Invensys dives on fresh profits alert

Shares in Invensys sank by a quarter yesterday after the troubled industrial conglomerate issued a fresh profits warning. The shares closed 15.25p down at 46.75p after the group reported a 7 per cent fall in first-half profits and said its performance in the second half would be flat. Its membership of the FTSE 100 index is now in jeopardy.

Rick Haythornthwaite, the chief executive brought in to streamline the former BTR-Siebe group, said: "Both our capital and consumer-end markets remain susceptible to the effects of further erosion in global confidence. In such an environment, we would expect our second half trading performance in the core group to remain at best flat with the first half."

Analysts said the 7 per cent fall in core operating profits to £143m was well below expectations. This outweighed the group's repeated commitment to key financial targets on margins, cash-flow, disposals and debt reduction.

Analysts also said investors were worried about the working capital outflow of £80m and free cash flow of only £9m. Mr Haythornthwaite admitted he was "very disappointed" with the cash-flow performance.

Invensys is seeking to improve operating margins from the 3.2 per cent in its production management division to 8-10 per cent by March 2004 and from 8.7 per cent in its energy management division to 12 per cent. Around 1,000 more jobs are to be cut to help achieve the target. Other aims are to improve free cash flow to 8 per cent of turnover, secure £1.8bn from disposals and cut debt to £1.5bn.

Though the company has failed on cash flow its disposal programme is ahead of target with £1.6bn achieved so far. The sale of the Fasco Motors division is expected to cut debts to the £1.5bn target.

Invensys recorded a loss of £58m in the six months to 30 September after losses on disposals and interest charges. Operating profits were down to £143m from £154m. At the divisional level, production management profits rose 44 per cent to £23m due to aggressive cost-cutting as spending by customers remained cautious. In energy management profits fell 232 per cent to £91m due partly to continued weakness in the IT and telecoms markets.

The company said that with no improvement in its main markets in sight it would have to rely on "self- help" to get the business back on track.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview