Imi Plc · LSE:IMI
Imi — H1 2015 Earnings Presentation
33 slides from Imi's earnings presentation, Jul 31, 2015
Slide 1: 2015 Interim Results – 31 July 2015
IMI plc Interim Results Presentation IMI plc 2015 Interim Results – 31 July 2015
Slide 2: Agenda
IMI plc Interim Results Presentation Agenda ‣ Highlights: Mark Selway – Chief Executive ‣ Financial review: Daniel Shook – Finance Director ‣ Operational review and Outlook: Mark Selway ‣ Q&A: IMI Executive Team
Slide 3: Highlights
IMI plc Interim Results Presentation Highlights Revenue Segmental operating profit Operating margins £765m Down 2% 1 £116m Down 9% 1 15.2% Down 180bps Cash generation Adjusted earnings per share Dividend per share £82m Up 26% 30.3p Down 13% 13.9p Up 2% ‣ Results in line with expectations in challeng
Slide 4: Financial review
IMI plc Interim Results Presentation Financial review Daniel Shook – Finance Director
Slide 5: Revenue
IMI plc Interim Results Presentation Revenue H1 2014 H1 2015 £m H1 2014 Exch Disp Organic H1 2015 Acqs Organic Critical Engineering 315 (10) (10) 295 295 (17) 278 Precision Engineering 355 (10) (1) 344 342 - 342 Hydronic Engineering 139 (11) (1) 127 128 - 128 Segmental revenue 809 (31) (12) 766 765
Slide 6: Operating profit
IMI plc Interim Results Presentation Operating profit H1 2014 H1 2015 £m H1 2014 Exch Disp Organic H1 2015 Acqs Organic Critical Engineering 56.1 (2.3) (3.2) 50.6 39.8 1.0 40.8 Precision Engineering 69.4 (1.5) 1.2 69.1 63.7 - 63.7 Hydronic Engineering 25.8 (2.3) - 23.5 23.0 - 23.0 Corporate Costs (1
Slide 7: Income statement
IMI plc Interim Results Presentation Income statement £m H1 2015 H1 2014 Segmental operating profit 116.2 137.2 Restructuring costs - not exceptional (1.1) (1.5) Loss on disposal of subsidiaries - not exceptional (0.4) - Net interest expense (8.0) (7.3) Net pension finance income/(charge) 0.1 (1.6)
Slide 8: Operating cash flow summary
IMI plc Interim Results Presentation Operating cash flow summary £m H1 2015 H1 2014 EBITDA* 137.6 155.0 Inventory (32.1) (39.5) Debtors 2.0 (26.2) Creditors 7.7 20.5 Working capital (22.4) (45.2) Capital expenditure (29.4) (22.9) Provisions and employee benefits (3.3) (12.5) Asset sales/other (0.6)
Slide 9: Balance sheet
IMI plc Interim Results Presentation Balance sheet £m Jun Dec Jun 2015 2014 2014 Shareholders' funds 523 509 425 Net debt 289 200 232 Gearing 55% 39% 55% Continuing businesses: EBITDA* 134 334 155 Interest costs 8.0 14.3 7.3 Net debt / EBITDA** 0.9x 0.6x 0.7x EBITDA / interest 17x 23x 21x * Before e
Slide 10: Pensions
IMI plc Interim Results Presentation Pensions £m Jun 2015 Dec 2014 Jun 2014 UK O'seas Total UK O'seas Total UK O'seas Total Assets 1,311 147 1,458 1,324 152 1,476 1,233 145 1,378 Liabilities (1,241) (235) (1,476) (1,264) (247) (1,511) (1,243) (240) (1,483) Accounting deficit 70 (88) (18) 60 (95) (35
Slide 11: Foreign exchange sensitivities 2014 and 2015
IMI plc Interim Results Presentation Foreign exchange sensitivities 2014 and 2015 H1 2015 H1 2014 Change Average rates Euro 1.37 1.22 -12% US$ 1.52 1.67 +9% Ready reckoner for translation impact of movement in FX rates on 2015 FY performance Closing rates Sensitivity to +/- Euro 1.41 1.25 -13% 1 cen
Slide 12: Operational Review & Strategic Update
IMI plc Interim Results Presentation Operational Review & Strategic Update Mark Selway – Chief Executive
Slide 13: IMI Critical Engineering
IMI plc Interim Results Presentation IMI Critical Engineering £m 2014 Foreign Disposals 2014 2015 Acquisitions 2015 Exchange Organic Organic 2015 First half order intake (organic) Revenue 315 (10) (10) 295 295 (17) 278 £292m down 6% organically Growth % -6% -6% Aftermarket up 5% £134m Operating 56.1
Slide 14: IMI Critical Engineering
IMI plc Interim IMI plc Results Presentation Interim Results Presentation IMI Critical Engineering Continue to invest to support addressable growth markets - £7bn… Controls Oil & Gas Isolation Power Generation Actuation Silencers Petrochemical … and organic technology transfer to new locations
Slide 15: Critical Engineering: invest in infrastructure, systems and processes
IMI plc Interim Results Presentation IMI Critical Engineering Continue to invest in infrastructure, enhanced systems and processes ‣ New Project Management process piloted at IMI CCI USA ‣ Obeya rooms now in place at IMI CCI Czech Republic and IMI CCI Korea ‣ IMI Critical divisional ‣ ERP system lau
Slide 16: Critical Engineering Lean assessments
IMI plc Interim Results Presentation IMI Critical Engineering 100 90 80 ‣ Third round of Lean assessments now 70 complete 60 50 ‣ Improvements evident at all sites 40 30 ‣ Action plans in place 20 for further 10 improvement over the next six months 0 IMI Z&J Germany IMI CCI SPEC JV IMI Fluid Kinetic
Slide 17: The acquisition of Bopp & Reuther
IMI plc Interim Results Presentation IMI Critical Engineering The acquisition of Bopp & Reuther Safety Valves Control Valves Shut-Off Valves £m H1 2015 H1 2014* Variance Order intake 24.3 27.7 (3.4) Revenue 17 27 (10) Operating Profit (1.0) 2.2 (3.2) ▸ Acquired for €153m – deal completion 2 January
Slide 18: The acquisition of Bopp & Reuther
IMI plc Interim Results Presentation IMI Critical Engineering The acquisition of Bopp & Reuther ‣ In the balance of the year, on a constant currency basis, organic revenue performance is expected to deliver a comparable percentage reduction to the first half of this year ‣ Given current order book p
Slide 19: IMI Precision Engineering
IMI plc Interim Results Presentation IMI Precision Engineering £m 2014 Foreign Disposals 2014 2015 Acquisitions 2015 Exchange Organic Organic 2015 First half revenue Revenue 355 (10) (1) 344 342 (-) 342 £342m down 1% organically Growth % -4% -1% Industrial Automation down 3% £156m Operating (-) Comm
Slide 20: Precision Engineering: growth plans, portfolio, quality systems
IMI plc Interim Results Presentation IMI Precision Engineering Regional growth plans Product portfolio Quality systems ✓ ✓ ✓ ▸ Strategic plans being ‣ Product portfolio ‣ Global Quality system now developed to accelerate rationalisation well developed growth in every IMI underway ‣ Pilot reviews com
Slide 21: Precision Engineering: fix the basics
IMI plc Interim Results Presentation IMI Precision Engineering New ERP system New Products Improved sales forecasting ✓Fix the basics in ✓ ✓ the next two years ‣ JD Edwards system ‣ New responsive ‣ New sales and financial installed in Brazil Application Engineering forecasting model ‣ Project plan
Slide 22: Precision Engineering Lean assessments
complete for further ‣ Improvements next six months evident at all sites assessments now ‣ Third round of Lean ‣ World-class by 2018 ‣ Action plans in place improvement over the 100 0 10 20 30 40 50 60 70 90 80 IMI Norgren Brno 3rd round score % 66 3rd round target % 75 IMI FAS Switzerland 66 65 IMI
Slide 23: IMI Precision Engineering outlook
IMI plc Interim Results Presentation IMI Precision Engineering ‣ PMIs are generally positive in Europe and North America with an offsetting softness in China and Brazil ‣ Commercial vehicle volumes are expected to be generally good in Europe and North America but weaker in Brazil ‣ In the second hal
Slide 24: IMI Hydronic Engineering
IMI plc Interim Results Presentation IMI Hydronic Engineering £m 2014 Foreign Disposals 2014 2015 Acquisitions 2015 Exchange Organic Organic 2015 First half revenue Revenue 139 (11) (1) 127 128 (-) 128 £128m up 1% organically Growth % -8% 1% IMI TA up 2% £58m Operating IMI Heimeier up 2% £37m 25.8 (
Slide 25: Invest in New Product Development
IMI plc Interim Results Presentation IMI Hydronic Engineering Invest in New Product Development to capitalise on European leadership position ‣ 20 new products launched, 6 in H1 2015 ‣ New Product Development increases to 4% of revenue ‣ Eclipse
Slide 26: Hydronic Engineering: ERP, procedures, organisation
IMI plc Interim Results Presentation IMI Hydronic Engineering Global ERP Global business Organisation & structure ✓ procedures ✓ ✓ ‣ JD Edwards global system ‣ Core processes introduced ‣ Reduced complexity being developed ‣ Advanced Quality management ‣ Promotes ‣ On time, on budget plan fully syst
Slide 27: Hydronic Engineering Lean assessments
IMI plc Interim Results Presentation IMI Hydronic Engineering 100 ‣ Third round of Lean 90 assessments now 80 complete 70 ‣ Improvements evident at 60 all sites 50 40 ‣ Action plans in place for further improvement 30 over the next six months 20 10 ‣ World-class by 2018 0 IMIIMI Hydronic Slovenia IM
Slide 28: IMI Hydronic Engineering outlook
IMI plc Interim Results Presentation IMI Hydronic Engineering ‣ Due to the continued success of new product sales, during the balance of the year, we expect organic revenues to show good growth when compared to the second half of 2014 ‣ Margins are expected to be broadly similar to the second half o
Slide 29: Strategic Achievements
IMI plc Interim Results Presentation Strategic Achievements ✓ Strategic initiatives continued at pace and all businesses made good progress to adopt best practice in operations, project management and IT ✓ Application of Lean continues and robust improvement plans in place for the next phase of deve
Slide 30: Outlook
IMI plc Interim Results Presentation Outlook ‣ Despite continuing challenging economic and market conditions in a number of key sectors, we delivered results broadly in line with expectations and continued to execute our growth plan. ‣ Revenue is expected to have a comparable percentage reduction to
Slide 31: Strategy execution timeline
IMI plc Interim Results Presentation Strategy execution timeline Year Year Year Year Year Year 0 1 2 3 4 5 2014 2015 2016 2017 2018 2019 ✓ “The hard work “Increased investment” “Benefits starting to “Nearly firing on “Up to full “Double operati begins” show” all speed” ng cylinders” profits” Organic
Slide 32: Q&A The Executive Team
IMI plc Interim Results Presentation Q&A The Executive Team
Slide 33: GREAT the IMI Way
N Engineering GREAT the IMI Way