IMI plc: Delivering Continued Growth and Strategic Progress Amidst Challenges

IMI plc is a global engineering company listed on the London Stock Exchange and is a constituent of the FTSE100, the FTSE4Good Index and has a market capitalisation of £5.7bn.

Half year results to 30 June 2025 were published on 1 August and we were delighted to welcome Edward Hann, Head of Investor Relations, to present the results and outline the prospects for the rest of 2025. A recording of the webinar is available here

IMI delivered another solid set of results in the first half of 2025, highlighting resilience despite external challenges. Organic revenue rose by 2%, to £1,091m and organic adjusted operating profit grew by 5% to £198m. Adjusted operating margins improved by 30bps to 18.2%, reflecting efficiency gains and pricing power. Statutory results were impacted by foreign exchange, largely due to a weaker US dollar, but underlying profitability remained robust.

Earnings per share rose 3% to 56.1p, supported by share buybacks, which also offset headwinds from higher tax rates and currency movements. The company completed its £200m share repurchase programme, taking total capital returned to shareholders since 2019 to over £1bn. A further £1bn is expected to be returned to shareholders in the next 3 years. The interim dividend was increased by 10%, underlining management’s confidence in the business.

Cash generation was particularly strong, with operating cash conversion at 80%. Management reiterated guidance for the full year, targeting adjusted basic EPS of 129–136p, operating margins around 20%, and maintaining momentum into the second half.

IMI operates across two platforms, Automation and Life Technology, covering five sectors. Process Automation delivered strong growth, with orders up 7% organically (excluding last year’s one-off marine order), supported by strength in power and nuclear applications. Aftermarket activity, a key strategic focus, also grew 10%. Organic revenue rose 8%, and the order book expanded further.  Industrial Automation reported a 4% organic revenue decline due to the impact of the cyber incident and weaker activity in Europe and the Americas. However, momentum improved in  Q2, with revenues flat year-on-year and expectations for recovery in the second half.  Life Technology saw mixed results. Climate Control grew revenues 5% on the back of strong demand for energy-efficient and connected products. Life Sciences sales were slightly down, but order intake was healthy. Fluid Control was more severely impacted by the cyber incident, though order books remain strong.  Finally, Transport reported a 9% organic decline, following strong prior-year comparatives (+13% in H1 2024). This sector remains under strategic review, with management considering all options to improve financial returns. 

The impact of the Q1 cyberattack was material but well managed. IMI recorded a £25.4m one-off exceptional charge related to IT system recovery, risk management, and strengthened cybersecurity infrastructure. Operational disruption lasted around 10 days, with deferred sales expected to be recovered in H2.

IMI’s strategy, built around three structural growth drivers: automation, energy efficiency, and healthcare demand, underpin a financial framework targeting 5% organic growth, 20%+ operating margins, >90% cash conversion, and ROIC above 12%.

The OneIMI operating model focused on commercial excellence, market-led innovation, and continuous improvement, remains central to delivering the strategy. Progress was highlighted in several areas. There has been an improvement in customer satisfaction, co-created solutions with clients, and disciplined sales execution. Innovation delivered £64m of orders via the Growth Hub in H1, with a strong pipeline. In the area of continuous improvement, restructuring is largely complete, freeing management to pursue efficiency gains and simplification initiatives across global facilities. 

A couple of examples were given of OneIMI in action. A database of 200,000 installed valves has been analysed using AI tools enabling targeted aftermarket opportunities, estimated to have added £70m to orders in the past two years.  New smart connected products have been launched in Climate Control and now account for 25% of sector revenues. In addition, a new electronic thermostatic radiator valve was launched in March 2025, targeting over 200,000 homes in Europe.  Industrial Automation, has used the creation of digital twins technology to simulate factory layouts in real time and reduce lead times and improve customer responsiveness. 

Cultural transformation has been equally important, with a performance-driven mindset embedded across the group. Employee engagement remains high, with 79% of staff recommending IMI as a great place to work.

The medium-term targets were also reiterated: 5% organic growth, 20+ operating margins, 90% cash-conversion and 12%+ return on invested capital. Combined they will help the company compound earnings growth.

The M&A pipeline remains strong, with a focus on smaller companies offering technology synergies or aftermarket potential. However, management stressed discipline, noting vendors are reluctant to sell at discounted multiples despite subdued markets. If suitable opportunities are not found, surplus cash will likely be returned to shareholders, potentially via further buybacks.

IMI has demonstrated resilience and strategic progress in the first half of 2025. Despite the disruption from a major cyberattack and ongoing tariff headwinds, the group delivered organic growth, margin expansion, and strong cash generation. The continued increase in shareholder returns reflects management’s confidence.

Longer term, IMI is well placed to benefit from structural drivers in automation, energy efficiency, and healthcare. The company’s disciplined capital allocation, growing portfolio of smart connected solutions, and cultural transformation underpin confidence in delivering sustainable profitable growth.

The investment case remains compelling: a track record of EPS growth (11% CAGR since 2019), improving margins, and strong cash flow generation, all within markets offering long-term structural growth. Management reaffirmed guidance for 2025 and highlighted the potential for further shareholder value creation, both organically and via bolt-on acquisitions.

A recording of the webinar is available here. If you would like further information on other webinars organised by Yellowstone Advisory, please contact info@yellowstoneadvisory.com