LONDON (ShareCast) - (Sharecast News) - IMI reported results ahead of market expectations for 2018 on Friday, with revenue rising 9% year-on-year to £1.91bn.
The FTSE 250 engineering firm said adjusted segmental operating profit was 11% higher at £266m, with its operating margin improving 20 basis points to 14%.

Its adjusted profit before tax increased 12% for the year ended 31 December to £251m, with adjusted basic earnings per share also rising 12% to 73.2p.

Operating cash flow was ahead by 2% at £222m.

The board confirmed a dividend per share of 40.6p for the year, which was 3% higher, while IMI's net debt widened to £405m from £265m during the 12 months period.

"2018 was another year of important progress - we delivered results ahead of market expectations and continued to execute our strategy effectively," said chairman Lord Smith of Kelvin.

"In the year we reported increases in revenues, margins and earnings per share and enhanced our competitive capabilities.

"We have a strong balance sheet and inherently cash generative operations which continue to provide the headroom to invest in organic development and appropriate acquisition opportunities as they arise."

On the operational front, IMI said it saw "good growth" across all of its precision engineering verticals.

It also saw sales growth in its critical engineering operations, despite continued weakness in 'New Construction Power', while the board also claimed to have delivered margin recovery in hydronic engineering.

The integration of the Bimba acquisition was said to be progressing "well", and the directors also reported a further reduction of IMI's global pension liabilities.

"It is pleasing to report the continuation of the progress achieved in the first half of 2018," said chief executive Mark Selway.

"Our strategic plan to drive sustainable long-term growth continues to make a real difference across all parts of the Group.

"Our new product pipeline is developing well, our manufacturing operations have further improved and the new systems and processes being embedded throughout the business are delivering gains in efficiency and competitiveness."

Selway said that in the first half of 2019, the company expected organic revenues to be lower than the same period in 2018 due to the phasing of the order book in its critical engineering operations, as well as slowing market demand in the industrial automation sector for precision engineering.

"Margins are expected to be broadly similar, supported by our operational initiatives and an improved performance from hydronic engineering.

"Results for the full year will also reflect the benefits of restructuring and our normal second-half bias."

In a separate announcement on Friday, IMI also announced that, following five years with the group, Mark Selway had confirmed his intention to step down as chief executive immediately following the company's annual general meeting on 9 May, and retire from the board on 31 July.

The firm said he would be succeeded by Roy Twite, currently divisional managing director of IMI Critical Engineering, who would become chief executive-designate from 1 March and chief executive outright immediately following the AGM.

Twite joined IMI in 1988, and had been a member of the board since 2007.

He had held senior management roles in all parts of the group, including president of IMI Hydronic Engineering, president of IMI Precision Engineering and, since 2011, divisional managing director of IMI Critical Engineering.

"Following a rigorous selection process supported by Russell Reynolds that included both internal and external candidates, the Board is delighted to appoint Roy as IMI's next chief executive," said chairman Lord Smith.

"He is a strong and experienced successor who has been pivotal to the group's continued success.

"He has extensive operational experience, deep knowledge of our core markets and outstanding leadership qualities."

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