Full year revenues rise at IMI as group looks to second half for growth
BIRMINGHAM-based engineering group IMI has said it is looking to the second half of the year for a pick-up in momentum as it reflects on full-year results which show revenue increasing 3%.
Profits for the group for the year ended December 31, 2012 were slightly better, with the pre-tax figure up 5% at £317.0m (2011: £301.4m) as the group battled against tough markets.
The group said the performance was “encouraging”, with growth from new products and emerging markets more than offsetting the impact of weaker economic conditions in the second half of 2012.
Across its main operating divisions, the group said its Fluid Controls business recorded organic revenue growth of 3%, with double digit revenue growth in Severe Service offsetting second half weakness in Fluid Power and a flat year in Indoor Climate. Margins for the Fluid Controls businesses reduced from 18.7% to 17.7%, impacted primarily by the shipment of a large backlog of lower margin projects within the Severe Service division.
Commenting on the future, it said: “IMI has proved itself to be a strong and resilient business, capable of securing growth even in difficult markets. Whilst the macro-economic environment has stabilised over recent months, we expect market conditions to remain subdued in the first half of 2013, but to improve gradually as the year progresses, with increased momentum in the second half, benefitting from an improving sales mix and the commercialisation of a number of new products.
“Over the longer term, we remain confident of delivering organic revenue growth well in excess of global GDP, with very attractive margins, as the benefits from the execution of our strategy fully materialise.”
Reported revenues increased by 3% to £2,190m (2011: £2,131m). After adjusting for an exchange rate impact of £63m and the contribution from acquisitions, the organic revenue increase was also 3%.
Segmental operating profit was £373m, compared to £374.1m last year. At constant exchange rates and excluding acquisitions segmental operating profit rose by 1%. The segmental operating margin was 17% (2011: 17.5%). Operating profit was £317.9m (2011: £314.2m), after restructuring costs of £23.3m, acquired intangible amortisation of £29.6m and reversing net economic hedge contract gains of £6.8m.
The restructuring charge – which was higher than expected – is said to mainly reflect ongoing costs associated with the move of the Severe Service business to low cost manufacturing centres and the closure of one of the group’s merchandising sites in the US.
The group said it expected to continue to incur restructuring costs in 2013 of around £15m resulting from additional initiatives to move manufacturing to lower cost sites.
Interest costs on net borrowings were £17.7m (2011: £16.9m). The net pension financing credit was £11.0m (2011: £6.2m). After adding the net credit on derivatives of £5.8m (2011: net expense of £2.1m), the total net financing costs were £0.9m (2011: £12.8m).
Basic earnings per share increased 15% to 72.6p (2011: 63.2p).
Roberto Quarta, chairman of IMI, said: “IMI has delivered a resilient set of results in 2012. In light of this performance, and our confidence in the future prospects for the business, we are pleased to propose an increase in the full year dividend of 8%.
“Whilst the global macro-economic outlook remains mixed, we are confident of delivering further progress in 2013, supported by higher growth in the emerging markets and an improving contribution from recently introduced new products.
“In the longer term we are committed to a programme of accelerating the convergence of the group’s activities around our sweetspot, through increased investment in sales and engineering, and a focused programme of corporate activity, featuring both acquisitions and disposals.”
