Shares in specialist engineering group IMI (IMI) topped the FTSE 350 leader board at the start of the week with an 8.4% rise to a new 12-month high of £15.15, after the firm raised its full year earnings guidance and long-term margin target, and announced a share buyback programme.
After a stronger than expected performance across all three divisions in the first quarter, but especially commercial vehicles and life sciences, the company raised its forecast for full year adjusted earnings per share from between 75p and 82p to between 81p and 87p.
The increase assumes no change in current market conditions as well as a continuing headwind from the strength of sterling against other currencies.
SUSTAINABLY HIGHER MARGINS
The firm also raised its estimate for long-term through-the-cycle operating margins to between 18% and 20% thanks to ‘accelerated progress against our strategy, including the identification of further opportunities for profitable growth’.
‘We are pleased with the progress that the business has continued to make through the first quarter of 2021 as we accelerated our strategy to deliver sustainable profitable growth’, said chief executive Roy Twite.
‘Our increased focus on adding value for our customers by solving key industry problems, along with initiatives to reduce complexity and accelerate growth, are delivering tangible benefits.’
TRIPLE BONUS
As well as raising its current-year and long-term forecasts, the firm said it believed it was ‘appropriate’ timing to initiate a share buy-back.
The plan to buy in up to £200 million of shares, equivalent to 5% of IMI’s market capitalization before today’s jump in the price, ‘will provide for a more efficient balance sheet while still leaving ample capacity to continue investing in growth, whether organically or through acquisition’, the firm said.
