16th Dec 2005 07:01
IMI PLC16 December 2005 16 December 2005 IMI plc Trading Update In accordance with its normal practice, IMI plc is today issuing a tradingupdate in advance of its preliminary results announcement for the twelve monthsending 31 December 2005, due to be published on 6 March 2006. Current trading Underlying growth for the second half will be similar to the first halfresulting in estimated organic growth for the year of around 4%. Our Severe Service business continues to enjoy strong end markets in both powerand oil and gas. New valve projects remain the principal growth driver with theAsian markets, particularly China, and the Middle East maintaining theirmomentum. Customer Service growth, although modest in comparison, remainshealthy. In Fluid Power we expect to achieve double digit growth in our chosensectors with global truck leading the way in the US, UK and Germany. The generalend markets in the US and Asia remain positive with the UK and European marketsstill somewhat mixed. In Indoor Climate the second half has been similar to thefirst half with growth in balancing valves offset by lower sales in Germany ofthermostatic radiator valves. We continue to make progress in the UK, EasternEurope and the US. In Beverage Dispense, the US, despite continued lower spend by one of our majorcustomers, remains positive and will be ahead of last year. The momentum in theUK beer market continues to improve although Europe is still subdued. During theyear our operational and sourcing initiatives have continued to make goodprogress. In Merchandising Systems, overall second half volumes will be similarto last year. Sales to the US automotive sector continue to run at a rateconsiderably lower than in 2004. Elsewhere the cosmetics sector volumes havebeen good and the beverage and bulk food display systems sales remain veryhealthy. We would expect reported profit before tax, exceptional items and intangibleasset amortisation to be in the range £168-172m compared to £161.1m last year.In arriving at this estimate, we have included around £19m (2004: £27.2m)operating profit from discontinued businesses and assumed a £0-2m loss arisingfrom the change in fair value of financial instruments (IAS39). Our current view on the trading outlook remains similar to that expressed inSeptember with our businesses continuing to experience consistent growth in theUS, Middle East and Asia, and still no significant signs of an upturn in the UKand European end-markets. Pensions The actuarial valuation of the UK IMI Pension Fund at 31 March 2005 resulted ina deficit of £51m, largely as a result of revised mortality assumptions. TheCompany has decided to eliminate this deficit by annual payments of around £16mover four years starting in December 2005. Corporate activity When we announced the sale of Polypipe in September, we indicated that the £39mvendor loan note could be repaid through a buyer refinancing in the high-yielddebt market or else that IMI could exercise its right to sell the note at a timeconsistent with realising best value. To date, no repayment or sale has beeneffected. Since our interim results announcement, we have completed the acquisition of thecontrol valve business of ABB in Japan (Severe Service); GT Developments (FluidPower), a leading designer and supplier of pneumatic controls to the USheavy-duty truck industry; and Northern Parts (Beverage Dispense), a US food andbeverage equipment parts distributor. All these acquisitions add to ourstrengths in our chosen sectors and should contribute well in 2006. The totalexpenditure on acquisitions in 2005 has been around £70m. To date we have purchased 16.8m shares through the on-market share buy-backprogramme at an average price of £4.21 and a total cost of £71m. - Ends - IMI plcGraham Truscott, Communications Director Tel: 0121 717 3712 Weber Shandwick Square MileNick Oborne/Susanne Walker/Stephanie Badjonat Tel: 020 7067 0700 Information about IMI plc can be found on the website: www.imiplc.com Note to editors: IMI plc is an international engineering business specialising in innovativesolutions and services for a wide range of industrial and retail customers. Itsfuture growth is being built on the two business areas of Fluid Controls (SevereService, Fluid Power, Indoor Climate) and Retail Dispense (Beverage Dispense,Merchandising Systems). IMI's operations in these two business areas share the following corecharacteristics: strong market positions in growing markets; the ability to beclearly differentiated from their competitors through technological innovationor after-sales service; and the provision of 'added value' through bespokesolutions rather than a high manufacturing or material content. IMI is quoted on the London Stock Exchange and is capitalised at approximately£1.6bn. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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