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IMI maintains expectations as some sectors see continued uncertainty
Specialist engineering company IMI updated the market on trading in its first quarter on Thursday, reporting that its results reflected a continuation of the improved trading it experienced through 2017, albeit with "continuing uncertainty" in some segments.
The FTSE 250 firm said overall, current trading remained "consistent" with market consensus expectations for the year.
Excluding the impact of acquisitions, disposals and exchange rate movements, organic revenues for the three months to 31 March were 2% higher compared to the same period last year.
On an adjusted basis, revenues were 3% higher, reflecting the combination of exchange rate headwinds and a maiden contribution from the acquisition of Bimba, which was acquired in January this year.
"We continue to expect organic revenues in the first half of 2018 to be higher than the first half of 2017, with a modest improvement in margins," the board said in the interim management statement.
"Results for the full year are expected to reflect normal trading seasonality."
IMI's strategic plan to drive sustainable long-term growth was continuing to make a "real difference" across all parts of the group, the board said.
Its new product pipeline was said to be developing well, the operational performance of its manufacturing facilities had further improved, and the new systems and processes it was putting in place were enabling the company to do business more efficiently.
Previously-announced reorganisation activities across the business were also progressing well and according to plan.
At IMI Critical Engineering, the board said the outlook for some of its major markets continued to be uncertain.
It still expected that first half order intake would be lower than last year, following strong petrochemical order input in the first half of 2017.
Critical Engineering organic revenues in the three months to the end of March were 4% lower, and on an adjusted basis were 7% lower, than the same period last year.
"Based on the current order book and market outlook, first half organic revenues are likely to reflect a slight improvement with broadly flat margins when compared to the first half of 2017," the board said.
"Results for the full year are expected to include the benefits of restructuring and the normal second-half bias."
In IMI Precision Engineering, organic revenues in the three months to the end of March were 8% higher than last year and, including the acquisition of Bimba and the effects of currency movements, 13% higher on an adjusted basis.
Industrial automation revenues in the first quarter of 2018 continued the positive momentum experienced throughout 2017, the board added.
Commercial vehicle production in the year-to-date also remained "robust", with particular strength in North America.
The integration of Bimba was progressing well and in-line with internal expectations.
"Based on the current market environment, we continue to expect first half organic revenues and profits to show good improvement with margins expected to be slightly improved when compared to the first half of last year," IMI said of the Precision Engineering division.
"The benefits of new product launches and continued strong market conditions are expected to deliver improved results for the full year."
At IMI Hydronic Engineering, revenues in the three months to the end of March were 4% lower on both an organic and adjusted basis when compared to the same period in 2017, and reflected the impact of the margin improvement initiatives undertaken in the period.
Plans to improve the performance of the business were said to be "well underway", with early actions already taken to capitalise on the division's fundamental strengths.
"Notwithstanding the timing and costs of the improvement actions, organic revenues and margins in the first half of 2018 are expected to be broadly similar to the first half of last year.
"In the second half of the year, these initiatives are expected to deliver a marked improvement in performance, when compared to the same period in the prior year."
IMI said that its 2018 financial results would be impacted by the relative strength of sterling against the euro and the dollar.
At 2018 first quarter average rates, that would give rise to an exchange rate headwind of around 4% to both revenues and profits in the full year.
IMI said it would issue its interim results announcement for the six months ending 30 June on 31 July.