Questor share tip: Engineer IMI benefits from its sweet spots Engineering group IMI posted an excellent set of full-year numbers on Friday, as its strategy of focusing on "sweet spot" products with high margins bears fruit. The majority of the company's business comprises of fluid control systems - such as valves for liquefied natural gas (LNG) plants and power stations, as well as air conditioning units. Just over half of IMI's operations are now positioned within the "sweet spot," which is characterised by higher growth, higher margins and greater resilience. Over time, management expects to increase this proportion significantly. This focus has resulted in margins hitting a record high of 17.5pc, up from 16.7pc, which is just shy of the company's target of 18pc. Progress on margins is expected to continue. In the year to December, revenues rose by 12pc to £2.13bn and pre-tax profits fell 2pc to £301.4m. However, when one-off items are stripped out, profits rose 19pc to £363m. The total dividend for the year rose by 15pc to 30p. The final payment of 19p will be paid on May 21. The shares are now trading on a prospective yield of 3.3pc. The balance sheet remains strong, with net debt falling 26pc to £108m. Consensus forecasts are likely to edge higher following the numbers - indeed the consensus in the table shows that earnings per share had been expected to fall marginally in 2012. Growth is now expected - albeit at a slower rate than seen last year. The shares were last tipped as a buy in The Sunday Telegraph at 758p on October 9 last year and they are up 31pc since then, compared with a FTSE 100 up 12pc. Trading on a December 2012 earnings multiple of 12.3, falling to 11.3 next year, the shares are now rated as a hold.