Ventilator demand gives engineering group breathing space to pay £90m dividend

Engineering group IMI’s response to a temporary surge in ventilator demand during the peak of the coronavirus crisis has given it the breathing space to reinstate its dividend.

IMI scaled up production of one of its most technically advanced products as a result of the demand, adding £35m in revenue and £14m in profit to its first-half figures.

This was a factor in it being able to reinstate its dividend at a cost of more than £70m and confirm an interim dividend of £20m after it delivered a “robust” performance despite the coronavirus lockdown.

In March it suspended its dividend among a raft of measures to conserve cash. Its cost actions helped improve its margins compared with a year earlier.

The Birmingham-headquartered group increased adjusted pre-tax profits by 5% to £116m in the six months to June. That was achieved despite revenues slipping 5% to £867m.

IMI’s chief executive Roy Twite said: “As a result of the robust profit and cashflow performance in the first half, we are revisiting two decisions taken earlier in the year.

“Firstly, our decision to suspend the 2019 final dividend payment has now been reversed, and we will make that payment in full.

“We will also reset our dividend for 2020 to a level that enables IMI to more effectively deliver on its long-term growth ambitions.”

Its 2019 full-year dividend is 26.2p per share, while its interim dividend for 2020 is 7.5p, which it said “has been to reflect a dividend earnings cover baseline of 3.0x”.