1st Mar 2024 17:33
(Alliance News) - IMI PLC posted higher earnings in 2023 and lifted its dividend, with analysts at Irish broker Davy taking heart from the numbers.
Davy believes there is potential for a "material re-rating" of the engineering company.
IMI shares fell 0.4% to 1,726.00 pence each in London on Friday. It has a GBP4.51 billion market capitalisation.
"The shares look significantly undervalued, especially compared to their larger US peers," Davy analysts said.
Davy rates the shares at 'outperform' with a 2,500p price target.
The Birmingham, England-based firm said pretax profit grew 6.0% to GBP302 million in 2023 from GBP285 million in 2022. Revenue climbed 7.2% to GBP2.20 billion from GBP2.05 billion.
IMI highlighted GBP20 million in cost savings from restructuring, with a further GBP15 million targeted for 2024 and GBP7 million for 2025.
IMI proposed a final dividend of 19.2 pence per share, bringing the total dividend to 28.3p, up 10% from 25.7p in 2022.
Chief Executive Officer Roy Twite said: "We continued to make significant progress in 2023 as we delivered our fourth consecutive year of profit and adjusted operating margin growth. Our purpose-led strategy, Breakthrough engineering for a better world, is accelerating performance as we continue to help our customers become safer, more sustainable, and more productive. We have a resilient portfolio with around 45% of sales now generated from the aftermarket, and our sectors are aligned to attractive growth markets supported by long-term global macroeconomic trends. Both our operating platforms increased revenues and margins in the year."
Looking ahead, IMI expects 2024 adjusted earnings per share between 120p and 126p, at least 2.7% higher than 116.8p in 2023. It expects continued progress toward its 20% target for adjusted operating margin. In 2023, this had improved to 18.7% from 17.8% in 2022.
By Eric Cunha, Alliance News news editor
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