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Critical Engineering

IMI Critical Engineering is a world–leading provider of flow control solutions that enable vital energy and process industries to operate safely, cleanly, reliably and more efficiently.

We operate a global service network with manufacturing facilities in 12 countries and employ over 4,300 talented people across a range of disciplines, all committed to providing excellent service to our customers.

We design, manufacture and install customised, highly engineered solutions for new plant builds and also provide complete plant lifecycle service support. This ensures that our customers benefit from efficient maintenance, speedy issue resolution and plant optimisation at all times.

Our products are at the heart of complex energy and production processes. They control the flow of steam, gas and liquids in harsh environments – they are designed to withstand temperature, and pressure extremes, as well as intensely abrasive or corrosive cyclical operations.

Our engineering expertise sets us apart. We combine technical knowledge, engineering design capability, application experience and innovative custom–designed products to deliver safe, reliable and durable solutions.

2015 Performance

Revenue
£631m (2014: £692m)

Operating profit
£93.1m (2014: £120m)


Performance

Full year order intake at £619m (2014: £686m) was down 13% on an organic basis (after adjusting for acquisitions, disposals and exchange rate movements). In the second half, order intake decreased 20% on an organic basis. The Oil & Gas sector, where we have a significant position in the LNG market, showed resilience with order intake decreasing by 3% in the year despite the drastic reduction in the oil price. LNG new construction orders played a key role in Oil & Gas, with orders up 23% in the year, more than offset by upstream orders down 25%. Due to the slower new order activity in China, Fossil Power orders were down 1% on the prior year. In the Petrochemical sector, orders were down 42% due to a combination of lower market activity in China, large one-off orders in 2014 and slippage of some large projects from 2015 into 2016. As anticipated, Nuclear orders were down 76% reflecting on-going weakness in the market post-Fukushima.

Aftermarket orders were down 3% compared to 2014 with Oil & Gas being up 3%, more than offset by Fossil Power down 4% and the remaining segments down 6%.

After adjusting for the impact of adverse exchange rate movements of £26m and for acquisitions and disposals, revenues decreased 10% on an organic basis. Revenues of £631m (2014: £692m) were down 9% on a reported basis with IMI Bopp & Reuther contributing £46m of revenues in the year. Segmental operating profit of £93m (2014: £131m) declined by 29% on a reported basis and was 24% lower on an organic basis while margins decreased to 14.8% from 19.0% in 2014. This decline in profitability and margins was primarily due to the reduction in volumes.

The division made good progress on a number of its growth initiatives including the division wide adoption of Obeya, a visual project management system, lean manufacturing and implementation of new ERP systems in two key sites.


IMI Bopp & Reuther

IMI Bopp & Reuther was acquired on 2 January 2015 and has been fully integrated into Critical Engineering with 97% of 400 integration actions being completed by the year-end. Hard synergies are now being delivered and actions have been taken to close the Swiss and Canadian Nuclear businesses and transfer their operations to the IMI Bopp & Reuther manufacturing facility in Mannheim by the end of 2016.


Key Achievements

  • IMI Bopp & Reuther successfully integrated in the year
  • Completion of the new £8m manufacturing facility for IMI CCI in South Korea and commencement of a £5m refurbishment of the IMI Z&J Germany manufacturing plant
  • Two new service centres opened in China and a new £9m China manufacturing localisation plan started
  • Successful adoption of lean with scores improving from 26% to 56%
  • Obeya project management process implemented in key manufacturing plants
  • New process improvements embedded in each of the business units including the 5 year strategic planning process, new risk profiling process and financial internal controls process
  • New divisional ERP system successfully launched in Austria and Czech Republic with a further four sites on track for go-live in 2016
  • Won a number of new orders including new choke valves for the Kashagan project, new monitoring and isolating equipment to prevent fugitive emissions and aftermarket high temperature nozzles for de-superheating applications
  • Sale of non-core IMI Scott and IMI Z&J South Africa to remove complexity from the division

Market Review

Conditions across much of the capital goods sector were particularly difficult in 2015 resulting in Critical Engineering’s key markets being more challenging than expected. The sharp decline in the oil price caused significant weakness in the Oil & Gas sector and post the 2011 Fukushima incident, investment continued to be depressed in the Nuclear sector. More generally the slowdown in China and the cautious global capital spending environment impacted new order opportunities significantly.

In response, the division initiated a number of cost-cutting initiatives including the restructuring of its European and Canadian nuclear businesses which are now centred at IMI Bopp & Reuther’s Mannheim facility in Germany and the transfer of IMI TH Jansen’s production facilities to IMI Z&J’s plant at Düren.


Outlook

Based on the current order book and market outlook, we expect first half revenues and margins to reflect a similar percentage reduction as experienced in the full year of 2015. Subject to order book timing, and including the benefits of restructuring actions, we anticipate a second half improvement in both revenues and margins when compared to the first half of the year.

Main markets

Oil & gas IMI Critical Engineering is the global market leader in the supply of anti–surge valve and actuator systems to the world’s largest LNG compression facilities, including Gorgon in Australia. Our systems operate below -160°C, with ultra–fast response to maximise liquid natural gas production while protecting the compressor.

Petrochemical IMI Critical Engineering is the global leader in the design and manufacture of integrated flow control systems for critical applications in Fluid Catalytic Cracking (FCC). We also supply bespoke valves into the ethylene and polypropylene production processes, as well as for delayed coking at temperatures up to 1,600°C.

Power – Fossil & NuclearIMI Critical Engineering supplies the critical, customised turbine by–pass valves to the world’s most efficient power stations. Our valves control high pressure super–heated steam at temperatures up to 650°C, protecting the turbine and optimising power yield. Globally, we have an installed base of over one hundred thousand valves and are a leader in the combined cycle gas sector. We also supply both product for new nuclear reactors and upgrades to existing facilities to improve safety levels. To date we have supplied products to over half the world’s reactor fleet.

Our product brands

IMI BOPP & REUTHER

Established over 135 years ago, based in Mannheim, Germany IMI Bopp & Reuther is a highly regarded control valve business designing a wide range of valves making plants and processes safer and more efficient.

IMI CCI

Presenting an unrivalled portfolio of technologies, including Drag®, BTG, ABJ® and technology acquired from Sulzer®, to meet extreme pressure and temperature control needs.

IMI CCI

Operating in the Nuclear sector for over 50 years, a dedicated supply chain provides control valve, isolation and other services to meet todays aggressive refuel outages.

IMI FLUID KINETICS

One of the world’s leading designers and manufacturers of silencer technologies within custom-designed products, which are engineered for a lifetime of service.

IMI INTERATIVA

A key supplier of butterfly isolation valves to the Oil & Gas, Sugar, Ethanol Production and Water Treatment process industries throughout Brazil and South America.

IMI NH

IMI Newman Hattersley has proven technologies spanning over 60 years, including bellows sealed globe, ball and butterfly valves, meeting the high demands of next-generation nuclear reactors.

IMI ORTON

An international leader in the design and manufacture of triple eccentric metal seated butterfly valves, specialising in refining processes and cryogenic valves for LNG.

IMI REMOSA

A world leader in slide, gate, goggle and through conduit valves, actuation and control units, specialising in Fluid Catalytic Conversion (FCC) applications.

IMI SSF

A manufacturer of high integrity special fasteners (bolts, set screws, stud bolts, nuts etc.) for critical applications in hostile environments such as offshore, subsea and nuclear.

IMI STI

Providing control solutions for actuation in critical applications, especially where reliability and performance are vital for process efficiency, plant safety and integrity.

IMI TH JANSEN

100 years of experience in the design and manufacture of butterfly and gate valves and blast furnace valves for the Iron & Steel, Power, and Petrochemical industries.

IMI TRUFLO MARINE

High integrity valves for faultless performance in extreme applications, with technology developed in the Naval Marine industry for nuclear submarines.

IMI TRUFLO RONA

A leader in the Oil & Gas, LNG, Petrochemical and shipbuilding industries, producing a range of gate, globe, top & side entry ball valves.

IMI Z&J

IMI Zimmermann & Jansen services very high temperature applications with slide, gate and goggle valves as well as heading and unheading devices for delayed coker processes.