IMI announces record first half profits

BIRMINGHAM-based engineering group IMI has announced record first half results with pre-tax profits rising by 68% compared with the same period last year.

Figures released by the company show profit levels rose from £79.7m this time last year to £133.5m in the six months to June 30, 2010. Revenue increased 3% from £900m to £925m.

Norman Askew, Chairman of IMI, said he was delighted with a “a very strong set of results” and said the company, which manufactures pneumatic valves, air conditioning and beverage dispensing equipment, was reaping the benefits of a gradual but fundamental reshaping of the group.

“The focus on achieving leading positions in niche global markets, with highly bespoke engineered products and a low cost manufacturing base has created a significant and sustainable improvement in the underlying quality and profitability of the business,” he said.

“The group delivered record profits and margins during the period on volumes that remain more than 10% below the peak levels seen in 2008.”
 
He said that while the general macro-economic environment remained uncertain, the group was optimistic that the momentum seen in the first half would continue for the remainder of the year.

The group said revenue growth was broadly in line with expectations, given the balanced mix of early and late cycle businesses and the improvement in trading conditions in most of its end markets.

There was a strong bounce back in Fluid Power, with organic revenue growth of over 30%, which helped to offset the expected lower volumes in the Severe Service operation.

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Operating profit, on a constant currency basis increased 48% to £145.6m and adjusted earnings per share by 61% to 29.8p, again both first half records for the group.

It said that as a result of the strong first half performance and as a reflection of its confidence in the future prospects of the group, the board had decided to increase the interim dividend by 13% to 9p, up 1p on 2009.

Operating margins reached 15.7% versus 10.9% in the first half of 2009 – ahead of 15% expectations. This was also a new record and again attributed to the reshaping of the group.

“With established and leading market positions, an accelerating programme of new product development and further benefits to accrue from the transfer of manufacturing to low cost economies, there remains, over time, scope to raise these margin objectives further,” added the group in its results statement.

The company said that during the period it had continued to invest in improving skills so it was in a position to capitalise on growth opportunities. Areas of expansion include: clean energy; sustainability; and life sciences, where it said increased investment in healthcare and new advanced medical equipment represents a significant opportunity for the Fluid Power business.   
 
It added that its strong balance sheet provided scope for additional investments in organic growth, further restructuring initiatives, and bolt-on acquisitions as and when suitable opportunities arise.