IMI PLC IMI plc
Press release
28 July 2023
Strong organic growth, margin improvement and cash delivery
Purpose-led strategy continuing to deliver growth
Full year guidance reconfirmed
Interim results, six months ended 30 June 2023
Adjusted1 | ||||||||
H1 2023 | H1 2022 | Change | Organic3 | |||||
Revenue | £1,084m | £972m | +12% | +7% | ||||
Operating profit | £193m | £160m | +21% | +13% | ||||
Operating margin | 17.8% | 16.4% | +140bps | |||||
Profit before tax | £180m | £154m | +17% | |||||
Basic EPS | 54.0p | 47.1p | +15% | |||||
Operating cash flow2 | £145m | £79m | +84% | |||||
Interim dividend per share | 9.1p | 8.3p | +10% | |||||
Net debt : EBITDA | 1.6x | 1.8x | ||||||
Statutory | |||
H1 2023 | H1 2022 | Change | |
£1,084m | £972m | +12% | |
£149m | £129m | +15% | |
13.7% | 13.3% | +40bps | |
£139m | £121m | +15% | |
42.2p | 36.6p | +15% | |
£174m | £111m | +57% | |
9.1p | 8.3p | +10% |
1 Excluding the effect of adjusting items as reported in the income statement. See Note 2 for definitions of alternative performance measures.
2 Adjusted operating cash flow, as described in Note 2 to the financial statements. Statutory measure is Cash generated from operations as shown on the cash flow statement. 3 After adjusting for acquisitions, disposals and exchange rates (see Note 3).
Continued strong performance
- 12% sales growth, 17% adjusted profit before tax growth, 15% basic EPS growth
- Adjusted operating margin 140bps higher than H1 2022
- Statutory operating profit up 15%
- Statutory profit after tax up 16%
- Operating cash flow significantly higher
- Interim dividend increased by 10%
- Business structure aligning to key sectors
Roy Twite, Chief Executive, said:
"During the first half, we have made excellent progress with our purpose-led strategy, Breakthrough Engineering for a Better World. We are creating value for all our stakeholders by increasing customer intimacy, driving market-led innovation and reducing complexity. We continue to help our customers become safer, more sustainable and more productive. Our new business structure from July 2023 further aligns us to our key sectors and positions IMI to accelerate growth. In light of the success of our Better World strategy we have expanded our financial framework with through-cycle targets of 5% organic growth, a 20% adjusted operating margin and 90% cash conversion. In addition, as we grow the business through M&A, we expect return on invested capital to remain above 12%."
"Based on the strong first half result and current market conditions we expect 2023 full year adjusted EPS to be between 112p and 117p."
Enquiries
Luke Grant | IMI | Tel: +44 (0)7866 148 374 |
Matt Denham | Headland | Tel: +44 (0)7551 825 496 |
A live webcast of the analyst meeting taking place today at 08:00am (BST) will be available on the investor page of the Group's website: www.imiplc.com. The Group plans to release its next Interim Management Statement on 9 November 2023.
1 Interim results 2023
IMI plc
Press release
Strategic progress
Positioning IMI for accelerated growth
Today we announce the next steps of our purpose-led strategy, Breakthrough Engineering for a Better World. IMI is always evolving. The sectors in which we operate have increased and expanded and the way we help solve customer problems has strengthened. We are making changes to our structure to enhance further our customer focus.
To build on our growth opportunities, we are organising IMI into an Automation business and a Life Technology business. The aim is to accelerate Better World growth by getting us even closer to our customers through sector focused teams.
Effective immediately, Jackie Hu will lead the Automation business, which will leverage deep automation technology and applications expertise to improve productivity, safety and sustainability in the Process Automation and Industrial Automation sectors. This platform includes IMI Critical Engineering and IMI Precision Engineering's Industrial Automation business.
Beth Ferreira will lead the Life Technology business, which will focus on technologies that enhance and improve everyday life, particularly in the areas of health, sustainability and comfort across the Climate Control, Transport, Life Science and Fluid Control sectors. This platform includes IMI Hydronic Engineering and IMI Precision Engineering's Fluid OEM and Transportation businesses.
Business Unit | Sectors | Previous Name | ||||
Automation | Process Automation | IMI Critical Engineering | ||||
Industrial Automation | IMI Precision Industrial Automation | |||||
Climate Control | IMI Hydronic Engineering | |||||
Life Technology | ||||||
Life Science & Fluid Control | IMI Precision Fluid OEM | |||||
Transport | IMI Precision Transportation |
From July 2023, reporting is being aligned across the two businesses and five sectors and will be used in our 2023 preliminary results announcement in early 2024.
Our financial framework
Given the success of the Better World strategy launched in November 2019, we are expanding the financial framework for the Group. We continue to build towards our 20% through-cycle adjusted operating margin target. Today we add through-cycle targets of 5% organic growth and 90% cash conversion. In addition, as we grow the business through M&A, we expect return on invested capital to remain above 12%.
Financial Metric | Through-cycle targets | 2022 full year |
Organic revenue growth | 5% | 4% |
Adjusted operating margin | 20% | 17.8% |
Cash conversion | 90% | 80% |
Return on invested capital | >12% | 12.7% |
2 Interim results 2023
IMI plc
Press release
Sustainability: creating a Better World
Our purpose, Breakthrough Engineering for a Better World, continues to drive our actions and create real energy across our organisation. IMI's solutions support the safety, sustainability, and productivity of our customers' products and operations, and often directly contribute to the delivery of their carbon reduction targets. When considering investments, we ensure that the impact on IMI's ESG objectives is a prime consideration.
IMI sees a natural link between pursuing our ESG objectives with vigour and our wider ambitions for improved growth and profitability. Many of our best growth opportunities are supporting customers in developing solutions for a zero-carbon future. In particular, we are supporting development in many aspects of the Hydrogen value chain, including electrolysis, liquid storage, refuelling and heavy-duty trucks. Our hydrogen related orders in 2023 are expected to double from £7m in 2022.
We have also agreed our first Sustainability linked revolving credit facility for £50m in June 2023 and will use this as a template to convert our remaining lending facilities as they come up for renewal.
We have submitted our commitment letter to the Science Based Target Initiative and plan to submit our targets later this year for approval. We continue to reduce our CO2 emissions for Scope 1, Scope 2 and Scope 3, making meaningful progress toward our Net Zero targets. We continue to improve our metrics regarding water withdrawal and non-recyclable hazardous waste.
Our Inclusion and Diversity activities are helping to build a more dynamic and innovative organisation. The female representation on the Board is currently 44% and the Executive Committee is 43%. Our employee engagement remains high, with 77% of all employees seeing IMI as a great place to work (2022: 80%).
Ensuring all our employees feel safe at work is central to our strategy and culture. Total recordable incidents in the first half were 17 (2022: 15), we have a continued focus on identifying and reducing workplace hazards, and remain committed to the ambition of an accident-free workplace.
The Group's commitment to a Better World is evident in our many external ESG credentials, including a MSCI AA rating, and our membership of the FTSE4Good Index. We are also proud to have been awarded the LSE's Green Economy Mark, as our products and services contribute to a number of environmental objectives such as climate change mitigation, waste and pollution reduction, and the circular economy.
More information about our ESG credentials and initiatives, including our policies and practices, can be found on our website: www.imiplc.com.
3 Interim results 2023
IMI plc
Press release
Results overview
Strong organic growth, margin improvement and cash delivery
IMI has delivered a strong first half performance, with Group revenue growth of 12% compared to the same period last year and 7% higher organically. First half adjusted operating margin has increased by 140bps when compared to the prior period.
£m | Adjusted1 | Statutory | |||||
H1 2023 | H1 2022 | Change | Organic2 | H1 2023 | H1 2022 | Change | |
Revenue | 1,084 | 972 | +12% | +7% | 1,084 | 972 | +12% |
Operating profit | 192.8 | 159.8 | +21% | +13% | 148.9 | 129.0 | +15% |
Operating margin | 17.8% | 16.4% | +140bps | 13.7% | 13.3% | +40bps | |
1 Excluding the effect of adjusting items as reported in the income statement. See Note 2 for definitions of alternative performance measures. 2 After adjusting for exchange rates, acquisitions and disposals (see Note 3).
This strong performance reflects continued focus on our unifying purpose-led strategy, Breakthrough Engineering for a Better World. We are creating value by increasing customer intimacy, driving market- led innovation and reducing complexity. These actions have allowed us to generate strong growth in the order book and revenue as well as improving margins.
Sector performance
Sector (£m) | H1 2023 | H1 2022 | Change | Organic1 | |
Process Automation | 366 | 312 | 17% | 15% | |
Industrial Automation | 243 | 226 | 8% | 2% | |
Climate Control | 201 | 175 | 15% | 5% | |
Life Science & Fluid Control | 152 | 150 | 1% | -3% | |
Transport | 122 | 109 | 12% | 6% | |
Total revenue | 1,084 | 972 | 12% | 7% | |
1 After adjusting for exchange rates, acquisitions and disposals (see Note 3). | |||||
Process Automation Sector (£m) | H1 2023 | H1 2022 | Change | Organic1 | |
Closing order book | 774 | 587 | +32% | ||
Aftermarket order intake | 296 | 228 | +30% | +26% | |
New Construction order intake | 213 | 153 | +39% | +36% | |
Total order intake | 509 | 381 | +34% | +30% | |
1 After adjusting for exchange rates, acquisitions and disposals (see Note 3).
Process Automation (IMI Critical Engineering) had an excellent first half, with strong order intake and continued organic growth. Orders were up 30% organically, with a 26% increase in Aftermarket. We have seen particular strength in LNG, Marine and downstream Oil & Gas, with new products continuing to make a major contribution to growth.
Industrial Automation (IMI Precision Industrial Automation) delivered a good performance despite uncertain markets. We see continued demand for solutions that automate processes in a competitive labour market.
4 Interim results 2023
IMI plc
Press release
Climate Control (IMI Hydronic Engineering) saw strong demand for our energy saving products. The integration of Heatmiser, acquired in December 2022, is progressing well and we see a significant opportunity to scale Heatmiser's unique product portfolio across our core European markets.
Life Science & Fluid Control (IMI Precision Fluid OEM) saw modest levels of customer destocking in the first half, although underlying demand for our innovative product portfolio remains solid.
Transport (IMI Precision Transportation) saw growth across all regions in the first half as supply chains began to normalise. We have benefited from a particularly strong recovery in China following the easing of COVID-19 restrictions.
Dividend
The Board is recommending a 2023 interim dividend of 9.1p per share (2022: 8.3p per share). Payment will be made on 15 September 2023 to shareholders on the register at the close of business on 11 August 2023.
Outlook
Based on the strong first half results and current market conditions our guidance for 2023 full year adjusted EPS is unchanged at 112p to 117p.
This reflects c.3% business outperformance since our last update, offset by foreign exchange, which is now expected to lead to a full year headwind of 1%. Divisional guidance remains unchanged.
Divisional results overview
The following review relates to our continuing businesses' performance for the six months ended 30 June 2023 when compared to the same period in 2022. References to organic growth are on a constant currency basis and exclude disposals and acquisitions, see Note 3 for a reconciliation of these measures.
£m | Adjusted1 | Statutory | ||||||||||||||||
H1 2023 | H1 2022 | Change | Organic2 | H1 2023 | H1 2022 | Change | ||||||||||||
Revenue | ||||||||||||||||||
IMI Precision Engineering | 517 | 485 | +7% | +2% | 517 | 485 | +7% | |||||||||||
IMI Critical Engineering | 366 | 312 | +17% | +15% | 366 | 312 | +17% | |||||||||||
IMI Hydronic Engineering | 201 | 175 | +15% | +5% | 201 | 175 | +15% | |||||||||||
Total | 1,084 | 972 | +12% | +7% | 1,084 | 972 | +12% | |||||||||||
Operating profit | ||||||||||||||||||
IMI Precision Engineering | 101.4 | 88.2 | +15% | +10% | 69.5 | 66.8 | +4% | |||||||||||
IMI Critical Engineering | 60.5 | 48.8 | +24% | +21% | 52.5 | 43.5 | +21% | |||||||||||
IMI Hydronic Engineering | 43.9 | 35.5 | +24% | +4% | 39.9 | 35.9 | +11% | |||||||||||
Corporate costs | (13.0) | (12.7) | (13.0) | (17.2) | ||||||||||||||
Total | 192.8 | 159.8 | +21% | +13% | 148.9 | 129.0 | +15% | |||||||||||
Operating margin | 17.8% | 16.4% | +140bps | 13.7% | 13.3% | +40bps |
1 Excluding the effect of adjusting items as reported in the income statement. See Note 2 for definitions of alternative performance measures. 2 After adjusting for exchange rates, acquisitions and disposals (see Note 3).
IMI Precision Engineering
IMI Precision Engineering performed well in the first half. Organic revenue grew by 2%, with growth in Industrial Automation and Transportation more than offsetting lower revenue due to customer destocking in
5 Interim results 2023
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IMI plc published this content on 28 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2023 06:12:52 UTC.
