Severe Service unit boosts growth at IMI

Engineering giant IMI raised its dividend by eight per cent after a 'resilient' set of results in 2012 which were helped by an encouraging performance from new products and emerging markets.

Engineering giant IMI raised its dividend by eight per cent after a 'resilient' set of results in 2012 which were helped by an encouraging performance from new products and emerging markets.

The company also announced a share buy-back programme of up to £175m over the next 12 months "to ensure that gearing remains at or above the current level".

Revenues increased 3.0% from £2.13bn to £2.19bn in 2012 (also up 3.0% on an organic basis) helped by double-digit revenue growth in the Severe Service division.

Severe Service provides valves and fluid-control products; it delivered revenue growth of 20% last year, helped by a strong shipment performance in fossil power, oil and gas and in the aftermarket.

This unit, which accounts for a third of group revenue, helped offset second-half weakness in the Fluid Power division and a flat year in Indoor Climate.

Meanwhile, profit before tax rose 5.0% from £301.4m to £317.0m, while basic earnings per share improved by 15% from 63.2p to 72.6p. However, the operating margin slipped from 17.5% to 17% owing mainly to a shipment of a large backlog of lower-margin projects within Severe Service.

The board has proposed paying a final dividend per share (DPS) of 20.7p for 2012 (2011: 19p), bringing the full-year DPS to 32.5p, up 8.0% from the 30p payout the year before.

OutlookIMI said that while macro-economic environment has "stabilised" over recent months, conditions will remain "subdued" over the first half of 2013, before improving gradually as the year progresses.

"Whilst the global macro-economic outlook remains mixed, we are confident of delivering further progress in 2013, supported by higher growth in the emerging markets and an improving contribution from recently introduced new products," said Chairman Roberto Quarta.

"In the longer term we are committed to a programme of accelerating the convergence of the group's activities around our sweetspot, through increased investment in sales and engineering, and a focused programme of corporate activity, featuring both acquisitions and disposals."

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021