IMI sees stronger second half; FY in line with expectations

Industrial engineering firm IMI said its full year expectations remained unchanged, with an improved performance predicted for the second half.

The company said based on year to date performance and current market conditions, organic revenues in the first half should show a similar percentage reduction to that experienced in the full year of 2015 with margins 250 basis points lower than the first half of 2015.

“We also continue to expect an improved performance in the second half, reflecting the benefits of business improvement and cost reduction initiatives,” it added.

The 2016 financial results continue to be favourably impacted by the effects of the exchange rates movements when compared to 2015, and in particular the strengthening of the Euro and US Dollar against Sterling. This is giving rise to an exchange rate benefit for the full year on both revenues and profits.

In the firm's critical engineering division organic revenue rose 2.0%, but revenue fell 2.0% on an adjusted basis against “challenging” markets with some projects delayed into the second quarter “though we have not seen any cancellations of note”.

“As previously outlined, revenues will be lower in the first half compared to 2015, principally reflecting the order intake profile last year. As expected first half margins will be impacted by the under-recovery of overheads associated with lower volumes,” IMI said.

“In the second half, we continue to expect organic revenues to be higher than in the first half with margins significantly improved on the first half of the year, due to the continuing cost reduction initiatives and the phasing of the order backlog.”
Sector prospects remained mixed, with petrochemical and nuclear showing early signs of recovery while momentum in oil & gas and power remained “weak and uncertain”.

Revenues at the precision engineering division fell 3.0% and 7% on an adjusted basis. In the hydronic engineering division, they were up 4% and flat on an adjusted basis.