IMI reports profit boost and expects better conditions in second half
Global engineering group IMI – which makes valves and other equipment for controlling liquids and gas flows – has reported a four per cent increase in pre-tax profits in the first half of the year and an eight per cent boost in basic earnings per share.
Pre-tax profits rose to £150.1m from £145.0m in the same period the year before. Basic earnings per share increased to 34.9p from 32.3p.
Shares were up around 2.8 per cent at 08:15, reclaiming highs experienced at the start of the week, later rising 5.7 per cent at 10:30 – leading the FTSE 100.
The group said that in a “subdued but stable macroeconomic environment, trading across our end markets has been varied”.
Bookings momentum in Severe Service has been particularly encouraging in both the Oil & Gas and Petrochemical markets which bodes well for future prospects.
As expected Fluid Power was impacted by a weaker market for commercial vehicles and Indoor Climate continues to rely on its more resilient refurbishment activity given the ongoing depressed market for new commercial construction in Europe.
Beverage Dispense markets were weaker than expected as major customers delayed some capital expenditure.
Our Merchandising business continued to exhibit strong momentum across most of its end markets.
In the second half of the year, IMI expects to see better trading conditions, an improving sales mix, and an increasing contribution from a number of recently launched new products.
Mike van Dulken, head of research at Accendo Markets, said strong orders (up 19 per cent) in severe service – which accounts for 30 per cent of revenues – and a healthy margin expansion "bodes well for the second half of the year and into 2014".
IMI boosted its interim divided to 12.8p from 11.8p.
The company also announced the acquisition of Quebec-based Analytical Flow Products, which has a range of products for the precise control of fluids in chromatography and for the testing of the purity of gases in refineries.
IMI paid an initial consideration of £5m for AFP, and could pay further deferredconsideration of up to £36m based on performance over the next 5 years.