IMI hit by tough US vehicle market in third quarter

Engineering giant IMI said that second-half trading has been in line with expectations so far though it did highlight some weakness in its Fluid Power division, owing to a tough US vehicle market.

Group organic revenues, which adjust for acquisitions and exchange rate movements, were up 3% in the four months to the end of October and were 4% higher for the first 10 months of the year. Reported revenues meanwhile were up 5% and 6%, respectively.

However, volumes in the IMI's largest division, Fluid Power, which accounted for a third of group sales last year, had weakened as anticipated, the company said. In the four months to the end of October, Fluid Power organic revenues fell 4% and were down 2% in the year-to-date. "The principal contributor to this decline has been the commercial vehicle sector, most notably in the US, with revenues down 8% for the four months to the end of October," the firm said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Elsewhere, the company's units have held up well with: 15% organic growth seen in the Severe Service unit, its second-largest division which accounted for a quarter of group sales last year; 2% organic growth in Indoor Climate; flat revenues in Beverage; and 6% organic growth in Merchandising.

The company said it has retained a strong balance sheet with year-end net debt expected to be between £150m and £170m "following a seasonally strong second-half cash performance". However, this is still significantly up from the £108m of net debt at the end of the previous fiscal year.