TIDMIMI
RNS Number : 1765C
IMI PLC
09 November 2009
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9 November 2009
IMI plc ("IMI" or "the Group")
INTERIM MANAGEMENT STATEMENT
In expectation that forecast earnings for 2009 are likely to be materially ahead
of current consensus, IMI plc has brought forward to today its Interim
Management Statement for the period from 1 July to 8 November 2009.
Current trading
The early management actions taken to mitigate the profit impact of lower
revenues continue to deliver encouraging results. Selling prices generally
remain resilient although we are beginning, as expected, to experience some
downward pressure within Severe Service on a number of larger oil & gas
projects. Low cost sourcing initiatives and value engineering programs have
reduced material prices in the year to date by around 5%. Lower average metal
prices have also produced margin benefits, particularly within our Indoor
Climate business. Actions to right size the business, and accelerate moves to
transfer more production to low cost economies continue to bear fruit and we
have brought forward some additional plans scheduled for 2010-2011, which will
result in a higher rationalisation charge for the year of around GBP35m
(compared to the GBP30m indicated at the half year).
As a result of the success of these various programs, we expect operating
margins for the second half of the year to be better than previously expected
and in excess of 14%. We expect earnings per share for the year as a whole, on
an adjusted basis, to be in the region of 43p to 45p per share (2008: 54.1p), of
which around 2p per share arises from one-off pension curtailment benefits.
Overall levels of demand remain broadly stable, with continuing signs of
recovery in Asia, some modest improvement in North America and European markets
generally remaining subdued.
Group revenues for the ten month period to the end of October are around 18%
lower than the corresponding period in 2008, on a constant currency basis. Six
week moving average order intake is around 12% lower than last year, reflecting
some modest improvement in Asia and North America, and a weakening comparable in
the last quarter of 2008.
The Group's effective tax rate for 2009 is expected to be 30%, one point below
the 31% reported for the first half of the year.
Balance sheet
Cashflow remains strong, with debtor day performance at similar levels to last
year, despite the difficult economic environment, and inventories having been
reduced by nearly 15%. We anticipate operating cash conversion in excess of 120%
for the full year, and net debt levels (subject to further movement in exchange
rates used for valuing year end currency denominated debt) of less than
GBP220m.
1 Operating margin - segmental operating profit as a percentage of segmental
revenue.
2 Adjusted earnings per share - before the after tax cost of restructuring,
acquired intangible amortisation and financial instruments, excluding economic
hedge contract gains and losses.
3 Cash conversion - cash flow from continuing operations as a percentage of
segmental operating profit after restructuring costs.
As previously announced the Group successfully issued $175m of US loan notes in
July 2009 with maturities extending to 2019. Following this issue the Group has
a balanced portfolio of short and long term loan facilities with considerable
headroom to utilise the balance sheet strength as and when acquisition
opportunities arise.
Severe Service
The weakening order intake within Severe Service referred to at the interim
results has continued and for the ten months to October is down, on an
underlying basis, about 15% on last year. However higher quotation activity
should result in a recovery in order intake next year. After market orders
remain buoyant which will be positive for margins this year. We were recently
successful in securing our largest ever order in the Nuclear sector, worth
around GBP55m over an 8 year period, which bodes well for our longer term
aspirations in this space.
Fluid Power
The business has stabilised since the sharp falls experienced early in the year,
with recovery continuing in Asia and signs in the last few weeks of some modest
improvement in North America. Volumes in Europe remain at fairly depressed,
albeit stable levels. The management actions taken in the early part of the year
to protect profitability in this business are having a significant impact.
Second half operating margins are expected to recover to around 9% on volumes
similar to those in the first half.
Indoor Climate
The business has continued to enjoy reasonably robust demand, importantly
through the key heating season of September to November. Organic revenues year
to date are down around 5% on last year. A combination of lower overheads and
lower material costs, arising partly from metals hedging arrangements entered
into in the first half, continue positively to impact margins which will show
strong progression both in the second half and for the year as a whole.
Beverage Dispense
Volumes within Beverage Dispense remain stable with some improvement in Asia and
North America offset by further softness in European markets. Management actions
to right size the business will maintain second half margins at broadly the same
level as the first half on markedly, and seasonally lower volumes.
Merchandising
Merchandising volumes for the second half will be substantially lower than last
year, reflecting the one off nature of the large grocery order shipped primarily
in the third quarter of 2008, and the expected and significant reduction in
North American automotive business. Demand in the balance of the business
remains resilient however which, together with early management actions to
contain cost, will lead to second half margins similar to the equivalent period
last year.
IMI plc will be holding a conference call today at 8:30am. Details of the
conference call are set out at the bottom of this announcement.
IMI will announce its Preliminary Results for the year ending 31 December 2009
on 4 March 2010.
Enquiries to:
IMI plc
Will Shaw Tel: 0121 717 3712
Weber Shandwick Financial
Nick Oborne / Stephanie Badjonat Tel: 020 7067 0700
Conference Call Details:
Time: 8.30am on Monday 9th November, 2009
The conference call id number and telephone numbers for the call are set out
below. Please note that the operator will ask for your name and company and we
would ask that you dial in at least 5 minutes prior to the call start time.
Participant dial-in details
Conference call Id: 39308664
UK Free Call: 0800 694 0257
UK Local Call: 0844 493 3800
UK Standard International: +44 (0) 1452 555 566
USA Free Call: 1866 966 9439
If you are unable to attend, a recording of the conference call will be
available for playback for 7 days using the numbers below and also available on
our website.
Encore Replay Access Number:39308664#
International Dial in: +44 (0) 1452 55 00 00
UK Free Call Dial In:0800 953 1533
UK Local Dial In:0845 245 5205
USA Free Call Dial In:1866 247 4222
This information is provided by RNS
The company news service from the London Stock Exchange
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