IMI increases profits despite 6% sales fall
Engineering firm IMI has reported a six per cent rise in profits despite sales falling by more than £100 million.
The Birmingham company posted pre-tax profits of £186.2 million, compared with £176 million last year.
That came despite revenues falling from £1.9 billion to £1.79 billion in the year to January.
Chairman Norman Askew said the profitability was evidence of a strong business model.
He said: “Retention of group operating margins in excess of 13%, despite a 16% organic reduction in revenues, is a measure of the underlying quality and differentiated positions of many of IMI’s businesses today, and underlines the value of the strategic repositioning we have undertaken in the years since the last global downturn.
“With strong cash momentum, and a more stable outlook, a resumption of progressive dividends is deemed appropriate and, accordingly, the final dividend has been increased by 4%.”
Mr Askew remained cautious about the markets looking ahead, but said IMI’s business model would hold it in good stead.
He said: “We are not anticipating any sharp recovery in the global economy and with later cycle and earlier cycle businesses within the Group broadly balanced, volumes in 2010 are not expected to be materially ahead of 2009. However, a lower cost base, with further benefits expected to arise from our ongoing transfer of manufacturing to lower cost economies, should enable us to build on the good progress made to date.
“In addition, our strong balance sheet and healthy cash generation leave us well placed to exploit further opportunities as they arise.”
IMI increased dividends despite the sales fall, and also revealed that net borrowings had reduced by 42 per cent, to £172 million.
Restructuring costs rose to £34.9 million, compared with £19.6 million in 2008.