According to finance director Alan Emson, last year's main acquisition, the pounds 134m purchase of German thermostatic radiator valve manufacturer Heimeier, made a strong firsttime contribution, chipping in pounds 80m and pounds 20.3m to sales and operating profits in its first full year of ownership.
"Heimeier had a terrific year and is on track to deliver the growth envisaged at the time of the deal. The German building market has been sluggish, but the acquisition of Heimeier has given us the opportunity to seek out fresh continental markets," Mr Emson said.
IMI's profits excluding exceptional items rose 30 per cent to a record pounds 137.5m last year, although this was no more than analysts had expected. But a sharp swing in exceptional items from a charge of pounds 19m to a contribution of pounds 23.6m. helped virtually double the pre-tax profit to pounds 161.1m.
Exceptionals included a profit of pounds 70m on the loss-making titanium businesses which were swapped for a 38 per cent stake in Timet, most of which was sold in June. They were balanced by provisions including a pounds 25m write- off on Yorkshire Alloys which will close in May.
The accounts use average exchange rate for the year which limited the adverse impact of the strong pound in the second half to just pounds 1m. The chairman Sir Eric Pountain put a confident gloss on the results and future prospects, and the shares rose 18.5p to 382.5p. Most of the improvement in operating profits came from the restructuring of the businesses.
Heimeier has easily shrugged off the woes affecting much of the German economy. It has already begun to benefit from IMI's existing outlets and the weakening of the German mark in the second half of 1996. Continuing operations, however, made pounds 118.2m, an increase of 3 per cent on an unchanged turnover. In the UK, water-heating suffered from the low level of housebuilding but air conditioning activities continued to benefit from the warming climate and overall margins in the division were 50 per cent higher than in 1995.
Profits from Drinks Dispense, which makes soft drink mixers and beer dispensers for pubs and restaurants, slipped to pounds 33.8m and Fluid Power barely held its own at pounds 30.4m, reflecting weaker continental sales.
The acquisition of Mosier in the US made a contribution but the acquisition of ISI Automation for pounds 80m came too late to have any effect on profits. Special engineering division made pounds 15m, an increase of 8 per cent, although Yorkshire Alloys which makes special tubes for export markets, was badly hit by the strong pound and made a loss of pounds 2m.