Friday, 26 February 2016

IMI - Final Results

IMI is a global engineering group focused on the precise control and movement of fluids in critical applications. They work with leading international companies in over 50 countries to deliver innovative engineering solutions to address global trends such as clean energy, energy efficiency, healthcare and increasing automation.

IMI’s products and services are ideally positioned to respond to the key environmental and demographic trends that are shaping the future. Drivers for growth of the business include climate change, population growth and scarcity of natural resources, renovation of existing buildings and infrastructure and finally, healthcare related innovation for an increasingly ageing population.

They are a FTSE 250 company with a market cap currently £2.5bn.

The shares rejoined my ISA portfolio following  results 2 years ago as a replacement for Carillion.

Results

IMI have today issued results for the year to 31st December 2015 (link via Investegate). As with many other companies, results have been impacted by the slowdown in China and Brazil as well as falling oil prices and exchange rates headwinds over the past 18 months. As a result, adjusted profits and earnings are down 20% at £219m and 62.2p respectively.

The full year dividend will however be increased by 2% to 38.4p (2014 37.6p). Dividend cover based on adjusted earnings for the continuing businesses is 1.6x earnings.

Mark Selway, CEO, commented: "We made steady progress on a number of fronts despite tough trading conditions in many of our markets. Our financial results were broadly in line with market expectations and we made substantial progress across a range of our strategic initiatives which have improved our operational performance and enhanced our market competitiveness.

Based on current market conditions, and on an organic constant currency basis, we expect first half revenues to reflect a similar percentage reduction to that experienced in the full year of 2015. Due to reduced sales volumes we expect first half margins to be around 250 basis points lower than the first half of 2015.  In the second half of 2016 the benefits of restructuring activities, combined with normal business phasing, are expected to result in improved revenues and margins when compared to the first half of the year."

It seems to me the results are pretty much in line with expectations. The shares have been marked down quite heavily over the past 12m however the results have been well received and in early trading the share price was up ~4% at £8.90 giving a yield of 4.3%.

Although I am in the process of winding down my shares portfolio, I feel the sell off for IMI has been overdone and I will hold for the time being and hope the SP can recover as quickly as it fell away.

As ever please DYOR.

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