of short and long term loan facilities with considerable headroom to utilise the balance sheet strength as and when acquisition opportunities arise.  


1 Operating margin – segmental operating profit as a percentage of segmental revenue.
2 Adjusted earnings per share – before the after tax cost of restructuring, acquired intangible amortisation and financial instruments, excluding economic hedge contract gains and losses.
3 Cash conversion – cash flow from continuing operations as a percentage of segmental operating profit after restructuring costs.

Severe Service

The weakening order intake within Severe Service referred to at the interim results has continued and for the ten months to October is down, on an underlying basis, about 15% on last year. However higher quotation activity should result in a recovery in order intake next year. After market orders remain buoyant which will be positive for margins this year. We were recently successful in securing our largest ever order in the Nuclear sector, worth around £55m over an 8 year period, which bodes well for our longer term aspirations in this space. 

Fluid Power

The business has stabilised since the sharp falls experienced early in the year, with recovery continuing in Asia and signs in the last few weeks of some modest improvement in North America. Volumes in Europe remain at fairly depressed, albeit stable levels. The management actions taken in the early part of the year to protect profitability in this business are having a significant impact. Second half operating margins are expected to recover to around 9% on volumes similar to those in the first half.  

Indoor Climate

The business has continued to enjoy reasonably robust demand, importantly through the key heating season of September to November. Organic revenues year to date are down around 5% on last year. A combination of lower overheads and lower material costs, arising partly from metals hedging arrangements entered into in the first half, continue positively to impact margins which will show strong progression both in the second half and for the year as a whole.  

Beverage Dispense

Volumes within Beverage Dispense remain stable with some improvement in Asia and North America offset by further softness in European markets. Management actions to right size the business will maintain second half margins at broadly the same level as the first half on markedly, and seasonally lower volumes.  


Merchandising volumes for the second half will be substantially lower than last year, reflecting the one off nature of the large grocery order shipped primarily in the third quarter of 2008, and the expected and significant reduction in North American automotive business. Demand in the balance of the business remains resilient however which, together with early management actions to contain cost, will lead to second half margins similar to the equivalent period last year.

IMI plc will be holding a conference call today at 8:30am. Details of the conference call are set out at the bottom of this announcement.  

IMI will announce its Preliminary Results for the year ending 31 December 2009 on 4 March 2010.  

Enquiries to:

IMI plc

Will Shaw                                                       Tel: 0121 717 3712

Weber Shandwick Financial

Nick Oborne / Stephanie Badjonat                Tel: 020 7067 0700

Conference Call Details:

Time:                    8.30am on Monday 9th November, 2009

The conference call id number and telephone numbers for the call are set out below. Please note that the operator will ask for your name and company and we would ask that you dial in at least 5 minutes prior to the call start time. 


Participant dial-in details

Conference call Id:                         39308664 

UK Free Call:                                  0800 694 0257   

UK Local Call:                                 0844 493 3800   

UK Standard International:             +44 (0) 1452 555 566   

USA Free Call:                                1866 966 9439


If you are unable to attend, a recording of the conference call will be available for playback for 7 days using the numbers below and also available on our website. 

Encore Replay Access Number:    39308664# 

International Dial in:                         +44 (0) 1452 55 00 00

UK Free Call Dial In:                        0800 953 1533

UK Local Dial In:                              0845 245 5205

USA Free Call Dial In:                     1866 247 4222

This information is provided by RNS
The company news service from the London Stock Exchange