IMI plc: A Model of Resilience and Strategic Execution in a Challenging Environment

In an era marked by macroeconomic volatility, geopolitical uncertainty, and supply chain disruptions, companies that can demonstrate both operational resilience and disciplined capital allocation are rare. IMI plc (LON: IMI), the global leader in fluid and motion control, has emerged as a standout example of such a company. Its first-half 2025 results underscore a business that is not only weathering headwinds but actively leveraging its strategic framework to compound value for stakeholders.

Operational Resilience in a Turbulent Climate

Despite a 1% decline in statutory revenue due to foreign exchange headwinds, IMI delivered 2% organic sales growth and 5% organic adjusted operating profit growth in 1H 2025. The company's adjusted operating margin expanded by 30 basis points to 18.2%, reflecting the power of its One IMI operating model—a framework centered on commercial excellence, market-led innovation, and continuous improvement.

The margin expansion is particularly impressive given the drag from a cyber incident in Q1, which disrupted operations in the Industrial Automation segment. Yet, IMI's ability to limit operational fallout and maintain profitability highlights its operational agility. The company's adjusted operating cash flow surged 21% to £158m, enabling it to fund a £200m share buyback and a 10% increase in the interim dividend to 11.0p per share.

Strategic Execution: Innovation and Digital Transformation

IMI's strategic updates reveal a company deeply invested in future-proofing its business. The Climate Control division, for instance, now derives 25% of its sales from smart connected products—a testament to its focus on energy-efficient solutions. The development of a digital twin at the Rockford facility further exemplifies IMI's embrace of Industry 4.0, enabling real-time operational insights and faster customer response times.

Meanwhile, the Process Automation segment has outperformed expectations, with 7% organic order intake growth and a 5% order book increase. This momentum is driven by demand for automation in energy transition and industrial decarbonization, areas where IMI's expertise in fluid control systems gives it a competitive edge.

Capital Discipline: Balancing Growth and Shareholder Returns

IMI's capital allocation strategy is a masterclass in balance. While maintaining a net debt/EBITDA ratio of 1.4x—within its 1x–2x target range—the company has returned over £1 billion to shareholders since 2019. This includes £30m in free cash flow (albeit down 54% in 1H 2025 due to the cyber incident) and a £26m loan to its UK pension scheme, which is now in the final wind-up stage.

The company's guidance for 2025—mid-single-digit organic revenue growth and adjusted basic EPS of 129p–136p—remains unchanged, even as it factors in a 1.5% FX headwind. This confidence stems from its ability to compound margins through cost discipline and its focus on high-margin, capital-light growth opportunities.

Risks and Mitigants

No investment is without risk. The cyber incident, while largely contained, exposed vulnerabilities in legacy IT systems, prompting a £25.4m one-off charge for infrastructure upgrades. However, the company's swift recovery and the absence of data breaches mitigate long-term concerns. Additionally, while FX volatility remains a headwind, IMI's diversified geographic footprint (18 countries) and hedging strategies provide some insulation.

The Investment Case

IMI's combination of operational resilience, strategic foresight, and capital discipline positions it as a compelling long-term investment. Its ability to grow margins organically, even in a low-growth environment, is a hallmark of a high-quality business. The recent expansion of connected products and digital capabilities further insulates it from cyclical downturns, as these offerings drive recurring revenue and customer stickiness.

For investors, the key takeaway is clear: IMI is not just surviving—it is compounding value through a disciplined approach to capital and a relentless focus on innovation. While macroeconomic risks persist, the company's track record of navigating uncertainty with minimal operational disruption and robust shareholder returns makes it a rare and attractive asset.

Conclusion

IMI plc's 1H 2025 results reinforce why it has become a poster child for sustainable growth in a volatile world. By marrying a capital-efficient operating model with a forward-looking innovation strategy, the company has created a flywheel effect: disciplined execution fuels margin expansion, which funds reinvestment and shareholder returns. As global markets continue to grapple with uncertainty, IMI's playbook offers a blueprint for enduring success.

For those seeking a business that thrives when others falter, IMI's stock warrants a close look.