Summary of the Multi-Industry Heatmap: 2Q25 Industry Overview - The report covers various industries, including electrical, machinery, marine, construction, healthcare, consumer, and technology sectors [3][4]. Key Findings 1. **Earnings Performance**: - Approximately 27% of the coverage and 10% of globally tracked companies reported by the end of the first week of 2Q25. - Mixed results were observed, with around 64% beating sales expectations, 78% beating margin expectations, and 67% beating Adjusted EBITA expectations. However, about 50% missed on orders and free cash flow (FCF) [3][8]. 2. **Sector Performance**: - Electrical companies outperformed machinery companies operationally. - Strong demand was noted in data centers, with companies like Legrand and Accelleron showing positive pre-release figures [3][4]. 3. **Geographical Trends**: - All regions (EU, Americas, China/Asia) indicated stability. - Specific sectors showed varied trends: Marine, EU/Americas construction, China healthcare, and Americas consumer sectors turned to growth, while tech, China construction, and U.S. consumer sectors declined [4][8]. 4. **Foreign Exchange Impact**: - Significant foreign exchange headwinds were noted across Nordic coverage, impacting margins. - Price/cost inflation was observed, with previous input costs still in inventory being unaffected by tariffs, although pricing had increased post-implementation. This situation may reverse in 2H25 as companies indicated challenges in offsetting tariffs entirely [3][4]. 5. **Stock Performance**: - Out of the 12 stocks that reported, 8 showed an increase on a weekly basis, including Accelleron and Legrand [3][8]. Additional Insights - The report highlights the importance of monitoring foreign exchange impacts and pricing strategies in the context of tariff changes, which could affect future earnings and margins [3][4]. - The mixed earnings season suggests a cautious outlook for investors, particularly in sectors experiencing order and cash flow misses [3][8]. Conclusion - The 2Q25 earnings season has been characterized by a mix of strong sales and margin beats, but significant challenges remain in terms of orders and free cash flow, particularly in the machinery sector. The overall stability across regions and sectors provides a nuanced view for potential investment opportunities and risks moving forward [3][4][8].

Investment Rating - The report downgrades the investment rating of IMI Plc to Neutral from Buy, with a lowered 12-month target price of 2,120p, down from 2,220p [1][11]. Core Insights - The downgrade reflects revisions in estimates due to a sharp decline in US ISM manufacturing PMIs, updated capex trackers, IMI's 1Q25 trading update, and increased foreign exchange headwinds [1][11]. - The adjusted FY25 earnings per share (EPS) forecast is lowered from 133.1p to 129.8p, moving to the lower end of the group's guidance of 129p-136p [1][11]. - The report anticipates a balanced risk-reward scenario for IMI in the upcoming quarters, with expected growth in Climate Control and Life Science & Fluid Control businesses, despite headwinds in short-cycle businesses [2][11]. Financial Forecasts - FY25 revenue is projected at £2,238.1 million, with a reduction in sales, adjusted EBIT, and adjusted net income forecasts by approximately 5% each [1][8]. - The adjusted EBIT margin forecast remains unchanged at 20.1%, reflecting a shift towards the Automation segment [1][8]. - The report indicates a 9% reduction in FY25 free cash flow forecasts due to lower earnings and an increase in capex by approximately £10 million [1][8]. Segment Analysis - The Automation segment's growth forecast has been lowered, primarily due to a 7% year-over-year decline in Q1 and a significant drop in the US ISM manufacturing PMIs [12]. - The Life Technology segment's forecast reflects a modest recovery in demand, while the Transport business is under strategic review due to anticipated declines [13]. - The Climate Control segment is expected to grow by 4.2%, benefiting from ongoing demand for energy-efficient HVAC products [13].