IMI LON: IMI reported a “good start” to the year in its first-quarter trading update, with Chief Executive Roy Twite saying the engineering group delivered organic growth across the business and remains on track with its full-year expectations.
Twite, who was joined on the call by Chief Financial Officer Luke Grant, said the performance reflected IMI’s “One IMI” operating model, its focus on energy, automation and healthcare, and continued execution across the company’s global operations.
The company reconfirmed its full-year guidance, saying it still expects to deliver its sixth consecutive year of mid-single-digit organic revenue growth in 2026. IMI also maintained its adjusted earnings per share guidance range of GBP 1.36 to GBP 1.42.
Process Automation Leads Growth, With Tough Order Comparisons
Twite said Process Automation delivered strong revenue growth in the quarter. Order intake was slightly lower year over year, which he attributed to a strong comparison in the prior-year period, particularly in aftermarket activity. He noted that aftermarket orders grew 19% organically in the first quarter of last year, helped by several large nuclear orders.
During the question-and-answer session, Grant said that if nuclear-related impacts in the prior-year quarter and Middle East normalization are stripped out, underlying aftermarket growth in Process Automation was around mid-single digits.
Twite said the company remains encouraged by new construction demand in power and LNG, as well as a strong pipeline in nuclear. He said conventional power orders had made “an absolutely fantastic start” to the year, with new construction orders in that area doubling in the first quarter.
The company also highlighted data center-related demand as a driver for both Process Automation and Climate Control. Twite said Process Automation benefits through the power infrastructure supporting data centers, while Climate Control benefits from demand for energy efficiency.
Middle East Disruption Creates Shipment Risk
IMI provided detailed commentary on its Middle East exposure, where Twite said the safety of employees remains the company’s “absolute top priority.” The region represented 6% of IMI sales in 2025, primarily within Process Automation.
Twite said IMI had shipped about GBP 35 million to the Middle East year to date through the end of April. Despite ongoing disruption, the company currently plans to deliver another GBP 15 million in May and June. Guidance assumes conditions normalize, allowing IMI to deliver about GBP 75 million in the second half and approximately GBP 125 million across the full year into the Middle East.
In response to JPMorgan’s Chitrita Sinha, Twite said April was the key month in assessing disruption. He said the company reviewed orders and shipments “Incoterm by Incoterm” and considered alternative ways to get products to customers.
Twite said GBP 15 million of sales is now expected to move from the first half to the second half. If April conditions continue and do not worsen or improve, he said about GBP 30 million of full-year shipments would be at risk within guidance.
On margins, Twite said additional costs such as some air freight were immaterial. In response to Barclays’ Jonathan Hern, he said the potentially at-risk Middle East shipments would be slightly below the Process Automation average margin because they are mainly larger new construction valves. He added that aftermarket margins are typically more than double new construction margins.
Industrial Automation Outlook Improves
Industrial Automation performed in line with expectations in the first quarter, helped by an easier comparison after a cyber incident affected the prior-year period. Twite said the business is in a better position, particularly in the United States, due to improving market conditions and internal work to use data to improve commercial effectiveness.
Twite said IMI now expects Industrial Automation to be “higher” rather than flat to modestly higher. He also cited stronger external data, including a global PMI that had moved up to 52, though he cautioned that this was only “slightly positive” rather than a sign of strong growth.
Climate Control continued to perform well, supported by demand for energy-efficient solutions. Grant said IMI is largely agnostic to whether a heating system uses a gas boiler or a heat pump, as long as there is water in the system. He said heat pumps can be slightly beneficial because they operate within narrower temperature ranges, making balancing and control more important, but he did not identify a significant quarterly demand impact from heat pump trends.
In data centers, Twite said Climate Control sales were GBP 18 million last year after more than doubling. He said a further increase of about 50% this year would be “sensible,” while noting the pipeline will determine the pace of conversion.
Transport Remains Expected to Be Broadly Flat
Transport grew in line with the heavy-duty truck market, with first-quarter organic growth helped by easier comparisons. Twite said IMI still expects Transport to be broadly flat for the year, though continued strength in the U.S. could lead to a revision.
Twite said he has visited key Transport factories over the past six months and is encouraged by operational improvement, including better inventory turns and cash generation. He also pointed to cost control and new products coming through at accretive margins, though he said the company is not yet seeing much of that contribution in the profit and loss statement.
Capital Allocation Remains Focused on Discipline
Grant said the M&A pipeline remains good, with IMI focused on targets that offer appropriate returns. He said the company is interested in severe service valve companies with under-served aftermarket opportunities, as well as technology adjacencies such as the previously completed TWTG acquisition.
Twite said IMI’s strong balance sheet and cash generation support investment, shareholder returns and strategic flexibility. In closing remarks, he said the quality of earnings is improving and that free cash flow is giving the company “plenty of optionality.” He said acquisitions would tend to be bolt-ons and that, absent attractive deals, IMI would return more capital to shareholders.
About IMI LON: IMI
IMI plc is a specialist engineering company operating in fluid and motion control markets. We combine our deep engineering knowledge with strong applications expertise to develop solutions for the most acute industry problems. We help our customers become safer, more sustainable and more productive. IMI employs around 10,000 people, has manufacturing facilities in 19 countries and operates a global service network. The Company is listed on the London Stock Exchange and is a constituent of the FTSE4Good Index.
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