IMI plc (LON:IMI) shares are holding steady on Friday, after the specialist engineering firm released its H1 2025 interim results, showcasing a 5% organic operating profit increase.
The company reaffirmed its full-year guidance, signaling confidence in achieving its fourth consecutive year of mid-single-digit organic revenue growth.
The stock currently trades around 2,240.00p, reflecting positive market sentiment.
IMI's revenue for the first half stood at £1.091 billion, a slight 1% dip compared to £1.098 billion in H1 2024. However, stripping out currency effects and acquisitions, organic revenue climbed by a healthy 2%.
Adjusted operating profit rose to £198 million, a 1% increase year-on-year, with organic growth reaching 5%. The adjusted operating margin improved by 30 basis points to 18.2%, demonstrating enhanced profitability.
Profit before tax edged up 1% to £190 million. Adjusted basic earnings per share (EPS) saw a 3% increase to 56.1p, while the interim dividend per share was boosted by 10% to 11.0p, signaling management's confidence in the company's financial health.
Despite the positive adjusted figures, statutory operating profit declined by 10% to £158 million, impacting the statutory operating margin, which fell 160 basis points to 14.5%.
Free cash flow also took a hit, decreasing by 54% to £30 million, although adjusted operating cash flow showed a robust 21% increase to £158 million.
IMI remains optimistic about the remainder of the year, reiterating its full-year adjusted basic EPS guidance of between 129p and 136p.
The forecast incorporates an anticipated increase in full-year interest expense to £19-20 million due to the accelerated share buyback program.
A foreign exchange translation impact is projected to create a full-year headwind of around 1.5% on adjusted operating profit. The company stated that it successfully offset the direct impact of global tariffs in the first half and remains well-positioned to manage future developments.
Analyst Consensus & Price Targets
Analysts maintain a generally positive outlook on IMI, with a consensus target price of 2,282.00p, representing approximately 3.6% upside from the current trading level. 15 analysts rate IMI a “strong buy,” with a one-year price target ranging from 1,925p to 2,500p. The next quarter's EPS is estimated at 0.56 GBX, with revenue expected to reach £1.09 billion.
| Metric | Value (GBX) |
|---|---|
| High Target Price | 2,500.00p |
| Mean Target Price | 2,282.00p |
| Low Target Price | 1,925.00p |
Analyst Summary: Bull and Bear Cases
Bull Case:
- Strong organic growth in operating profit and revenue demonstrates underlying business strength.
- Reaffirmation of full-year guidance provides reassurance to investors.
- Share buyback program and dividend increase signal efficient capital allocation and management confidence.
- Positive momentum in the Process Automation division suggests continued growth potential.
- Analysts' consensus target price indicates potential upside.
Bear Case:
- Decline in statutory operating profit and free cash flow raises concerns about profitability and cash generation.
- Cybersecurity incident highlights potential operational risks.
- Foreign exchange headwinds could negatively impact adjusted operating profit.
- CFO departure introduces a potential leadership transition risk.
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