IMI cuts management pay, pulls dividend in response to outbreak

Industrial engineering group IMI has pulled its dividend and cut senior management remuneration, as it assured investors it was well positioned to weather the disruption brought about by the Covid-19 outbreak.

The Birmingham-based firm said that at end of February, it had immediately available liquidity of £393m, with an additional £81m of undrawn uncommitted facilities. Long-term debt totalled £363m, was at fixed rates and, aside from an £11m tranche due in 2022, does not mature before 2025 and beyond.

The company added that the coronavirus outbreak had so far had a relatively modest impact, with sales and orders in the first two months of the year "slightly ahead" of its earlier guidance. Margins and cash flow remained strong, it said, while the majority of its sites remain at or near normal capacity.

Some facilities producing valve components for ventilator manufacturers had even received special dispensation to ramp up production.

However, IMI added that other locations, including those in Italy and India, had temporarily closed following moves by local authorities to contain the pandemic.

And the London-listed firm conceded: "While we look forward to, and remain confident of, a return to normal trading, we are actively preparing for the short-term disruptions and expected macroeconomic declines brought about by this pandemic."

In response, the board and executive committee have agreed a 20% salary cut effective 1 May for three months. IMI has also introduced a hiring freeze, reduced discretionary spending and capital expenditure, and withdrawn its recommendation to pay a final dividend, thereby saving £71m. Guidance for the first half has also been pulled.

Roy Twite, chief executive, said: "My firm belief that, by continuing to act decisively, IMI will deliver on its ambitious strategy once this global, human tragedy has been resolved."

As at 0830 BST, shares in IMI were down nearly 3% at 704.81p.