IMI Divisional Websites Location & Contact Home About IMI Investors Media Corporate Responsibility Careers Contact Us You are here: Home / About IMI / Our Strategy / Strategic Framework Our Approach Our Strategy Strategic Framework Strategic Timeline Strategy in Action Market Drivers & Risk KPIs Our Divisions Our Engineering Heritage Leadership & Governance Share Email Print Bookmark Alert Strategic Framework IMI has many strengths which provide us with an excellent foundation on which to build the next phase of the Group’s development and growth. Today all our specialist flow control businesses are concentrated on industrial end markets. We have a strong balance sheet, which provides headroom and flexibility to support a range of both organic and acquisitive growth opportunities, great people, market-leading engineering expertise and strong long-term relationships with world-class customers. Our Goal Our strategic plan will ensure that this potential is harnessed and fully exploited to deliver sustainable accelerated top and bottom line growth. The opportunities are significant and that is reflected in our ambition to double the Group’s 2014 operating profits by 2019, while retaining our financial discipline. Mark Selway Chief Executive Our organisation structure How we generate revenue Strategic growth priorities Capitalising on significant organic growth opportunities We already operate in a number of attractive end markets and we intend to focus on those that offer the greatest potential in terms of delivering top and bottom line growth. These end markets include those where we already are, or have the potential to be, in a leading position, markets where we can grow share and markets where there are significant higher margin aftermarket opportunities. Improving operational performance The benefits of moving towards and achieving best in class operational performance are significant. As we improve how our businesses operate we will better utilise capacity, enhance our competitiveness, reduce working capital and generate cost savings by operating more efficiently. Our ambition is to progressively self-fund our organic growth initiatives using the benefits generated from our operational improvements. Increased investment in product development We will increase our investment in product development, a key enabler of our growth plan, which is to build sustainable competitive advantage. Progressively we will increase R&D spend from around 3% of revenues in 2014 to 5% over the next two to three years. To ensure that we maximise to the full the benefits of this increased investment, we are improving our product development processes and systems. Expand addressable markets through targeted acquisitions We will supplement our organic growth opportunities with targeted acquisitions capable of producing returns in excess of the Group’s weighted average cost of capital within three years. Beyond our existing business portfolio, our review has identified the potential to double the Group’s addressable market by making acquisitions in adjacent non-valve product markets. Strategic enablers Maintain financial discipline As we execute our strategy to deliver accelerated growth we will continue to maintain financial discipline. Capital will be allocated to drive organic growth, maintain a progressive dividend policy in line with earnings and fund acquisitions. Whilst retaining flexibility to develop IMI’s full potential, we will continue to focus on maintaining an efficient balance sheet and, in the event of us having cash in excess of the Group’s current needs, we will return this excess capital to shareholders. Through the life of our five year plan we will target net debt to EBITDA of two times through the cycle. Invest in Group–wide IT and infrastructure Because of the historically diverse make-up of the Group, and the autonomous nature of the businesses there is a need to invest in Group-wide IT systems and facilities. Each division is now implementing new ERP systems to support their long-term growth ambitions. The implementations are being phased on a site by site basis to minimise risk and to deliver an optimal solution. The Group is also investing in its sites, alongside the lean manufacturing initiatives, to ensure that we have best in class facilities. Overall capital spending is progressively increasing to around two times depreciation where it will remain for the first few years of the plan. Work together as one simplified IMI To harness the Group’s full potential we are determined to channel and maximise our scale to act as one IMI. The new brand co-ordinates and creates a single focus for everything we do. Our core processes provide a strong platform and underpin a framework for creating consistent Group–wide standards and behaviours. To enable us to operate as one IMI on a day-today basis we have put in place a global intranet that all employees, regardless of location, are able to access. Sharing best practice is now an important part of life at IMI and having a single place to manage our processes and record our progress will be essential to improving our overall performance. Business priorities For each of the divisions we have developed five year plans which are closely aligned to the ambitions of the Group. These plans are now fully embedded within each division and are already beginning to deliver real progress. The key strategic priorities for each division are as follows: Focus and grow Capitalise on attractive growth in existing markets Our goal is 6–8% organic compound annual growth rate (CAGR) over 5 years Invest to support growth markets New larger sites in Houston, Italy and Korea completed Planned refurbishment of IMI Z&J site in Germany Investing in additional service locations to support aftermarket Enhance systems and processes New product development Project execution benchmarking Enterprise Resource Planning (ERP) system implementation progressing well at IMI CCI Acquisitions to support growth Add strategically aligned bolt-ons such as Bopp & Reuther acquired in January 2015 Extend into adjacent markets Expand product portfolio - semi-severe and configured valves Fix, focus and grow Fix the basics in the next two years Simplify organisational structure Introduce standard costing New ERP implementation underway in Brazil and North America Grow emerging market local manufacturing content Address supply chain complexity Manufacture closer to end customers Increase plant utilisation Significantly improve operational performance Revitalise industrial automation and grow organically New product development Our goal is growth in line with GDP in years 1and 2 and 6-8% organic CAGR thereafter Acquisitions Future opportunity for larger acquisitions to accelerate growth Focus and grow Capitalise on attractive growth in existing markets Our goal is 5% organic CAGR over 5 years Increase new product development 14 new products launched in 2014 Double investment in new product development over 5 years 15 new products planned for 2015 Optimise organisational structure Introduce core processes Project underway to implement new divisional ERP system Acquisitions Potential bolt–on acquisitions to target North America 2014 Annual Report View Report Online Download PDF Site Map Disclaimer Privacy Accessibility Site Map About IMI Our Approach Our Strategy Our Divisions Our Engineering Heritage Leadership & Governance Investors Key Financials Financial Calendar Results Centre Annual Reports Presentations Regulatory News Share Price and Dividend Shareholder Services Analysts Investor & Advisor Contacts Media IMI in Action Press Releases Media Contacts Corporate Responsibility Our Approach Our People Careers Why Work for Us What We Look for Your Development Our People Graduates Job Opportunities IMI plc, Lakeside, Solihull Parkway, Birmingham Business Park, Birmingham B37 7XZ