IMI (IMI) is considering which areas of its industrial automation business it will prioritise as the engineering group seeks ways to kickstart growth against a tough market backdrop. Having recently softened its critical engineering division’s focus on fossil fuel and nuclear activities, IMI’s strategic review will nevertheless also examine how it will make the most of “the significant liquefied natural gas (LNG) market opportunity” that it recognises. Over its first half, IMI’s new construction orders were 36 per cent higher owing to petrochemical, marine and LNG work, which offset declines in fossil fuels. But sales here were down 28 per cent, “reflecting the expected reductions from the order book phasing”.
The engineer, which designs flow control solutions for of energy and process industries, attributed its revenue drop to a 4 per cent decline in industrial automation, which hampered its progress in precision engineering. Organic industrial automation turnover dropped in Europe and the Americas, with Asia flat. Precision engineering revenues jumped, though, help by boosts in its energy, life sciences and rail activities.
IMI will deliver its review’s outcome at its 2019 results. It anticipates full year rationalisation charges to sit around £35m, with approximate annualised savings of £30m. IMI’s new chief executive Roy Twite said second half organic revenues “will experience a decline similar to that in the first half” when set against last year’s figures, but profits should be around last year’s figure. IMI’s second half statutory pre-tax profit came in at £120m in 2018.
Bank of America Merrill Lynch forecasts full-year 2019 earnings per share of 73p, rising to 78.7p in 2020.
| IMI (IMI) | ||||
| ORD PRICE: | 1,038p | MARKET VALUE: | £ 2.82bn | |
| TOUCH: | 1,038-1,039p | 12-MONTH HIGH: | 1,268p | LOW: 868p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 248p* | NET DEBT: | 77% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 914 | 92.9 | 27.4 | 14.6 |
| 2019 | 910 | 92.7 | 28.4 | 14.9 |
| % change | -0.4 | -0.2 | +4 | +3 |
| Ex-div: | 08 Aug | |||
| Payment: | 13 Sep | |||
| *Includes intangible assets of £600m, or 221p a share | ||||
