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Sharp rise in profits at IMI

The indoor climate division of Birmingham based engineering group IMI saw profits up by 37 per cent in the first half of 2008 despite being forced to increase prices in response to metal costs.

Profits at the global firm rose to £18.9 million between January and June while revenues rose by 39 per cent to £135mill with organic revenue growth at seven per cent.

David Nicholas, IMI executive director, said the company was buoyed by its contribution to the climate control systems at the Olympic stadium in Beijing, while future growth was likely to come from investment in energy efficient products and services.

He said: “Where we are seeing some slowdown in construction markets our focus on energy efficiency is clearly evident and we are winning in the market. This is based on the excellent and technical support given to our customers.

“We have accelerated our investment in new products and we saw 12 per cent of sales through new products focused on energy efficiency.”

Mr Nicholas pointed out price pressures particularly with steel remained an issue: “There have been significant material price increase in this platform (indoor climate), but we have balanced this by achieving price increases of around four per cent.”

The company report said its balancing valve business performed well in both West and East European markets. The thermostatic radiator valve business continued to grow in East European markets but was marginally lower than the prior period in its largest market, Germany.

The report concluded: “Project activity remains high, and the demand for energy efficient solutions is growing.

“We are witnessing some slowdown in the commercial construction market, but the number of project delays or cancellations experienced to date has not had a significant impact on our business.

“Whilst residential construction markets have weakened in much of Western Europe, our thermostatic radiator valve business is more dependent on replacement and maintenance activity which, in the main, has held up reasonably well, with Germany stabilising after a weak second half in 2007 and continued growth in Eastern Europe.”

Overall the group as a whole reported revenues were up 17 per cent to £911mill, organic growth was six per cent and operating profit was £120.6mill.

Martin Lamb, chief executive (pictured), indicated the potential conclusion of an investigation into the Severe Service division in the United States might leave the company in a better position to pursue acquisitions although he noted “expectations of price remain high” amongst potential targets.

He said: “The strong trading performance during the period has, so far, been maintained into the early weeks of the second half year, although the global macro-environment is deteriorating.

“We have seen sustained business investment by customers and are benefiting from expanding our selling opportunities and increasing market share.”