IMI beats 1H forecasts, guides higher for the full-year

IMI's first half profits edged past analysts' forecasts with the engineer guiding higher for the full-year, citing the impact of its reorganisation activities and expectations for a modest improvement in its margins.

For the six months to 30 June, the manufacturer of flow and fluid control solutions posted an 11% rise in reported revenues to £846.0m, driving a 13% jump in profits before tax to £98.0m for earnings per share of 28.4p (Numis: PBT: £97, EPS: 27.4p).

Improved trading conditions in some of the company's most important markets which were evident in the first three months of the year had extended into the second quarter, IMI boss Mark Selway said.

However, Selway said it was progress made on the firm's ongoing operational improvements which were most encouraging.

He said those improvements were being carried out at an "impressive" pace and that the company's market positions continued to improve.

Operating cash flows were 1% ahead to £86.0m, alongside a decline in the company's debt pile to £318.0m.

Within its precision engineering arm, IMI said its Janus project was running ahead of targets, with utilisation having risen to 66% from 50% at the beginning of 2017.

In terms of the outlook, stripping out exchange rate fluctuations both organic revenues and margins were seen up in the backhalf of 2017 when compared to the same period of 2016 - reflecting cost reductions and better market conditions.

For the full-year, sales and margins were seen in-line with 2016 levels, the company said in a statement.

"[Full-year] organic revenue is still expected to be below last year, principally driven by order phasing in Critical Engineering. However, second half margins will show a modest improvement compared with the same period in 2016, supported by both rationalisation savings and improved market conditions in Precision Engineering," Selway added.

IMI raised its interim dividend by 1.4% to 14.2p.

As of 1028 BST, shares of IMI were down 3.34% to 1,244p, but not far off their 52-week highs of 1,319p, their next key level of technical resistance.