IMI makes solid start to 2012 despite FX headwinds

published 20 April 2012

Engineering group IMI has made a strong start to 2012 with growth in its Severe Service and Merchandising divisions offsetting a more subdued performance in its other units.

Group revenues in the three months to the end of March rose by 8%, up 6% on an organic basis which adjusted for exchange rate movements and acquisitions.

Severe Service, IMI's valves and flow control products division, saw shipments jump 30% in the first quarter, helped by a catch-up in new valve shipments as out put from the Brno facility increases. The firm said growth will moderate in the second quarter against stronger comparatives. On an organic basis, which excludes the Remosa and InterAtiva acquisitions, the division's shipments rose 20%.

Subscribe to MoneyWeek

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

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

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

Margins in the first half are expected to be flat due to a higher mix of lower margin new valve shipments and higher operations costs in Brno. These factors are expected to unwind in the second half leading to an improvement in margins. Severe Service sales accounted for over a quarter of group revenue in 2011.

Fluid Power revenues (which accounted for over a third of group sales last year) were unchanged from last year as growth in the US and Asia offset by weaker sales in central and southern Europe.

Indoor Climate and Beverage Dispense revenues were also at similar levels as the first quarter of 2011, while Merchandising organic revenue growth was 14%.

IMI said that with the pound strengthening against the euro and slightly weakening against the dollar, there was an "overall translational headwind". The company says that if first-quarter average exchange rates were applied to last year's results, revenue and operating profits would have been 1% and 2% lower, respectively.

"Overall we expect results in the first six months of the year to be in line with our expectations and, based on current market conditions, we remain optimistic that the group will make further progress in 2012," the statement read.