IMI plc · LSE:IMI
IMI — FY2015 Earnings Presentation
40 slides from IMI's earnings presentation, Feb 26, 2016
Slide 1: IMI plc 2015 Preliminary Results
IMI plc Preliminary Results Presentation IMI plc 2015 Preliminary Results 26 February 2016
Slide 2: Agenda
IMI plc Preliminary Results Presentation Agenda ‣ Operational review Mark Selway – Chief Executive ‣ Financial review Daniel Shook – Finance Director ‣ Strategic update Mark Selway ‣ Q&A IMI Executive Team
Slide 3: Highlights
IMI plc Preliminary Results Presentation Highlights Revenue Segmental operating profit Segmental operating margins £1,557m Down 5% 1 £239.4m Down 15% 1 15.4% Down 230bps Cash generation2 Adjusted earnings per share Dividend per share £192m Up 25% 62.2p Down 20% 38.4p Up 2% ‣ Steady progress made dur
Slide 4: Financial review
Financial review Daniel Shook – Finance Director
Slide 5: Segmental revenue – continuing operations
IMI plc Preliminary Results Presentation Segmental revenue – continuing operations Acquisitions / £m 2015 Translation disposals Organic 2014 Critical Engineering 631 (26) 29 (64) 692 Precision Engineering 662 (23) (1) (24) 710 Hydronic Engineering 264 (23) (2) 5 284 Group 1,557 (72) 26 (83) 1,686 %
Slide 6: Segmental operating profit
IMI plc Preliminary Results Presentation Segmental operating profit Acquisitions/ £m 2015 Translation disposals Organic 2014 Critical Engineering 93.1 (5.4) (4.5) (28.4) 131.4 Precision Engineering 117.7 (3.4) 1.7 (19.1) 138.5 Hydronic Engineering 51.8 (4.3) (0.1) (0.6) 56.8 Corporate Costs (23.2) 5
Slide 7: Income statement
IMI plc Preliminary Results Presentation Income statement £m 2015 2014 Segmental operating profit 239.4 298.1 Restructuring costs - not exceptional (2.1) (2.6) Loss on disposal of subsidiaries - not exceptional (0.4) - Net interest expense (18.4) (14.3) Net pension finance income/(charge) 0.2 (3.1)
Slide 8: Operating cash flow summary
IMI plc Preliminary Results Presentation Operating cash flow summary £m 2015 2014 Continuing operations: EBITDA* 275 334 Exceptional items (13) (4) Working capital 18 (51) Capital expenditure (71) (71) Losses/(gains) on non-exceptional disposals 1 - Asset sales/other 12 (3) Operating cash flow from
Slide 9: Net cash flow summary
IMI plc Preliminary Results Presentation Net cash flow summary £m 2015 2014 Cash generation 192 154 Special pension contributions (3) (87) Cash flow before corporate activity 189 67 Corporate activity: (Acquisitions)/disposals (108) 725 Dividend to minority/others (4) (4) Shareholder activity: Retur
Slide 10: Balance sheet
IMI plc Preliminary Results Presentation Balance sheet £m Dec Dec 2015 2014 Shareholders' funds 546 509 Net debt 237 200 Gearing 43% 39% Continuing businesses: EBITDA* 275 334 Interest costs 18.4 14.3 Net debt / EBITDA* 0.9 0.6 EBITDA* / interest 15x 23x * Before exceptional items
Slide 11: Pensions
IMI plc Preliminary Results Presentation Pensions £m Dec 2015 Dec 2014 UK O'seas Total UK O'seas Total Assets 1,273 73 1,346 1,324 152 1,476 Liabilities (1,184) (158) (1,342) (1,264) (247) (1,511) Accounting surplus/(deficit) 89 (85) 4 60 (95) (35) ‣ Overall position now in surplus ‣ Gross liabiliti
Slide 12: Foreign exchange sensitivities 2015 and 2016
IMI plc Preliminary Results Presentation Foreign exchange sensitivities 2015 and 2016 2015 2014 Change Average rates Ready reckoner for translation Euro 1.38 1.24 -11% impact of movement in FX rates on 2016 FY performance US$ 1.53 1.65 +7% Sensitivity to +/- Closing rates 1 cent move in: Revenue Ope
Slide 13: Operational review
Operational review Mark Selway – Chief Executive
Slide 14: Strategy execution timeline
IMI plc Preliminary Results Presentation Strategy execution timeline Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 2014 2015 2016 2017 2018 2019 ✓ “The hard “Nearly “Up to “Double ✓ “Increased work begins” firing on all full speed” operating “Benefits starting cylinders” profits” investment” to show” ‣
Slide 15: Critical Engineering Operational Review
IMI plc Preliminary Results Presentation IMI Critical Engineering Operational Review 2015 order intake £m 2015 FX Disp/Acq Organic 2014 £619m down 13% organically Revenue 631 (26) 29 (64) 692 Aftermarket down 3% £283m Organic growth % -10 +2 Oil & Gas down 3% £137m Fossil Power down 1% £108m Operati
Slide 16: Critical Engineering: Focus and grow strategy
IMI plc Preliminary Results Presentation IMI Critical Engineering Focus and grow strategy 1. Capitalise on attractive growth in existing markets “Our goal for the division is to deliver 5 year compound organic growth of 6 to 8%” Strategic objective August 2014 Power Generation Oil & Gas Petrochemica
Slide 17: Critical Engineering: Investing for Growth
IMI plc Preliminary Results Presentation IMI Critical Engineering Investing for Growth 2. Continued investment in world- class manufacturing “The investments we continue to make, while many others are retreating, will prove to be significant operations and new service differentiators when the market
Slide 18: Critical Engineering: Lean Assessments
IMI plc Preliminary Results Presentation IMI Critical Engineering Lean Assessments 100 2015 Year end assessment score (average 56%) 2014 Year end (average 40%) 2015 Year end target (average 56%) First assessment 1H 2014 (average 26%) 90 80 70 60 50 40 30 20 10 0 IMI CCI IMI CCI IMI CCI IMI STI IMI C
Slide 19: Critical Engineering: Restructuring
IMI plc Preliminary Results Presentation IMI Critical Engineering Restructuring 3. Focusing the business “This period is an opportunity to realign our footprint to the higher growth markets” Invest to support growth markets Disposals: Nuclear Manufacturing TH Jansen into Z&J Germany, ▸ Eley consolid
Slide 20: Acquisitions to support growth
IMI plc Preliminary Results Presentation IMI Critical Engineering Focus and grow strategy 4. Acquisitions to support growth “We continue to target bolt-on acquisitions to expand our product range and our geographic footprint” Invest to support growth markets The Bopp & Reuther integration was undert
Slide 21: Critical Engineering: Strategic checklist
IMI plc Preliminary Results Presentation IMI Critical Engineering Strategic checklist ✓ Investment in world-class manufacturing operations in Korea, Germany and China ✓ ERP successfully implemented in Czech Republic, Austria, Japan and Sweden ✓ Lean, Obeya and Value Engineering tools will provide fo
Slide 22: Critical Engineering: Outlook
IMI plc Preliminary Results Presentation DRAFT 13 (22.2.16) IMI Critical Engineering Outlook Outlook ‣ First half revenues and margins will reflect a similar percentage reduction as 2015 full year. Second half improvement in both revenues and margins when compared to first half
Slide 23: Precision Engineering Operational Review
IMI plc Preliminary Results Presentation IMI Precision Engineering Operational Review 2015 Revenue Acquisitions £m 2015 FX / Disposals Organic 2014 £662m down 3% organically Revenue 662 (23) (1) (24) 710 Industrial Automation down 5% £364m Commercial Vehicle down 1% £158m Organic growth % -3 +4 Oil
Slide 24: Precision Engineering: Fix and focus strategy
IMI plc Preliminary Results Presentation IMI Precision Engineering Fix and focus strategy “Our goal for the division is to improve our 1. Capitalise on significant potential for accelerated growth competitiveness and build a strong platform for future growth” Strategic objective August 2014 Industri
Slide 25: Fixing the basics to improve competitiveness
IMI plc Preliminary Results Presentation IMI Precision Engineering Fix and focus strategy “The impact of the FIX8 programme has been 2. Fixing the basics to improve competitiveness and build a huge and vital to the achievement of our five strong platform for the future year ambitions” Industrial Aut
Slide 26: Precision Engineering: Lean Assessments
2015 Lean Assessments 0 20 30 40 60 70 80 100 10 50 90 IMI Norgren Seattle Year end score % 71 Year end target % 70 IMI Norgren Brno 69 71 IMI plc Preliminary Results Presentation IMI FAS Switzerland 68 70 IMI Norgren Australia 66 65 IMI Norgren India 65 65 IMI Norgren China 65 65 IMI Norgren Singap
Slide 27: Precision Engineering: Restructuring
IMI plc Preliminary Results Presentation IMI Precision Engineering Restructuring £0.9M Traded £367.1M Traded £5.1M Traded intra region intra region intra region £29.8M Traded £9.6M Traded Europe to Americas Asia to Europe £11.2M Traded £30.4M Traded Americas to Europe Europe to Asia £5.0M Traded Ame
Slide 28: Precision Engineering: Strategic Checklist
IMI plc Preliminary Results Presentation IMI Precision Engineering Strategic Checklist ✓ Massimo Grassi, Divisional Managing Director ✓ Global defined Industrial Automation review completed Increase plant and opportunities for growth utilisation ✓ First ERP systems successfully launched in Brazil an
Slide 29: Precision Engineering: Outlook
IMI plc Preliminary Results Presentation DRAFT 13 (22.2.16) IMI Precision Engineering Outlook Outlook ‣ First half revenues will reflect a similar percentage reduction to the second half of 2015 with margins comparable to the second half of 2015 ‣ Restructuring activities expected to deliver improve
Slide 30: Hydronic Engineering Operational Review
IMI plc Preliminary Results Presentation IMI Hydronic Engineering Operational Review 2015 Revenue £m 2015 FX Disp Organic 2014 £264m Up 2% organically TA up 1% £117m Revenue 264 (23) (2) 5 284 Heimeier up 8% £82m Organic growth % +2 -1 Pneumatex up 2% £37m Operating profit 51.8 (4.3) (0.1) (0.6) 56.
Slide 31: Hydronic Engineering: Focus & Grow strategy
IMI plc Preliminary Results Presentation IMI Hydronic Engineering Focus & Grow strategy 1. Capitalise on European leadership position “Our goal for the division is to deliver 5 year compound organic growth of > 5%” Strategic objective August 2014 Hydronic Balancing Hydronic Conditioning Thermostatic
Slide 32: Hydronic Engineering: New Product Development
IMI plc Preliminary Results Presentation IMI Hydronic Engineering New Product Development Eclipse TA-Slider ERP ERP ▸ Patented technology, reduces ▸ Patented, unique digitally ▸ Hydronic Engineering’s new JD noise, quick installation configurable actuator Edwards computer system will be ▸ Sales of £
Slide 33: Hydronic Engineering: Lean Assessments
IMI plc Preliminary Results Presentation IMI Hydronic Engineering Lean Assessments 2015 Year end assessment score (average 72%) 2014 Year end (average 59%) 2015 Year end target (average 69%) First assessment 1H 2014 (average 37%) 100 90 80 70 60 50 40 30 20 10 0 IMI Hydronic Poland IMI Hydronic Slov
Slide 34: Hydronic Engineering: Strategic Checklist
IMI plc Preliminary Results Presentation IMI Hydronic Engineering Strategic Checklist ✓ 29 new products launched, accounting for 10% revenues ✓ Revenue increased, despite market softness Increase plant utilisation ✓ New Slider product range provides adjacency and increases available market to £3 bil
Slide 35: Hydronic Engineering: Outlook
IMI plc Preliminary Results Presentation DRAFT 13 (22.2.16) IMI Hydronic Engineering Outlook Outlook ‣ New product launches expected to result in good revenue growth in 2016 ‣ Margins expected to show normal second half improvement
Slide 36: Outlook
IMI plc Preliminary Results Presentation Outlook ‣ First half revenues to reflect a similar percentage reduction to full year of 2015 ‣ First half margins around 250 basis points lower than the first half of 2015 ‣ Improved revenues and margins in the second half of the year
Slide 37: Engineering GREAT the IMI Way
IMI plc Preliminary Results Presentation Engineering GREAT the IMI Way Engineering GREAT the IMI Way 36
Slide 38: Q&A
IMI plc Preliminary Results Presentation Q&A The Executive Team
Slide 39: any change in circumstances or in IMI plc’s expectations.
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 expectations reflected in these sta
Slide 40: Engineering GREAT the IMI Way
N Engineering GREAT the IMI Way