IMI enjoys record profits up 64%

BIRMINGHAM engineering group IMI has reported record full-year profits boosted by rising sales and operating margin ahead of expectations.

The company, which has raised its final dividend by 29%, today reported pre-tax profits for 2010 had risen 64% on 2009 – from £186.2m to £306.1m. Revenues grew 7%, from £1.79bn to £1.91bn. After adjusting for an exchange rate benefit of £19m the organic revenue increase was 6%.

It said segmental operating profit was £319.7m, an increase of 37% on last year, while operating margin rose from 13.1% to 16.7%.   Operating profit was £309.1m, up from £201m in 2009.

The group has also said it expects to incur restructuring costs of around £15m in each of the next two years as part of a plan to move more production to its lower cost manufacturing centres.  It also warned the charge for acquired intangible amortisation would be higher in 2011 following the group’s acquisition of German firm Zimmermann & Jansen.

Adjusted earnings per share was 66.3p, up 45% on 2009’s 45.8p, while basic earnings per share was up 73% at 70.4p.

Norman Askew, IMI chairman, said: “IMI delivered a very strong set of results in 2010 with record profits, margins and earnings.  We are now well placed for the next stage in the group’s development and have detailed plans to accelerate growth, deliver further margin improvement and make greater use of our strong balance sheet in delivering value enhancing acquisitions.  

“In light of this performance, and our confidence in future prospects we are pleased to raise the final dividend by 29%.   

“We remain optimistic that the group will continue to make good progress in 2011.”

He added that collectively the group’s three Fluid Controls businesses all performed well helped by a significant recovery in Fluid Power volumes where organic revenue growth was 31% for the year.  

This performance, together with good progress on margins in both Fluid Power and Indoor Climate, helped to offset lower activity levels in the later cycle Severe Service business. Overall, on a constant currency basis, Fluid Controls revenues grew by 7%.  Operating margins for Fluid Controls rose to 18.3% from 14.7% last year.  

In Retail Dispense, both the group’s Beverage Dispense and Merchandising operations made progress with revenues up 4% on an organic basis despite a deliberate and focused programme to improve margins by exiting from a number of lower margin, older and more commoditised products.  Operating margins also benefited from operational efficiencies and an improved project mix, increasing to 11.8% from 8.5% last year.  

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