IMI is full of beans after these results. An increase in operating margins to 17.5 per cent and underlying profits up a fifth to £363.4m broke records, and management say there's more to come. They received a warm welcome in the City, too, with earnings upgrades on the cards.
Acquisitions bumped up the core fluid controls division, especially at the later-cycle severe service valves business where revenue rose 27 per cent, just 2 per cent of which was organic. Here, selling valves to the liquefied natural gas industry offset weakness in fossil power and nuclear, though problems moving a factory to a cheaper site in the Czech Republic hurt margins. Still, they should improve in the second half and there's a healthy order book, too. IMI's sweet spot - Fluid Power- did better, driven by high demand for valves from commercial vehicle makers. Expect further progress in 2012, given European markets look to have stabilised and the volume of work in North America and Asia is growing. Over at the drinks machine unit, profit grew 28 per cent, while focusing more on healthy smoothies and juices should benefit margins again in 2012.
Broker Numis Securities expects adjusted pre-tax profit of £396m in 2012, giving adjusted EPS of 88.1p (£363m and 81.5p in 2011).
IMI (IMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 985p | MARKET VALUE: | £3.16bn | |
| TOUCH: | 983-985p | 12-MONTH HIGH: | 1,142p | LOW: 625p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 16 | |
| NET ASSET VALUE | 176p* | NET DEBT: | 18% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.60 | 171 | 34.8 | 20.2 |
| 2008 | 1.90 | 176 | 35.4 | 20.7 |
| 2009 | 1.79 | 186 | 40.8 | 21.2 |
| 2010 | 1.91 | 306 | 66.4 | 26.0 |
| 2011 | 2.13 | 301 | 63.2 | 30.0 |
| % change | +12 | -2 | -5 | +15 |
Ex-div: 11 Apr Payment: 21 May *Includes intangible assets of £497m, or 155p a share | ||||
