IMI Confident About 2013
LONDON -- IMI saw its shares surge over 40 pence, or 3.2%, to 1,320 pence in early trade this morning, following the release of an interim management statement for the first four months of the year that confirmed trading has been in line with expectations.
The global engineering group reported that revenues in the four months to April were down 1% on a reported basis (3% on an organic basis), after "adjusting for exchange rate movements and acquisitions", but management are confident that IMI will deliver progress over the full year. It remains in a solid financial position, retaining a strong balance sheet with good cash generation in the year to date.
IMI's merchandising division saw good growth, with revenues were up 14% on a reported basis and 13% organically, helped by a strong start to the year by its European cosmetics business and good activity levels in U.S. automotive, where "dealers are investing in our merchandising solutions for their showrooms".
Indoor Climate revenues were up 1% on a reported basis and down 1% on an organic basis in the first four months of the year. As expected, the turbulent eurozone caused its markets to be mixed while the Middle East and Eastern Europe had weaker sales, but the Nordic region, France and Switzerland saw good growth, and North American performance improved. Management stated that "growth is expected to improve in the second half benefiting from the recent launch of a number of new products".
Elsewhere, revenues in Severe Service were flat on a reported basis and down 2% organically, which "reflects a positive performance given the very strong start we had in 2012, when shipments included a catch up in backlog that existed at the end of 2011". Order intake was up around 20% in the period to the end of April, and a particularly large order in the Middle East helped drive continued good momentum in the Oil & Gas sector. A few good contracts for new equipment in the Nuclear sector were also won in the period, and "margins are expected to improve in the first half benefiting from productivity gains in our Brno manufacturing facility and to show progressive improvement thereafter as the lower margin shipments complete".
Fluid Power saw revenues fall 4% on a reported basis and 5% on an organic basis, following a slow start to the year in the Commercial Vehicle sector against a strong first quarter last year, with margins expected to be slightly down in the first half compared to the first half of last year as a result of lower activity levels. However, management confirmed that a return to growth is expected in the second half.
Finally, revenues in Beverage Dispense were down 4% on a reported basis and 5% organically, reflecting "a slower start to the year in the U.S. and Latin American markets and the impact of the exit from a large, low margin contract in the U.K. in the middle of last year". It was stated that good progress was being made on a number of new product opportunities for customers to meet growing demand for innovative solutions for a wider variety of health and indulgence drinks.
Foolish final thought
Previously, the share price had fallen as low as 1,164 pence on 22 April as the market rerated the stock following an all-time high of 1,347 pence reached in mid-March. Today's news shows that investors are keeping faith with IMI, though, as one of the better performers in recent years.
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