8
IMI plc
Performance in 2014
Despite challenging economic and market conditions in a number of our key sectors,
we delivered results in line with expectations while at the same time making significant
investment in the Group, which will drive future growth. Our new strategic plan is now
being executed across the Group and I am pleased to report that we are already starting
to see early signs of tangible benefits.
Chief Executive’s Review
Early signs of strategic progress
Our new growth strategy
Shortly after I arrived at IMI I initiated a detailed review of all the Group’s activities.
The review confirmed many of IMI’s inherent strengths. The Group is a specialist flow
control business focused on industrial end markets with good prospects and market
leading expertise. We have a great team of people, strong long-term relationships
with world-class customers and a robust balance sheet, which provides headroom
and flexibility to support a range of both organic and acquisitive growth opportunities.
The review process did however identify a number of challenges that must be
addressed in order to deliver long-term accelerated growth. We need to invest in
product development, which will become a critical component of our growth plan,
to build sustainable competitive advantage. And because of the historically diverse
make-up of the Group, and the autonomous nature of the businesses, there is also
a need to invest in Group-wide IT systems and facilities. Furthermore the organisational
structure that has evolved over the years is complex and in many places inefficient,
and in the Precision Engineering division in particular, we have significant underutilised
capacity which has caused top line margins to be absorbed by increasing levels
of fixed costs.
Using all the detailed findings that emerged from the review we have developed a
strategic plan that builds on the Group’s inherent strengths, addresses the challenges
we have identified and ultimately harnesses the Group’s full potential to deliver
sustainable accelerated growth and long-term shareholder value.
Detailed information about our strategic plan including our growth priorities and strategic
enablers are set out on pages 10 and 11 and the priorities for each of our divisions are
covered on page 12.
Early signs of strategic progress
As the Chairman has highlighted in his report, our new strategic plan is now in the early
stages of execution and real progress has been achieved on a number of fronts:
•
our operational performance is improving:
in August 2014 when we announced
our five year strategic plan, each division set a target to improve their lean assessment
score on average by 50% within six months and to achieve world-class scores
by 2018. The initial target lean scores have largely been achieved with IMI Critical
Engineering improving its benchmark results by 54%, IMI Precision Engineering
by 44% and IMI Hydronic Engineering by 55%. As a result of these improvements,
tangible operational benefits are evident in all divisions. In our Hydronic division,
on time delivery has improved from 82% to 90% while inventory has reduced by 10%.
In Critical Engineering we have achieved significant reductions in both set up times
and work in progress and in Precision Engineering the early initiatives to address the
complex supply chain have resulted in improvements in both quality levels and delivery
times. By the middle of 2015 each division is targeting to deliver further improvements
in their benchmark lean performances;
Mark Selway
Chief Executive
