Imi Plc · LSE:IMI
Imi — H1 2008 Earnings Presentation
39 slides from Imi's earnings presentation, Aug 28, 2008
Slide 1: Interim results presentation
Interim results presentation 28 August 2008 1
Slide 2: Agenda
Agenda • Introduction Norman Askew • Results overview Martin Lamb • Financial review Douglas Hurt • Sector performance David Nicholas Roy Twite • Outlook Martin Lamb • Questions and answers 2
Slide 3: Results overview
Results overview • Revenue £911m +17% • Profit before tax * £115.5m + 23% • Adjusted earnings per share ** 24.5p +30% • Interim dividend 8.0p +7% * Before restructuring, investigation costs and acquired intangible amortisation ** Before the after tax cost of restructuring, investigation costs, acqui
Slide 4: Martin Lamb
Martin Lamb 4
Slide 5: Results overview
Results overview • Organic sales growth +6% • Operating profit* at constant currency +16% • Increase in operating margin* + 120bps * Before restructuring, investigation costs and acquired intangible amortisation 5
Slide 6: Positive developments
Positive developments • Return to normal trading conditions at CCI • Strong order intake across most businesses • Continued margin development 6
Slide 7: Positive developments: Severe Service
Positive developments Severe Service • CCI trading pattern fully restored - customer confidence - routes to market - order momentum 7
Slide 8: Positive developments: Strong order intake
Positive developments Strong order intake ROW Emerging Beverage Markets Merchandising Dispense N. America Severe W.Europe Service Fluid Power Indoor UK Climate Growth key (organic yoy%) 15%+ 10-15% 5-10% 0-5% <0% 8
Slide 9: Positive developments: Continued margin development
Positive developments Continued margin* development H1 H1 2008 2007 Severe Service 16.6% 15.2% Fluid Power 14.2% 12.4% Indoor Climate 14.0% 14.2% Beverage Dispense 9.1% 7.6% ** Merchandising 8.3% 9.5% Group 13.2% 12.0% ** * Before restructuring, investigation costs and acquired intangible amortisati
Slide 10: Challenges
Challenges • Beverage UK and US • US automotive • US truck • Materials inflation 10
Slide 11: Future developments
Future developments • New product momentum accelerating • Increased investment in emerging markets - China, Czech Republic, India • Further factory consolidation opportunities • Strong balance sheet, acquisition capacity 11
Slide 12: Douglas Hurt
Douglas Hurt 12
Slide 13: Results overview
Results overview £m H1 H1 % 2008 2007 change Revenue at comparable rates 886 839 +6 Exchange impact (60) +8 886 779 +14 Acquisitions/Other 25 2 +3 Revenue as published 911 781 +17 13
Slide 14: Results overview
Results overview £m H1 H1 % 2008 2007 change Operating profit* 120.6 94.1 +28 Interest (8.3) (5.6) Return on pension plan asset 1.9 5.3 IAS39 1.3 0.2 Net financing (costs)/income (5.1) (0.1) Profit before tax* 115.5 94.0 +23 * before restructuring, investigation costs and acquired intangible amortis
Slide 15: Results overview
Results overview £m H1 H1 % 2008 2007 change Profit before tax * 115.5 94.0 +23 Restructuring costs (5.6) (10.9) Investigation costs (2.7) - Intangible amortisation (3.5) (6.3) Profit before tax 103.7 76.8 +35 Taxation (31.1) (23.9) Profit after tax 72.6 52.9 +37 * before restructuring, investigatio
Slide 16: Earnings per share
Earnings per share % 2008 2007 change Adjusted EPS * 24.5p 18.9p +30 Basic EPS 22.2p 15.4p +44 * before the after tax cost of restructuring, investigation costs, change in fair value of financial instruments and acquired intangible amortisation 16
Slide 17: Operating cash flow summary
Operating cash flow summary £m H1 H1 H2 Year 2008 2007 2007 2007 Continuing businesses: EBITDA 134 104 116 220 Working capital (38) (35) 24 (11) Tax (24) (18) (19) (37) EC fine - (33) - (33) Special pension contributions - - (16) (16) Other (8) 3 (6) (3) Net cash from operating activities 64 21 99 1
Slide 18: Net cash flow summary
Net cash flow summary £m H1 H1 H2 Year 2008 2007 2007 2007 Cash flow before corporate activity 31 (6) 67 61 Corporate activity: Acquisitions - (35) (17) (52) Disposal/discontinued - - 2 2 Dividend to minority/others (2) (2) - (2) Shareholder activity: Dividends (41) (39) (25) (64) Share buyback/issu
Slide 19: Balance sheet
Balance sheet £m June June Dec 2008 2007 2007 Shareholders funds (£m) 375 445 407 Net borrowings (£m) 275 192 233 Gearing % 73 43 57 Continuing businesses: EBITDA (£m) 134 104 220 Debt/EBITDA 1.0 0.9 1.1 EBITDA/interest 16x 19x 17x 19
Slide 20: Severe Service investigation
Severe Service investigation • Independent investigation being finalised • Resolution with the DoJ could occur Q1 2009 • H1 investigation costs were £2.7m 20
Slide 21: On-market share buyback
On-market share buyback Total since H1 08 21/03/2005 Number of shares 3.1m 44.4m * Cost £14.8m £216.0m Average price £4.75 £4.86 * 25.3m of these shares were cancelled in December 2007, the remaining 19.1m are held in Treasury 21
Slide 22: Exchange rates
Exchange rates June June % Year 2008 2007 change 2007 Average rates Euro 1.29 1.48 +13 1.46 US$ 1.98 1.97 -1 2.00 Closing rates Euro 1.26 1.49 +15 1.36 US$ 1.99 2.01 +1 1.99 Impact on H1 2008: Revenue +8 Operating profit +10 22
Slide 23: Pensions – IAS 19
Pensions – IAS 19 £m Assets 1,033 Liabilities (1,162) Surplus/(deficit) at 30.06.08 (129) Deficit 31.12.07 (64) • Triennial funding valuation of UK plan at 31 March 2008 • Further additional contributions are likely to be required 23
Slide 24: In summary
In summary • Strong first half results • Currency impact favourable • Strong balance sheet 24
Slide 25: David Nicholas
David Nicholas On the following slides, operating profit is stated before restructuring, investigation costs and acquired intangible amortisation. Organic growth numbers strip out the impact of acquisitions and exchange translation effects. 25
Slide 26: Severe Service
Severe Service £m H1 H1 % Year 2008 2007 change 2007 Revenue 191 171 +12 362 Organic growth % +3 +24 +18 Operating profit 31.8 26.0 +22 55.9 Operating margin % 16.6 15.2 15.4 • North America strong in both oil and gas and power sectors • Emerging markets performed well • Japan weaker in the nuclear
Slide 27: Fluid Power
Fluid Power £m H1 H1 % Year 2008 2007 change 2007 Revenue 339 282 +20 571 Organic growth % +7 +2 +2 Operating profit 48.2 35.1 +37 75.4 Operating margin % 14.2 12.4 13.2 • Commercial vehicles sector up over 10%, some recovery in US • Rail and PET/Beverage sectors strong. Auto in-plant and print weak
Slide 28: Indoor Climate
Indoor Climate £m H1 H1 % Year 2008 2007 change 2007 Revenue 135 97 +39 207 Organic growth % +7 +12 +7 Operating profit 18.9 13.8 +37 32.5 Operating margin % 14.0 14.2 15.7 • Balancing valves showing good growth in West and East Europe, despite some slow down in construction markets • German thermos
Slide 29: Roy Twite
Roy Twite On the following slides, operating profit is stated before restructuring costs and acquired intangible amortisation. Organic growth numbers strip out the impact of acquisitions and exchange translation effects. 29
Slide 30: Beverage Dispense
Beverage Dispense £m H1 H1 % Year 2008 2007 change 2007 Revenue 157 147 +7 285 Organic growth % +3 +7 +6 Operating profit 14.3 11.2 +28 24.8 Operating margin % 9.1 7.6* 8.7 * After impact of Sheffield flood, before impact of flood 9% • Good growth in US, with robust QSR sales • Continental Europe pe
Slide 31: Merchandising
Merchandising £m H1 H1 % Year 2008 2007 change 2007 Revenue 89 84 +6 174 Organic growth % +9 +3 +4 Operating profit 7.4 8.0 -8 19.2 Operating margin % 8.3 9.5 11.0 • Good revenue growth in most sectors • Automotive and legacy cart revenues softer • Steel cost increases impacted H1 margins • Large su
Slide 32: Martin Lamb
Martin Lamb 32
Slide 33: Outlook
Outlook • Continuing momentum • Prospects for second half encouraging albeit Beverage weaker, Severe Service stronger • Long term progress underpinned by strong fundamentals 33
Slide 34: Additional information
Additional information 34
Slide 35: Sales bridge
Sales bridge £m H1 Translation Acquisitions/ Organic H1 Disposal 2007 2008 Severe Service 171 16 4 191 Fluid Power 282 27 8 22 339 Indoor Climate 97 13 17 8 135 Beverage Dispense 147 4 6 157 Merchandising 84 - (2) 7 89 781 60 23 47 911 35
Slide 36: Profit bridge
Profit bridge £m H1 Translation Acquisitions/ Organic H1 Disposal 2007 2008 Severe Service 26.0 3.1 2.7 31.8 Fluid Power 35.1 4.0 1.5 7.6 48.2 Indoor Climate 13.8 2.2 0.4 2.5 18.9 Beverage Dispense 11.2 * 0.4 2.7 14.3 Merchandising 8.0 (0.2) (0.2) (0.2) 7.4 94.1 9.5 1.7 15.3 120.6 * After £2m impact
Slide 37: Organic revenue growth by region
Organic revenue growth by region ROW 5% UK Emerging Markets 10% 17% N. America 29% Growth key W.Europe (organic yoy%) 39% 10-15% 5-10% 0-5% <0% 37
Slide 38: Organic revenue growth by end market
Organic revenue growth by end market Auto 3% Retail 9% Truck Draught Dispense 6% 17% Power Capital 11% Equipment Growth key 29% (organic yoy%) Oil & Gas 10-15% 10% 5-10% Construction 0-5% 15% <0% 38
Slide 39: Low cost manufacturing 2006-2008
Low cost manufacturing 2006-2008 £60m three-year programme £m 2006 2007 2008 2009 Annual costs 20 22 18* Cumulative benefits 2 8 18 26 * Potential for some slippage into 2009 39