Imi Plc · LSE:IMI
Imi — FY2013 Earnings Presentation
28 slides from Imi's earnings presentation, Mar 6, 2014
Slide 1: IMI plc 2013 Preliminary Results
IMI plc 2013 Preliminary Results 6 March 2014
Slide 2: Agenda
Agenda ‣ Highlights and operational review Mark Selway Chief Executive ‣ Financial review Douglas Hurt Finance Director ‣ Assessing full potential Mark Selway ‣ Outlook and summary Mark Selway ‣ Q&A IMI Executive Team
Slide 3: Highlights
Highlights Revenue Adjusted profit before tax Operating margins £1,744m Up 3% £297.7m Up 8% 18.4% Up 70bps Cash generation Earnings per share Dividend per share £345m Up 16% 72.6p Up 12% 35.3p Up 9% ‣ Delivered another set of strong results ‣ Focused our business through the sale of the beverage and
Slide 4: Operational Review: Severe Service Division
Operational Review: Severe Service Division 2013 2012 Order intake £m H1 H2 Year Year £742m Up 12% Oil & Gas up 27% £145m Revenue 322 394 716 686 Fossil Power up 16% £109m Organic growth % -3 +8 +3 +14 Nuclear up 19% £73m Operating profit 49.0 67.8 116.8 96.3 Petrochemical up 11% £90m Operating marg
Slide 5: Operational Review: Fluid Power Division
Operational Review: Fluid Power Division 2013 2012 2013 Revenue £m H1 H2 Year Year £723m down 1% Industrial Automation down 3% £331m Revenue 363 360 723 717 Commercial Vehicles down 3% £167m Organic growth % -5 +3 -1 -3 Energy up 7% £86m Operating profit 69.4 71.1 140.5 142.3 Food & Beverage flat £6
Slide 6: Operational Review: Indoor Climate Division
Operational Review: Indoor Climate Division 2013 2012 2013 Revenue £m H1 H2 Year Year £305m Up 1% Heimeier up 1% £102m Revenue 146 159 305 293 TA up 1% £124m Organic growth % -1 +2 +1 +0 Pneumatex down 2% £47m Operating profit 27.7 36.6 64.3 61.5 Other up 3% £32m Operating margin % 19.0 23.0 21.1 21
Slide 7: Financial review
Financial review Douglas Hurt – Finance Director
Slide 8: Revenue – continuing operations
Revenue* – continuing operations £m 2012 Translation Acquisitions Organic 2013 Severe Service 686 8 3 19 716 Fluid Power 717 13 - (7) 723 Indoor Climate 293 10 - 2 305 Group 1,696 31 3 14 1,744 % Change on 2012 +2% - +1% +3% *Segmental revenues
Slide 9: Segmental operating profit
Segmental operating profit £m 2012 Translation Acquisitions Organic 2013 Severe Service 96.3 0.1 (0.5) 20.9 116.8 Fluid Power 142.3 3.1 (0.7) (4.2) 140.5 Indoor Climate 61.5 1.9 - 0.9 64.3 Group 300.1 5.1 (1.2) 17.6 321.6 % change on 2012 +2% -1% +6% +7% Segmental operating margin 17.7% 18.4%
Slide 10: Income statement
Income statement £m 2013 2012 change Segmental operating profit 321.6 300.1 +7% Net interest expense (16.0) (17.5) Net pension finance charge (7.9) (7.8) Profit before tax and exceptional items 297.7 274.8 +8% IAS39 adjustment (2.4) (1.0) Restructuring costs (14.2) (18.9) Other acquisition/disposal
Slide 11: Results – total group (old basis)
Results – total group (old basis) £m 2013 2012 change % Revenues 2,254 2,190 +3% organic revenue growth +1% Operating profit* 402.6 373.0 +8% Operating margins* 17.9% 17.0% EPS* - basic 90.1p 79.7p +13% *Adjusted (before exceptional items)
Slide 12: Operating cash flow summary
Operating cash flow summary £m 2013 2012 Continuing businesses 332 318 Discontinued businesses 79 76 EBITDA* 411 394 Inventory 1 29 Debtors (10) (19) Creditors (17) (41) Working capital (26) (31) Capital expenditure (53) (47) Provisions and employee benefits (1) (32) Asset sales/other 14 14 Operatin
Slide 13: Net cash flow summary
Net cash flow summary £m 2013 2012 Cash generation 285 191 Other - (3) Special pension contributions (35) (26) Cash flow before corporate activity 250 162 Corporate activity: Acquisitions (8) (83) Dividend to minority / others (5) (5) Shareholder activity: Dividends (106) (98) Employee share trust n
Slide 14: Balance sheet
Balance sheet £m Dec Dec 2013 2012 Shareholders' funds 601 636 Net debt 199 144 Gearing 33% 23% Continuing businesses: EBITDA 332 318 Interest costs 16.0 17.5 Net debt / EBITDA 0.6x 0.5x EBITDA / interest 21x 18x
Slide 15: Pensions
Pensions £m 2013 2012 UK O'seas Total UK O'seas Total Assets 1,147 147 1,294 1,076 135 1,211 Liabilities (1,210) (242) (1,452) (1,187) (256) (1,443) Accounting deficit (63) (95) (158) (111) (121) (232) ‣ UK deficit reduced to £63m due to strong asset returns and £34m of additional cash contributions
Slide 16: Foreign exchange sensitivities 2013 and 2014
Foreign exchange sensitivities 2013 and 2014 2013 2012 Change Average rates Euro 1.18 1.23 +4% US$ 1.56 1.59 +2% Ready reckoner for translation impact of movement in FX rates Closing rates Sensitivity to +/- Euro 1.20 1.23 +2% 1 cent move in: Revenue Operating Profit US$ 1.65 1.62 -2% US $ +/- £2.1m
Slide 17: Assessing full potential
Assessing full potential Mark Selway – Chief Executive
Slide 18: First impressions
First impressions Mark Selway’s itinerary ‣ Skilled and committed people Company Country IMI Webber UK Norgren, Lichfield UK ‣ Market-leading engineering expertise Truflo Marine UK IMI Components UK Thompson Valves UK Watson Smith UK ‣ Strong long-term relationships with world-class IMI Scott UK CCI
Slide 19: Ideal time to review
Ideal time to review Now Future ‣ Outperform in chosen markets Review ‣ End markets ‣ Deliver sustainable accelerated ‣ Through-cycle returns top and bottom line growth ‣ Competitive positions ‣ Build long-term shareholder ‣ Growth opportunities value identified
Slide 20: On-going work streams
On-going work streams ‣ Four key work streams underway to review existing competencies and opportunities: Markets Manufacturing operations Collaboration Customers Investment for Product Synergies 1 Products 2 development 3 Economies of 4 Acquisitions growth Peers Systems and scale Competition contro
Slide 21: Early findings – operational performance
Early findings – operational performance Initial benchmark sample Green: >70% World class Score Each site was assessed against 71 questions % across ten LEAN areas: Yellow: 51% to 70% needs follow up Orange: <50% requires action Fluid Power – Plant 1 53.5% Indoor Climate – Plant 1 53.2% Fluid Power
Slide 22: Early findings – collaboration
Early findings – collaboration ‣ More focused structure provides greater opportunity for collaboration ‣ Pilot engineering project already underway ‣ Q2 – launch global intranet to promote best practice and improve overall performance
Slide 23: Early findings – product development
Early findings – product development Now Future ‣ Investment in innovative Review products and technology that ‣ Product portfolio ‣ Current product pipeline deliver optimal returns Boston Matrix
Slide 24: Early findings – customer alignment
Early findings – customer alignment ‣ Existing strong long-term customer relationships ‣ Key factors: responsiveness to market demand and geographical alignment in terms of manufacturing Product differentiation Operational Customer competence responsive
Slide 25: 2014 outlook
2014 outlook ‣ Estimate that exchange rates may impact reported revenue and profit by about 4% compared to average 2013 rates On a constant currency basis: ‣ H1 delivering comparatively modest organic revenue growth with slightly lower margins ‣ Improved overall performance in full year
Slide 26: Summary
Summary ‣ Strong performance in 2013 ‣ Strong foundations for next phase in the Group’s development ‣ Review update: 1 August 2014 ‣ Well positioned to exploit a range of growth opportunities over the medium term
Slide 27: Q&A
Q&A The IMI Executive Team
Slide 28: Thank you
Thank you