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IMI ends tough year ahead of expectations

By Josh White

Date: Friday 28 Feb 2020

IMI ends tough year ahead of expectations

(Sharecast News) - IMI reported results ahead of market expectations on Friday, with revenue from continuing operations falling 2% on an adjusted basis to £1.87bn.

The FTSE 250 engineering firm said its adjusted operating profit was stable year-on-year for the 12 months ended 31 December, at £266m, as its operating margin improved by 20 basis points to 14.2%.

Its adjusted profit before tax and basic earnings per share were also stable, at £251m and 73.2p respectively, while its operating cash flow was 35% higher at £299m.

IMI's dividend per share was 1% higher year-on-year at 41.1p, as its net debt widened to £438m at year-end, from £405m at the start of the prior year.

The company said its profit improvement initiatives helped it see a 60 basis point second-half margin improvement, and it also reported £27m in rationalisation savings for 2019, which was ahead of its forecasts.

It said its structural reorganisation plans were progressing well, adding that its rationalisation charges for 2020 were expected to be around £45m, with savings of about £25m.

The boards said a commercial cultural shift driven by 'Growth Accelerator' was gaining traction, and added that its new customer-focused organisational structures were bedding-down well.

"2019 was a year of significant change and progress at IMI," said chairman Lord Smith of Kelvin.

"We delivered results ahead of market expectations whilst simultaneously formulating and launching a new strategy for the group led by our new chief executive, Roy Twite.

"Those plans are both ambitious and achievable and will ultimately deliver improved and sustainable value for our shareholders and wider stakeholders."

Lord Smith said the firm was already seeing the benefits from its early actions impacting its results.

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

Chief executive Roy Twite added that he was "delighted" to report good results for 2019, given the anticipated market headwinds.

"The businesses have made immediate progress with their profit improvement initiatives, resulting in margins for the group improving in the second half and full year.

"We have also made a solid start in the pursuit of a new purpose - breakthrough engineering for a better world.

"Each division has taken decisive steps in their long-term, strategic plans to create tremendous value by solving key industry problems and working with the best."

Twite added that it was difficult to predict the impact the coronavirus outbreak would have on global supply chains and demand.

"Based on no worsening of the current situation, we expect first half organic revenues to be lower than the first half of 2019, given the end market weakness in the factory automation and commercial vehicle sectors.

"Our continuing business improvement initiatives are expected to enable us to maintain our margins in the first half of the year."

At 0815 GMT, shares in IMI were down 2.28% at 970.4p.


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