IMI Q2 Earnings Call Highlights

IMI LON: IMI reported a strong first-half performance for 2026, with organic revenue rising 5% and organic adjusted operating profit increasing 8%, as growth across its Automation, Life Technology and Transport platforms supported higher earnings and cash generation.

Chief Executive Officer Roy Twite said the company delivered growth across all of its businesses during the period and remained on track to achieve its sixth consecutive year of mid-single-digit organic revenue growth. IMI reaffirmed its full-year adjusted basic earnings-per-share guidance of between £1.36 and £1.42.

Profit, margins and shareholder returns Chief Financial Officer Luke Grant said adjusted operating profit increased to £217 million, while adjusted operating margin rose 50 basis points to 18.7%. The margin improvement reflected operating leverage and continued expansion of the higher-margin aftermarket business, partly offset by previously announced cybersecurity investments. Adjusted basic EPS rose 13% to 63.4 pence. IMI’s tax rate was 26.2% in the first half, while net interest expense was broadly unchanged from the prior year at £8.4 million.

The company declared a 10% increase in its interim dividend. It also returned more than £300 million to shareholders during the first half, including through its ongoing £500 million share repurchase program. IMI had completed £250 million of the buyback as of June 30.

Grant said the company’s capital-allocation priorities remain organic investment first, followed by targeted bolt-on acquisitions and then shareholder returns where excess capital is available. Net debt stood at £673 million at the end of June, equivalent to 1.2 times adjusted EBITDA and within IMI’s target range of one to two times.

Cash flow improves sharply IMI reported adjusted operating cash flow of £208 million, up 32% from the comparable period. Free cash flow increased to £171 million from £30 million in the first half of 2025, aided by stronger operating cash flow and the absence of one-off items recorded last year. Working capital showed an £8 million outflow, an improvement from a £42 million outflow in the prior-year period. Cash conversion reached 96%. The company spent £38 million on capital expenditures during the half, or 1.2 times depreciation, while also opening three new facilities and investing in its Growth Hub, data and digital capabilities.

Grant said IMI expects cash conversion to remain above 90% over time, while noting that investment in capacity and working capital requirements associated with growth could affect the result in individual periods.

Automation supported by power, nuclear and LNG demand Automation revenue increased 5% organically. Process Automation orders rose 12% organically, including a £48 million nuclear new-construction order that is expected to generate deliveries over more than a decade. The Process Automation order book at the end of June was 10% higher than a year earlier. New-construction orders in Process Automation increased 20%, while aftermarket orders rose 7%.

Twite said conventional-power orders doubled to £64 million in the first half, supported by electrification and demand for reliable power supply for data centers. He said IMI’s customers in the sector have multi-year order books, though construction capacity could limit the pace of growth. Twite said aftermarket demand typically begins a few years after valves are installed and can amount to roughly 10% of the original new-construction value on average. IMI has more than 200,000 installed severe-service valves across its markets, supporting a recurring aftermarket revenue stream.