6 May 2011
IMI plc ("IMI" or "the Group")
Interim Management Statement
IMI, the international engineering group, issues the following Interim Management Statement, which covers the period from 1 January to 5 May 2011.
Current trading and Outlook
IMI has continued to perform well in the first few months of the year. Group revenues in the four months to the end of April were up 10% on a reported basis and 6% on an organic basis, after adjusting for the impact of exchange rate movements and excluding Zimmermann & Jansen (Z&J) which was acquired by our Severe Service business at the end of last year.
Our plans to accelerate longer term growth through increased investment in sales and engineering, particularly in emerging economies, are making good progress. Our various initiatives to combat input cost inflation and build on the margin momentum of previous years are continuing to bear fruit. Overall we expect results in the first half of the year to be well ahead of the same period last year and we remain confident that the Group will continue to make good progress in 2011.
Shipments for the first four months of the year were down around 10% on an organic basis due primarily to weak Fossil Power order intake in 2010. Revenues are expected to be much stronger in May and June reflecting increasing shipments to the Oil and Gas sector so that revenues for the first half should be broadly in line with the first half of 2010. Activity in the Fossil Power sector is recovering with order intake up 15% in the first four months of the year. These improving trends are expected to underpin a return to growth in the second half.
As previously indicated, first half margins are being impacted by an unfavourable mix of lower margin shipments of Nuclear and Oil & Gas projects. However, margins are expected to improve in the second half. Z&J is performing well in the first few months of ownership, in line with our expectations.
We have continued to see strong growth in our Fluid Power business, with revenues in the four months to April up 18% compared to the same period last year, on a constant currency basis. We continue to experience healthy demand in our sector business with the Commercial Vehicle, Energy and Rail sectors growing particularly strongly year to date.
We are continuing to make good progress on transferring production to our lower cost manufacturing centres in China, Mexico and the Czech Republic. This, together with the higher volumes and effective product margin management, is likely to lead to good progress in first half margins compared to the first half of last year.
As expected activity levels have strengthened this year, with revenues, on a constant currency basis, over the first four months up 5% on last year. While the new commercial construction market in Europe remains subdued, we are seeing further good growth in refurbishment activity which continues to benefit from the global move towards more energy efficient buildings.
We are investing heavily in our seminar programme which underpins our knowledge based solutions. We have a particular focus on increasing this seminar activity outside of our historic core markets in Europe and importantly, year to date, we have seen good revenue growth in both North America and Asia Pacific.
Volumes in Beverage Dispense have continued to improve in the first half with revenues to the end of April up around 4% on a constant currency basis over last year. The North American market continues to be particularly strong and we have seen an improving performance in Continental Europe.
We remain focused on improving the quality of the overall sales mix in Beverage Dispense through a combination of growth in new product sales where we are targeting the smoothies, water, juice and frozen drinks markets and by exiting a number of lower margin, more commoditised product areas. Consequently we expect first half margins to show further progress over the first half of last year.
As expected, Merchandising has seen good revenue growth of 8% in the four months to the end of April compared to the same period last year. We continue to focus on improving the quality of this business by targeting higher margin project opportunities where we can add more value for customers.
During the early part of the year we opened the In-Vision retail science laboratory in Milwaukee, US. This now enables us to demonstrate to customers how we can deliver a sales uplift on their most profitable product lines in a state of the art facility using the latest immersive 3D technology.
The Group continues to be highly cash generative and the balance sheet remains strong. We expect net debt at the end of the first half, which is traditionally seasonally weaker from a cash generation perspective, to be at approximately the same level as at the end of last year.
IMI will announce its interim financial report for the six months ending 30 June 2011 on 25 August 2011.
As detailed in the separate announcement released this morning, IMI has appointed Roberto Quarta as a non-executive director with effect from 1 June 2011 and as Chairman with effect from 1 November 2011. In addition, Sean Toomes, President of the Indoor Climate business, has been appointed to the Board as an executive director with effect from 1 June 2011.
Will Shaw IMI plc Tel: +44 (0)121 717 3712
Rollo Head / Clare Hunt Finsbury Tel: +44 (0)20 7251 3801
This announcement contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this announcement and IMI undertakes no obligation to update these forward-looking statements. Nothing in this interim management statement should be construed as a profit forecast.
Notes to editors:
IMI is a global engineering group focused on the precise control and movement of fluids in critical applications. It works with leading international companies in over 50 countries to deliver innovative engineering solutions, built around valves and actuators, to address global trends such as clean energy, energy efficiency, healthcare and increasing automation. Its shares are listed on the London Stock Exchange and it is a member of the FTSE100. Further information is available at www.imiplc.com.