British engineer IMI has reported a three per cent fall in revenue, hurt by a strong pound, and said it expects only "modest organic revenue growth" this year.

The company, which supplies flow-control systems such as valves for power, nuclear, oil and gas and petrochemical plants, said it expected 2015 operating margins to be lower than a year earlier.

Investec analyst Michael Blogg said the company's outlook for 2015 suggested a more challenging environment than he had forecast for two of IMI's three divisions.

Revenue for 2014 fell to £1.69 billion from £1.74bn a year earlier. On an organic basis, or excluding the impact of currency exchange rate changes and acquisitions and disposals, the company's revenue rose two per cent.

Adjusted operating profit fell to £298 million in the year ended December 31, from £322m a year earlier.

Operating margins fell to 17.7 per cent from 18.4 per cent.

IMI, which is in the process of simplifying its structure, said the strong pound adversely impacted revenue by £96m, while the hit to operating profit was £18m.

The company also said it expected a three per cent impact to revenue and operating profit in 2015 due to the strengthening pound.