Optimism For Second Half Lifts IMI PLC

Shares in IMI (LSE: IMI) lifted 5% in early trade this morning,  following interim results for the six months ended 30 June 2013.

The jump came after the engineering company saw operating profit increase by 5% to £162.2m, against the comparative period’s figure of £155.1m. This was helped by “good margin improvement” in IMI’s ‘Severe Service’, which saw orders increase by 19%.

The good performance in this division and in ‘Merchandising’ offset the anticipated impact that was seen in ‘Fluid Power’ and ‘Indoor Climate’, while ‘Beverage Dispense’ markets were weaker than expected.

Revenue remained flat at £1,087m for the six-month period, although they saw a decrease of 3% with acquisitions and exchange rate movements price in, but basic earnings per share shot up 8% to 34.9p on a reported basis — leading to an 8% hike in the interim dividend to 12.8p, too, putting the company on a consensus forecast yield of 2.4%.

Chairman Roberto Quarta commented:

 “The Group has delivered another set of positive results with growth in profit and underlying earnings per share.  In particular, Severe Service delivered a strong performance with orders up and margins showing a healthy improvement year on year. We also made good progress with our growth agenda launching several new products and continuing to improve our operational efficiency which will help drive future margin momentum.     

 “We expect the Group to benefit from an improving sales mix and an increasing contribution from the recently launched new products.  Overall, we remain confident that the Group will deliver good progress in 2013.  Reflecting this confidence the Board has increased the interim dividend by 8%.” 

Management anticipates better trading conditions in the second half, and it’s this optimism that has contributed to today’s rise in the share price, which is currently up over 60% in the last 12 months.

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> Sam does not own shares in IMI.