8th May 2014 07:41
LONDON (Alliance News) - Engineering firm IMI PLC Thursday said it is on track to deliver "modest" organic revenue growth in the first half, with slightly lower margins, compared with the first half of 2013, and an improved overall performance in the full year.
In an interim management statement for the period January 1 to May 7, the company said overall trading in the first fourth months of the year has been in line with expectations with group revenues up 1% on an organic basis and down 4% on a reported basis "reflecting the ongoing adverse impact of exchange rate movements".
FTSE 100-listed IMI said its three main divisions - severe service, fluid power and indoor climate - experienced contrasting fortunes during the period.
Revenue for the severe service arm fell 4% during the period on an organic basis reflecting the "strong prior year comparator that included backlog sales". IMI said order intake for the division was lower in the first four months of the year compared with the same period in 2013, when a very large single order from a Middle Eastern oil and gas customer was secured.
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.
IMI said it expects the division to perform strongly in the second half, which should result in revenue and margin growth for the full year.
On the other hand, its fluid power arm saw revenue increase 5% on an organic basis in the first four months of 2014, with good progress in the European industrial automation market and strong activity levels in the commercial vehicle sector.
The fluid power division specialises in the design and manufacture of pneumatic and other flow control technologies.
Looking ahead, IMI said it expects fluid power to deliver first half revenue growth with margins slightly lower when compared with the first half of 2013 "reflecting the sales mix and increased investment to support growth initiatives".
IMI said revenue for its indoor-climate business, which provides hydronic solutions, were broadly similar on an organic basis compared with the same period in 2013.
In January, the company said it sold its Beverage Dispense and Merchandising divisions for GBP690 million. Since then IMI said GBP620 million has been returned to shareholders and a contribution of GBP70 million is being made to the IMI UK Pension Fund.
Financially, net debt at the end of April stood at GBP212 million.
IMI shares were down 0.2% at 1,507.00 pence early Thursday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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