Investors dump IMI stock after it warns margins will be lower
IMI’S share price slumped over four per cent yesterday, after the engineering firm warned that first-half margins would be hit by costs relating to new product launches and some emerging market exits.
The FTSE 100-quoted company also warned that currency exchange rates would eat into profits, but said it expects modest organic revenue growth in the first half of the year.
IMI forecast lower first-half operating margins at its indoor climate business, but expects margins to recover in the second half. The unit plans to exit 20 emerging market countries, including Vietnam and Ukraine, to focus on stronger growth markets.
Chief executive Mark Selway, who joined IMI in January from Weir Group, told City A.M. that the company has £1bn firepower to spend on acquisitions. He would not reveal specific plans until a strategic review is completed, due to be presented with the interim results in August. “We need hard synergies to make the valuation multiples work,” he said. 2013 revenues rose three per cent to £1.74bn. Shares closed 4.3 per cent lower at 1,481p.