Excluding restructuring costs, IMI (IMI) delivered flat operating profits in 2019, along with a 20-basis point increase in the underlying margin. That was achieved primarily through the latter half of the year, with both the critical and hydronic engineering divisions recording significant gains in unit profitability.
Though a modest improvement, it would have given encouragement to Roy Twite, who has been at the helm of the engineering group since last May. He has been focussing on reducing the complexity of the corporate structure, while driving material cost savings, together with placing greater emphasis on building mutually beneficial client relationships. It’s an ongoing process, so rationalisation charges of around £45m are expected for this year, generating annual savings in the region £25m.
Strong cash generation, a steep reduction in receivables and a consequent decrease in net working capital meant that net debt (1.2 times Ebitda) increased by just £38m to £438m despite recognition of £90m in lease liabilities and the £69m acquisition of PBM Inc in September.
Consensus forecasts collated by Bloomberg give EPS of 56.4p for 2020, rising to 69p in the following year.
| IMI (IMI) | ||||
| ORD PRICE: | 992p | MARKET VALUE: | £ 2.70bn | |
| TOUCH: | 992-994p | 12-MONTH HIGH: | 1,215p | LOW: 896p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 261p* | NET DEBT: | 62%** | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.57 | 163 | 44.7 | 38.4 |
| 2016 | 1.66 | 165 | 48.3 | 38.7 |
| 2017 | 1.75 | 181 | 59.8 | 39.4 |
| 2018 | 1.91 | 213 | 62.5 | 40.6 |
| 2019 | 1.87 | 189 | 56.6 | 41.1 |
| % change | -2 | -11 | -9 | +1 |
| Ex-div: | 02 Apr | |||
| Payment: | 15 May | |||
| *Includes intangible assets of £619m, or 227p a share. **Includes lease liabilities of £90.4m. | ||||
