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.

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."