For the six months to June 30, 2020, the engineering group reported a pre-tax profit of £116mln, up 5% year-on-year, despite a 5% fall in revenues to £867mln.
IMI said it had benefited in the period from cost actions enacted early on, which had supported the delivery of higher margins compared to the first half of 2019 alongside productivity gains and value pricing.
The company also said lower volumes across most of its businesses had been partly offset by a “temporary surge” in sales of ventilator components during the coronavirus pandemic.
As a result of the “robust” first-half performance, IMI said it has revisited the decision to suspend the final dividend for its 2019 financial year and will now pay the full 26.2p per share to shareholders.
The company added that it will also recommend a 2020 interim dividend of 7.5p, down from 14.9p in the previous year, while resetting its dividend earnings cover baseline to 3x, which it said will enable it to “deliver more effectively on its long-term growth ambitions”.
Looking ahead, IMI said while forecasting was “challenging”, based on current market conditions and no material changes in the second half due to the pandemic it expected to report full-year adjusted earnings per share of between 65p-70p, compared to 73.2p last year.
“Our results confirm the resilience and quality of IMI's business model in what have been exceptional and demanding circumstances. Whilst we continue to protect our employees and operations, we have also been helping our customers, broadening our reputation for delivering industry solutions, and readying ourselves for when markets improve", IMI chief executive Roy Twite said in a statement.
In a note on Friday, analysts at Liberum retained their ‘hold’ rating and 850p target price on IMI, saying the “very strong set of results” and 2020 guidance demonstrated the confidence of the company’s management.
Fellow broker Peel Hunt offered similar sentiments, reiterating their ‘buy’ rating and 1,100p target price and saying the company was “now delivering” and a rerating of the shares was on the way.
IMI’s shares jumped 7.5% to 1,081.2p in lunchtime trading.
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