IMI suffers trucking reverse

Engineer IMI endured a slow start to the year, hit by poor commercial vehicle sales in Europe and the US.

Organic group revenues fell 3.0% in the four months to April, or just 1.0% if exchange rate movements and acquisitions are excluded, but the group remained confident it would deliver progress over the full year in 2013.

Weak truck sales in its largest markets of Europe and North America saw commercial vehicle revenues reverse 11.0% and meant turnover at Fluid Power, the largest division by revenue, was down 4.0% against a strong performance the previous year.

The FTSE 100 group said truck sales were being hit as manufacturers adjusted down stock levels in the first quarter, and it now expected Fluid Power revenues in the first half to be at similar levels or slightly ahead of the second half of 2012.

The division has lately seen an increase in order intake, as industry demand data in the US market improves and several major truck manufacturers in Europe notified of an impending uplift in production.

With a number of recently launched new products gaining traction and a brightening outlook in the US and Europe, the expectation is for a return to growth for Fluid Power in the second half.

The Severe Service unit, which provides engineering expertise to the energy and steel industries, faced flat revenues since the start of the year compared to a very strong period the previous year, though margins were hit by a number of lower-margin contracts.

Management expect margins to stiffen here in the remainder of the first half, due to productivity gains at its Czech manufacturing facility, and said it believed they will continue to improve as the lower-margin shipments work their way out.

Revenues from the smaller Indoor Climate and Beverage Dispense divisions dipped 1.0% and 5.0% on an organic basis, while the smallest segment, Merchandising, was the only area to enjoy a strong start to the year. Sales were up 13% on an organic basis here in the first four months of the year.

Shares in IMI were up 2.43% at 1,309p at 09:03.

OH