Trading deteriorates for IMI

In the year to 31 December 2008, IMI saw a 19% increase in turnover while pre-tax profits were up 3% to £176 million (2007: £171m). The chairman and chief executive’s statement accompanying the results said there had been encouraging progress in most areas of the business, but went on: “However the global economic downturn presents the group with significant challenges in 2009 and beyond. Consequently we are taking early and decisive actions to position the group to meet these challenges and mitigate against the financial impact.” Chairman Norman Askew (pictured), said the group nevertheless retained a healthy balance sheet and good cash generation. IMI – which specialises in niche engineering sectors including control valves, fluid controls and beverage dispensers – said it had completed a three year restructuring programme to move a greater proportion of its manufacturing capacity to low cost economies, and the benefits were being delivered as expected. The group had seen some evidence of a slow down in certain of its markets since the summer as a result of the global economic downturn. This included the in-plant automotive and European commercial vehicle sectors in fluid power and the demand from major soft drinks bottlers in both North America and Europe in beverage dispense. Since late November trading conditions had deteriorated across many end markets. Sectors such as automotive and commercial vehicles suffered a sharp contraction, as had investment in factory automation as businesses seek to rein back capital expenditure in the face of balance sheet concerns and poor forward visibility. Construction markets, particularly within the once fast growing regions of Eastern Europe and Dubai, also contracted sharply, as access to credit has evaporated. For the three months to the end of February, like for like revenues for the group were around 15% lower than the equivalent period last year. The statement explained: “We have taken rapid action to right size the business to the lower activity levels, with 10% of the global workforce (the group employs around 14,000) having been released since December, and short-time working arrangements having been implemented wherever practicable. Further releases are planned over the next few weeks and we expect to be fully reconciled to the current levels of activity by the end of June. As part of this sizing initiative we have also taken the opportunity to bring forward some of our longer range plans to transfer more of our manufacturing capacity from North America and Europe to the lower cost areas of China, Czech Republic and India.”