IMI keeps wary eye on Europe

IMI, the global engineering group, came in on target in the first half but warned the second part of the year would be tougher due to the financial crisis in Europe.

Revenue was up 6% to £1.09bn, with pre-tax profits rising 7% to £154.4m.

Earnings per share were up 7% to 40.4p and the copany hiked its interim dividend 7% to 11.8p.

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But Chairman Roberto Quarta said the pace of revenue growth was likely to slow in the second half, given in particular the weakening economic conditions in Europe.

"Notwithstanding the macroeconomic uncertainty, we continue to make good progress with the strategic development of the group, with increased investment in new products and emerging markets, and ongoing utilisation of a strong balance sheet in securing further value-enhancing acquisitions," he said.

The firm said it had contingency plans in place to defend margins should activity levels weaken from current levels.

Analysts had voiced concerns about the state of the firm's Fluid Power division.

Revenues in that part of the business were down 1% on an organic basis and 4% on a reported basis compared to the first half of last year.

As expected, geographical performance had been more variable, with growth in both the Americas and Asia being offset by a weakening market in Europe, the company said.

IMI reported growth in both its Severe Service and Merchandising businesses, although margins fell slightly in Severe Service.