IMI Precision Engineering is a world leader in motion and fluid control technologies wherever precision, speed and reliability of process are essential. We deliver integrated solutions which improve the productivity and efficiency of our customers' equipment.
A significant proportion of Precision Engineering's revenue is generated by aftermarket sales. To maintain our strong existing market positions, and to increase the rate at which we convert competitor's products into our own, a number of new initiatives were launched to enhance the customer service experience.
A particularly innovative initiative is the IMI Norgren Express™ App, which enables customers using their smartphone, to quickly find and buy replacement parts, including the replacement of competitors' products. All a customer has to do is scan the required part and they will receive full details of the product and its price on the IMI Norgren Express website, enabling them to purchase the product immediately.
If the part number or data matrix is not visible, or the part to be replaced is a competitor's product, using the App, the customer can simply photograph the part and, within 30 minutes, they will be sent relevant replacement details or compatible options. The App also provides information about the required part's availability within the distributor network, allowing the customer to find the closest local stockist. Following the IMI Norgren Express App's launch in November 2016, customer reaction has been extremely positive.
£708m (2015: £662m)
£118.5m (2015: £117.7m)
- Successfully developed first new platform products for launch in 2017
- Improved operational performance resulted in new Commercial Vehicle opportunities
- Launched innovative IMI Norgren Express App
- 22% reduction in scrap costs
- Seven day improvement in inventory turns
- Janus Phase 1 now being implemented
After adjusting for £72m of exchange rate benefit and £1m from prior year disposals, revenues of £708m (2015: £662m) were 3% lower on an organic basis and 7% higher on a reported basis. Industrial Automation revenues were 1% lower principally driven by a small decline in Europe which offset broadly equivalent revenues in the balance of our core markets. The revenue profile in the year included a 5% pick-up in the final quarter providing early indications of a potential, so far unconfirmed, improvement in the sector.
In the year, Commercial Vehicle sales were 9% lower reflecting a 22% decline in North America due to lower truck production in that region. European Commercial Vehicle revenues were broadly consistent with the prior year whilst Asia improved. Energy sales continued to be impacted by lower investment and were 7% lower than 2015 while Life Sciences and Rail were broadly equivalent to 2015.
Segmental operating profit of £119m (2015: £118m) was 1% higher on a reported basis and, after adjusting for £13m of exchange rate benefit and disposals, 10% lower on an organic basis. Operating margins of 16.7% compared to 17.8% in 2015 and reflected the impact of lower overhead recoveries following weaker market conditions and investment to support long-term growth.
Our detailed review of the Industrial Automation market and its various subsectors confirmed that we have excellent market positions with a valuable installed base and high margin aftermarket and identified those sub-sectors and products that would provide us with the greatest opportunity for growth. In response, the division has embarked on a significant programme of new product development with the first of our great new products due to launch in the first half of 2017. This review also formed the basis for a structured programme of reorganisation, including Janus, to capitalise on the most significant opportunities.
The successful implementation of lean throughout the division has continued to make excellent progress with the score increasing to 66% against 59% at the 2015 year-end. The impact of lean was clearly evident in the results with improved productivity, a 22% reduction in scrap costs and a seven day improvement in inventory days in the year.
The global industrial outlook remains mixed albeit with some leading indicators and improved fourth quarter sales providing a more positive backdrop for Industrial Automation in the year ahead. We remain cautious given the considerable economic, political and industry uncertainty that remains across many markets and geographies. We expect the European heavy truck and North American Class 8 volumes to soften in 2017 which, when combined with the conclusion of £13m of Commercial Vehicle contracts, will result in lower revenues in the year ahead.
Based on current market conditions, we expect first half organic revenues to be slightly lower than the first half of 2016. Excluding the £4m benefit from 2016 property disposals, margins will be comparable to the first half of last year. While markets remain uncertain, the benefits of further restructuring activities and new product launches are expected to deliver broadly equivalent margins for the full year.
We supply high performance products including valves, valve islands, proportional and pressure monitoring controls and air preparation products, as well as a comprehensive range of pneumatic actuators.
2016 Revenue: £396m
We design and manufacture a range of cab chassis and powertrain solutions which deliver fuel efficiency, emissions reduction and faster assembly times for the world's leading commercial vehicle manufacturers.
2016 Revenue: £161m
Oil & Gas
We offer a comprehensive range of products which deliver precision control in even the harshest environments, including stainless steel valves and regulators, nuclear class valves and emergency shutdown controls.
2016 Revenue: £63m
We supply precision flow control solutions used in medical devices, diagnostic equipment and biotech and analytical instruments. We help to reduce the size of customers' products, while enhancing accuracy, throughput and fluid control performance.
2016 Revenue: £57m
Our product brands
With over 80 years of industry experience, the IMI Norgren brand includes a wide range of high quality pneumatic and fluid control products such as actuators, air preparation products, pressure switches, fittings and valves.
Successful in the market for over 60 years, IMI Buschjost is a market leading range of process and multimedia solenoid valve technology and system solutions.
The IMI FAS range offers a comprehensive portfolio of globally acclaimed miniature fluid control solutions which provide successful, consistent performance at the heart of demanding applications. They specialise in miniature solenoid valve technology for 10mm and 15mm valve applications.
For over 50 years the IMI Herion brand has specialised in solenoid valves and hydraulic solutions for mechanical and pneumatic press and press safety technology.
Proven in the field for over 50 years, the IMI Maxseal brand offers extremely high quality stainless steel solenoid valves, for harsh environments such as offshore oil & gas and coastal applications.