(Alliance News) - IMI PLC on Monday said it is developing cost-reduction initiatives as coronavirus disrupts its operations.
The Birmingham-headquartered engineering company said it has entered the period of uncertainty - which was caused by Covid-19 - in a "strong" financial position.
As at the end of February, the company had immediately available liquidity of GBP393 million.
IMI's existing long-term debt, totalling GBP363 million is at fixed rates and, aside from GBP11 million due in 2022, matures in 2025 and beyond.
Turning to trading, IMI said the disruption from coronavirus to its businesses in the first two months of the year has been relatively modest - with sales and orders being slightly ahead of its earlier guidance. Margins and cash flow remained strong, IMI highlighted.
The majority of the company's sites remain at or near normal capacity. IMI's operations in China were disrupted for two weeks in early February, but have since returned to normal operations, it said.
However, in some locations, including in Italy and India, sites have had to close temporarily in line with the direction of the authorities. IMI said it expects that site and supply chain disruptions will likely increase in the short-term before global industrial activity returns to normal.
In order to protect its business, IMI said it suspended its hiring activity, reduced discretionary spending, and made reductions to capital expenditure unless vital for health & safety or operations continuity. The board and executive committee members have agreed to a 20% salary reduction, effective from the start of May, for at least the next three months.
In addition, IMI has decided to withdraw its recommendation to pay a final dividend, thereby preserving GBP71 million of funds to support the long-term position of the company.
Further cost-reduction initiatives are being developed in order to enable the company to align its cost base with any reduced market demand, IMI said.
The company withdrew its guidance for 2020, given at the end of February.
"I am incredibly proud and humbled by the commitment, courage and professionalism shown by all our employees as we face this unprecedented disruption to our communities and businesses. It is my firm belief that, by continuing to act decisively, IMI will deliver on its ambitious strategy once this global, human tragedy has been resolved," said Chief Executive Roy Twite.
FTSE 250-listed IMI shares were trading 0.5% lower in London on Monday at 720.40 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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IMI (IMI)