6th Mar 2014 09:31
LONDON (Alliance News) - Engineering firm IMI PLC reported an increase in profit and revenue for the full year, reflecting a strong performance across the business, but warned of pressures on profit margins in the first half of 2014.
The FTSE 100 company posted pretax profit of GBP297.7 million for 2013, up from GBP274.8 million, as revenue climbed 3% to GBP1.74 billion from GBP1.70 billion a year earlier.
"Looking at the year ahead: in 2014, based on current market conditions and excluding the adverse impact of exchange rates, we expect the group to deliver modest organic revenue growth in the first half with margins slightly lower than in the first half of last year and an improved overall performance in the year," Chief Executive Mark Selway said in a statement.
IMI said all three of its divisions - severe service, fluid power and indoor climate - saw revenue increases in 2013.
IMI's severe service arm saw revenue rise to GBP716 million, up from GBP686 million, boosted by a 27% increase in oil and gas orders. The company won a profitable contract for a high integrity pressure protection system for installation on a gas field in the Middle East. In the petrochemical sector, orders were up 11%, while orders were up 16% for the fossil power sector.
The severe service division designs and manufactures highly engineered valves, actuators and controls which are able to withstand extremes of temperature and pressure and intensely abrasive and corrosive cyclical operations.
Operating margin for the division improved to 16.3% from 14.0% in 2012.
The fluid power division, which specialises in the design and manufacture of pneumatic and other flow control technologies, saw revenue rise to GBP723 million from GBP717 million.
Following a "soft" first half, the fluid power division's commercial vehicle sector grew 1% in the second half while the European truck business rose 18%.
During the year, the company acquired two small technology companies to support the fluid power business - Analytical Flow Products and Nano-Porous Solutions Ltd - for a combined GBP7.6 million.
Operating margin for the fluid power division dipped to 19.4% from 19.8%, reflecting the lower level of sales.
IMI said its indoor climate division performed well with revenue rising to GBP305 million, from GBP293 million and operating margin up to 21.1% from 21.0%.
The firm said growth in Europe of 4% for indoor climate division was partially offset by declines in the emerging markets and its automatic balancing valve business in North America.
Since the year-end IMI has scaled back the indoor climate division's interest in a number of smaller, less profitable emerging markets to focus on those markets, such as China, Brazil and Russia, where it sees the best opportunities for future growth.
Overall, IMI said group operating margin rose to 18.4% from 17.7%
Near the end of the period, IMI sold its retail dispense businesses to Chicago-based manufacturing company Marmon Group for GBP666.7 million, allowing the firm to focus more on flow control solutions.
Financially, net debt at the year-end stood at GBP199 million compared with GBP144 million at the end of the corresponding period.
The company declared a final dividend of 22.5 pence, up from 20.7 pence, making a total dividend for the year of 35.3 pence from 32.5 pence.
The stock was trading at 1,461.31 pence Thursday morning, down 86.69 pence or 5.6%, putting it at the bottom of the FTSE 100.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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