The production controls and rail equipment group Invensys scaled back expectations for its disposals programme yesterday.
Although it still expects to raise £1.8bn from selling two-thirds of the operations, it no longer reckons on beating the target by a substantial margin.
Its chief executive, Rick Haythornthwaite, said: "There are plenty of buyers out there and plenty of money but buyers are cagier than in the first batch of disposals. They are more wary of restructuring costs."
The sale proceeds are important because Invensys is aiming to complete a refinancing in 2005. Net debt of £1.6bn, already down from £3bn before the disposal programme began 18 months ago, would be wiped out if the sales go through smoothly.
Three main businesses are to go - appliance controls, climate controls and uninterruptible power supplies - plus two smaller ones. Mr Haythornthwaite said only one of these businesses - which he would not identify - was proving hard to sell. The profitable metering service in North Carolina has been sold since the half-year end but for less than expected.
The shares slipped 5.75p to 26.5p after he also reported that while the core businesses had increased sales from £822m to £872m in the six months to September, their operating profits had slipped from £77m to £70m. Despite the sale of two loss makers, the Dutch software group Baan and the US electronics company Teccor, non-core businesses still generated more sales than the core operations. Group sales were £2bn in the first half.
The pre-tax loss widened from £97m to £198m due to losses on disposals and reorganisation costs. There is no interim dividend. Invensys paid 1p at this stage last year.
Mr Haythornthwaite admitted that "at this stage, there remains much to be done". The outlook for the production management division was patchy, with "some signs of better trading conditions in certain sectors and regions".
He said sales to food and beverage producers were rising and oil and gas was improving. The biggest improvement had come in sales of low-cost software to improve productivity in machinery. The rail systems business has a strong order book, including London Underground contracts.
While figures from the core businesses were in line with City expectations, analysts were concerned at a £44m cash outflow and the prospect of higher pension costs despite a reduction in the pension deficit from £931m in March to £816m at the end of September.
Current analysts' forecasts are for full-year profits of about £130m before exceptionals, compared with £217m last time.
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