In accordance with its normal practice, IMI plc is today issuing a trading update in advance of its interim results announcement for the six months ending 30 June 2007, due to be published on 3 September 2007.
Organic sales growth in the first half, on a constant currency basis, is expected to be about 7%.
In Severe Service, order intake for new valves remains strong both in power generation and the oil and gas segments. There has been some catch up in the shipment schedules against order book growth which has helped to rebalance some of the seasonality in our shipments profile. Organic sales growth in the first half should be in excess of 20%.
In Fluid Power, European end markets continue to show good momentum. The North American truck market is, as expected, sharply down, but the European truck market is strong and has helped offset some of this decline. Excluding North American truck, our other sector businesses within Fluid Power continue to grow at about 15%. Overall, organic sales growth in Fluid Power in the first half is forecast to be around 2%.
Indoor Climate has continued to perform strongly in its core European markets. Eastern Europe, Asia Pacific and the US have all shown good momentum. First half sales are expected to reflect organic growth of around 10%.
In Beverage Dispense, the European and Asia Pacific markets have performed well. Although the US market remains patchy, we have seen some improvement in shipments to the quick service restaurant sector. Progress in 3Wire, our parts management business in the US, continues to be encouraging. Beverage Dispense organic sales growth is forecast to be about 5% in the first half.
In Merchandising Systems, the cosmetics sector is performing well, while the automotive sector remains relatively subdued. Organic sales are forecast to be slightly ahead for the first half and we enter the second half with a stronger order book.
Our restructuring programme announced in March last year is continuing on track. The transfer of certain manufacturing facilities from the US and Western Europe to Mexico and the Czech Republic is making good progress. Restructuring costs for the first half are in line with plan and expected to be about £11m, compared to £7.7m in the first half of 2006.
We continue to face metal and material cost headwinds which are being addressed through our restructuring and procurement programmes. The recent flooding in Yorkshire, UK resulted in severe damage and disruption to one of our facilities. The self-insured costs have been estimated at £2m in arriving at the guidance below.
We expect a first half profit of £90-£93m before tax, restructuring costs and intangible amortisation which, at the mid point, represents an increase on a constant currency basis of around 9% over last year. In arriving at this guidance, the impact of changes in the fair value of financial instruments (IAS39) is estimated to be a credit of £1m. The comparable result for 2006 was £88.1m (after an IAS39 credit of £0.9m).
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Graham Truscott, Communications Director
Tel: 0121 717 3712
Weber Shandwick Financial
Nick Oborne/Stephanie Badjonat/Charlie Hooper
Tel: 020 7067 0700
Notes to editors
IMI is a dynamic, worldwide company delivering innovative engineering solutions to leading global customers in clearly defined niche markets. Its five businesses share a common goal - to convert their industry knowledge and market insight into customised, design-engineered solutions which create customer advantage and value. These include severe service valves, motion and fluid control systems, indoor climate controls, beverage dispense systems, and merchandising display systems for retail operations.
Close customer relationships, strong positions in growing markets and clear differentiation through technological innovation or service are the defining characteristics of all IMI businesses.
IMI is quoted on the London Stock Exchange. Information about IMI plc can be found on the website: www.imiplc.com.