London, England – Investors seeking exposure to automation’s long-term growth potential may find IMI plc (IMIAY) a promising choice. The company plays a significant role in motion and control across various end markets, including climate control and precision fluidics for life sciences and healthcare. This diverse portfolio provides investors with broad exposure to different sectors and future growth drivers like factory automation, green energy, and life sciences.
IMI’s shares have risen more than 25% recently, outperforming the broader industrial sector. However, compared to companies in the same industry like ABB Ltd (OTCPK:ABBNY) and Crane Company (CR), IMI’s performance has been more mixed. While the business outlook remains positive, concerns about Process Automation, Climate Control, and Life Sciences/ Fluid Control facing challenges in the near term have tempered optimism.
In the first quarter, IMI reported a 4% increase in overall revenue, with Process Automation showing strength in energy markets like LNG. However, weaker trends are emerging in process industries such as chemicals, food/beverage, metals, and pulp/paper. Industrial Automation experienced a 5% decline, reflecting a broader trend of companies reducing capex spending due to weakening demand and economic uncertainties.
Despite challenges, IMI’s Transport segment saw a 19% increase, driven by strong performance in commercial vehicle markets in countries like India and China. Looking ahead, IMI anticipates potential growth deceleration in the coming years due to market cyclicality but remains optimistic about long-term prospects beyond 2025.
In the industrial automation space, IMI expects continued investment in automation as companies look to enhance efficiency and offset labor challenges. The company’s focus on renewable energy and emerging sources like LNG and hydrogen positions it well for future growth. Additionally, IMI’s Climate Control business benefits from energy efficiency trends, especially in Europe.
IMI’s Life Sciences and Fluid Control segment provides essential components for analytical instruments and medical devices, with opportunities for growth in areas like lab-based diagnostics and pharmaceutical production. As the company navigates through current challenges, management is focused on enhancing margins, increasing aftermarket sales, and improving operational efficiency for sustained long-term growth.
While IMI faces near-term uncertainties, its long-term prospects in the automation industry and strategic leverage in key markets like LNG and HVAC efficiency remain compelling. Considering the valuation and market risks, investors may find IMI a potential investment opportunity on pullbacks rather than at its current price near an all-time high.
