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UPDATE 1-IMI expects improved trading for second half
August 22, 2013 / 9:22 AM / 4 years ago

UPDATE 1-IMI expects improved trading for second half

* H1 adj. pretax profit up 1 pct at 170.1 mln stg

* Sees better trading conditions for rest of the year

* Raises interim dividend to 12.8 pence from 11.8 pence

* Shares hit life high (Adds CEO comments, updates share movement)

Aug 22 (Reuters) - IMI Plc forecast an improvement in trading for the second half of the year as the engineering company takes on higher-margin contracts at its severe service business while its fluid power unit also returns to growth.

Shares in the company rose as much as 6.5 percent to a life high of 1501 pence on the London Stock Exchange on Thursday morning.

IMI, which specialises in fluid control systems such as valves and beverage dispensers, said a greater contribution from recently launched products would also bolster trading in the second half.

“An improving sales mix in the second half, particularly within the severe service business, is supportive of good overall margin growth,” Chief Executive Martin Lamb said.

“We are definitively taking more advanced technology contracts at higher margins and we continue to ship out and take out of the order book a number of lower-margin projects that were booked two or three years ago.”

The company also forecast a return to growth in the second half for its fluid power business, which has so far held back results due to a downturn in the commercial vehicles market.

Lamb said truck manufacturers were gearing up for higher production runs in the second half with sales of current truck models expected to pick up ahead of more stringent Euro VI emissions rules that are set to kick in next year.

IMI would also benefit from the new emissions rules as the Euro VI-compliant trucks would be fitted with its products.

“So the commercial vehicle business looks a good deal more positive in the second half of this year, at the same time we’ve got other new products that are being launched that will support a return to growth in the fluid power business in the second half year-on-year,” he added.

The fluid power business, which also caters to the rail, food and beverage and life science industries, and the severe service business, which mainly serves the energy market, are IMI’s largest divisions.

For the six months ended June 30, IMI reported a pretax profit of 170.1 million pounds ($266.9 million) up marginally from 168.3 million pounds a year earlier. Revenue for the period was flat at 1.09 billion pounds.

IMI shares, which have gained 28 percent so far this year, were up 5 percent at 1,481 pence at 0921 GMT. (Reporting by Abhishek Takle in Bangalore; Editing by Supriya Kurane)

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