Ideally, major corporate restructurings are carried out against a stable economic backdrop. Unfortunately for engineer IMI (IMI), the markets its businesses are concentrated in - nuclear, Chinese industrials, oil and gas among them - are undergoing profound change and disruption, making the turnaround a considerable challenge.
IMI's critical engineering business is of greatest concern, based on results for the first six months of the year. Post-Fukushima investment in nuclear power remains depressed, and together with slowing market conditions in China contributed to a 19 per cent drop in operating profit for the division. At the same time, lower volumes and delays of more profitable projects narrowed margins by 2.5 percentage points. Although less impacted, trading in the precision and hydronic engineering divisions also remained subdued.
Despite this, chief executive Mark Selway is confident the five-year strategic plan to double operating profits is progressing well, and that operational efficiencies and new products are "already making a difference". To underline this, the company expects second-half margins to rebound to 2014 comparables of 17-18 per cent, despite further falls in revenues.
Analysts at Liberum are forecasting adjusted full-year pre-tax profits of £253m and earnings per share of 70.9p, down from £278m and 77.3p in 2014.
IMI (IMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,069p | MARKET VALUE: | £2.91bn | |
| TOUCH: | 1,068-1,069p | 12-MONTH HIGH: | 1,454p | LOW: 1,053p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 192p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 808 | 105.8 | 29.7 | 13.6 |
| 2015 | 772 | 87.1 | 25.5 | 13.9 |
| % change | -4 | -18 | -14 | +2 |
Ex-div: 13 Aug Payment: 18 Sep *Includes intangible assets of £448m, or 165p a share | ||||
