IMI plc · LSE:IMI
IMI — H1 2019 Earnings Presentation
28 slides from IMI's earnings presentation, Jul 26, 2019
Slide 1: IMI plc 2019 Interim Results
IMI plc 2019 Interim Results IMI plc 2019 Interim Results Roy Twite – Chief Executive Daniel Shook – Finance Director 1
Slide 2: Key messages
IMI plc 2019 Interim Results Key messages ► First half results in line with expectations ► Good cash delivery ► Precision Engineering continues to be impacted by Industrial Automation weakness ► Full year rationalisation charges to be c.£35m with c.£30m annualised savings ► Strong order growth and r
Slide 3: Business review
IMI plc 2019 Interim Results Business review Daniel Shook – Finance Director 3
Slide 4: Organic revenue and operating profit
IMI plc 2019 Interim Results Organic revenue and operating profit £m 6 months to 30 June 2019 6 months to June 2018 Adjusted Adjusted Adjusted Organic Adjusted Foreign Acquisitions/ Organic post IFRS 16 pre IFRS 16 Growth (%)* Growth (%)** Exchange Disposals and notional and notional rent rent Reven
Slide 5: Lease Accounting Changes (IFRS 16) – from 1 January 2019
IMI plc 2019 Interim Results Lease Accounting Changes (IFRS 16) – from 1 January 2019 £m H1 2019 Impact from H1 2019 H1 2018 (post IFRS 16) IFRS 16 Notional (pre IFRS 16) ► Adjusted operating profit increases Rent by £0.8m, offset by higher finance expense Income Statement ► Minimal impact to profit
Slide 6: Income statement
IMI plc 2019 Interim Results Income statement £m 2019 2018 ► Net interest expense higher due to IFRS Adjusted operating profit 118.0 119.7 16 and full period effect of debt used to Net interest expense (7.7) (5.9) acquire Bimba Net pension finance expense (0.3) (0.7) ► Restructuring costs of £12.5m
Slide 7: Operating cash flow
IMI plc 2019 Interim Results Operating cash flow £m 2019 2018 ► Strong cash delivered in H1 EBITDA (from continuing operations) 164 146 ► Debtor reduction reflects continued focus on improving cash collection Inventory (44) (38) ► Capital expenditure of £28m represents Debtors 22 (15) 0.9x of deprec
Slide 8: Net cash flow
IMI plc 2019 Interim Results Net cash flow £m 2019 2018 Adjusting Operating cash flow 101 68 ► Adjusting items reflect £6m of restructuring spend, primarily in Critical Adjusting items (6) (13) Engineering Statutory Operating cash flow 95 55 ► Lease liabilities of £91m included in net Interest and D
Slide 9: Balance sheet
IMI plc 2019 Interim Results Balance sheet £m Jun Dec Jun 2019 2018 2018 ► Net debt of £516m includes £91m IFRS 16 Shareholders’ funds 674 666 620 lease liabilities and £70m dividend Net debt 516 405 459 payment ► Weighted average debt maturity of 5.7 Gearing 77% 61% 74% years, 100% at fixed rates E
Slide 10: IMI Precision Engineering operational review
IMI plc 2019 Interim Results IMI Precision Engineering operational review £m H1 2019 IFRS 16 H1 2019 FX Organic Acq’n H1 2018 Sales by Sector Adjusted and notional Adjusted Adjusted rent* Pre IFRS 16 and notional rent Industrial £259m Automation Down 4% Adjusted Revenue 463 - 463 10 (5) 9 449 Commer
Slide 11: IMI Critical Engineering operational review
IMI plc 2019 Interim Results IMI Critical Engineering operational review £m H1 2019 IFRS 16 H1 2019 FX Organic H1 2018 Order input by Sector and notional Adjusted Adjusted rent* Adjusted Pre IFRS 16 and notional rent Aftermarket £179m Up 5% Adjusted Revenue 294 - 294 4 (29) 319 Oil & Gas £58m Up 10%
Slide 12: IMI Hydronic Engineering operational review
IMI plc 2019 Interim Results IMI Hydronic Engineering operational review £m H1 2019 IFRS 16 H1 2019 FX Organic H1 2018 Sales by Sector and notional Adjusted Adjusted rent* Adjusted Pre IFRS 16 TA £75m and notional rent Up 2% Adjusted Revenue 153 - 153 (1) 7 147 Heimeier £48m Up 5% Organic Growth 4%
Slide 13: Group outlook
IMI plc 2019 Interim Results Group outlook ► The trading outlook for the Group remains substantially unchanged. In the second half of 2019 we continue to expect that organic revenue will experience a decline similar to that in the first half, when compared with the same period in 2018. ► Nonetheless
Slide 14: Profitable growth acceleration
IMI plc 2019 Interim Results Profitable growth acceleration Roy Twite – Chief Executive Initial Immediate Strategic review observations priorities 14
Slide 15: Observations
IMI plc 2019 Interim Results Observations Strengths Opportunities ► Great people and culture ► Put customers at the centre ► Strong brands and market positions ► Focus on attractive market segments ► Industry leading engineering expertise ► Accelerate results from Lean ► Lean capability and operatio
Slide 16: 3 strong divisions
IMI plc 2019 Interim Results 3 strong divisions ► Recent margin pressure has been well understood ► tough markets ► investments to improve the business ► Now is the right time ► to focus the organisation on delivering for our customers ► to improve shareholder returns through the cycle 16
Slide 17: Drive through-cycle margin and cash flow
IMI plc 2019 Interim Results Drive through-cycle margin and cash flow Sales initiatives Divisional programmes Sales Ignite Programme Maximise profitable sales Accelerate cross selling in Aftermarket and LNG Shared initiatives Value Engineering Material cost reduction Productivity improvement Smart p
Slide 18: New processes for sustainable growth
IMI plc 2019 Interim Results New processes for sustainable growth ► Build IMI’s Growth Accelerator capability in all 3 divisions ► Create diverse “Sprint” teams ► Working at pace to solve significant industry problems ► Create and capture significant value ► Creating customer centric culture of inno
Slide 19: Drive accountability through the organisation
IMI plc 2019 Interim Results Drive accountability through the organisation ► Realigned reporting ► Reduced corporate scale and costs ► General Manager Boot Camps ► Optimise customer service ► Drive profitable growth ► Commercial excellence 19
Slide 20: IMI Precision Engineering
IMI plc 2019 Interim Results IMI Precision Engineering Strengths Considerations Work Streams ► Globally recognised brands ► Industrial Automation target segments ► Review twelve IA segments & established routes to market ► Complexity ► Implement European organisation, ► Applications engineering, foo
Slide 21: IMI Critical Engineering
IMI plc 2019 Interim Results IMI Critical Engineering Strengths Considerations Work Streams ► Globally recognised brands ► 13% new construction Fossil Power ► Review opportunity to use engineering skills in new segments ► Industry leading engineering ► Margins need to improve capability & applicatio
Slide 22: IMI Hydronic Engineering
IMI plc 2019 Interim Results IMI Hydronic Engineering Strengths Considerations Work Streams ► Great market positions, ► Lack of growth over last ► Explore ability to win in attractive strong brands, pull model 10 years market adjacencies ► Excellent HVAC system-level ► Supply chain and product compl
Slide 23: Key takeaways
IMI plc 2019 Interim Results Key takeaways Now: Ongoing: February: ► Immediate focus on improving ► Assess true potential of each division ► Further insights on Divisional financial returns and shareholder against profitable growth ambition strategies value ► Identify and test growth opportunities ►
Slide 24: Q&A
IMI plc 2019 Interim Results Q&A 24
Slide 25: Appendix
IMI plc 2019 Interim Results Appendix 25
Slide 26: Pensions
IMI plc 2019 Interim Results Pensions £m Jun Dec Jun 2019 2018 2018 Total Position: Liabilities (654) (597) (1,012) ► UK scheme remains in surplus following Assets 609 545 962 the de-risking exercises completed in 2018 Deficit (45) (52) (50) ► Continued proactive management of Swiss schemes in H1 20
Slide 27: Foreign Exchange
IMI plc 2019 Interim Results Foreign Exchange H1 2019 H1 2018 Change Average Rates Ready Reckoner for translation impact of movement in FX Euro 1.14 1.14 0% rates on 2019 FY Performance US Dollar 1.29 1.37 6% Sensitivity to +/- 1 cent move in: Revenue Operating Profit H1 2019 H1 2018 Change Closing
Slide 28: Forward-looking statements disclaimer
IMI plc 2019 Interim Results This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and operating margins, market trends and our product pipeline are forward-looking statements. It is believed that the expect