Challenging market conditions prompt cost-reduction review at IMI

CURRENCY fluctuations are set to reap rewards for Birmingham-based engineering group IMI.

However, it has warned that challenging market conditions have prompted a cost-cutting review across the group.

In an interim management statement for the period July 1 to September 30, 2016, the group said progress with its strategic initiatives continued and expectations for the year would be consistent with market estimates.

But is added that based on current exchange rates, full year sales and profits were likely to reflect a gain of around 12% from foreign currency translations.

This could stand the company in good stead as it said Q3 volatility had made trading conditions tough, with organic revenues dropping 8% lower than the same period last year.

It said the second half was likely to be better that the first six months of the year but conditions were still expected to be challenging during the final three months of the year.

“Organic revenues and margins in the second half are expected to improve when compared with the first half of 2016 but will be lower than last year. Adjusted constant currency earnings per share for the full year remain in-line with the expectations outlined at the group’s 2016 interim results presentation,” it said.

Despite the difficult market conditions, it said various initiatives to harness the group’s potential were progressing well but it was keeping one eye on costs.

“We remain committed to investment in new product development to fuel growth, improving operational performance to enhance our competitiveness and investing to modernise our IT infrastructure,” it added.

“To mitigate where practical the impact of current market weakness, we are reviewing a number of cost-reduction initiatives. These actions will support the near term financial results of the Critical Engineering and Precision Engineering divisions, without compromising our long-term strategic agenda.”