Invensys in a plunge on its profit warning
Saturday 14 January 2012
Shares in the engineering giant Invensys slumped 20 per cent yesterday after it warned that its profits this year will fall well below City expectations.
Problems on building nuclear reactors in China and a number of railway signalling contracts around the world mean that operating profits will be £60m less than expected at about £210m, down from last year's £262m.
Shares in the mid-cap company were the biggest fallers in the FTSE All-share yesterday, closing down 43.9p at 183.2p.
In China the group has had to do more engineering work than it had expected on the control and safety systems for four new nuclear power reactors on a contract worth £250m, mainly because they are among the first to use digital rather than analogue systems. This will hit operating profits by £40m.
In the rail division a "handful" of contracts have been reviewed and found to carry extra costs and delayed revenues. None is believed to be in the UK, where Invensys was yesterday awarded three large signalling contracts. Operating profits from the rail division will fall £20m short of management targets.
Taken together, analysts said the two divisions would knock £60m from their average profit forecast of £270m, and warned they could have a knock-on effect next year. "It has severely impacted my confidence in management to deliver the promised margins," Mark Wilson, an analyst at Collins Stewart, said.
Notes from a small island: Is Sealand an independent 'micronation' or an illegal fortress?
World news in pictures
British man confesses to slitting his two children's throats in Lyon flat
'Swivel-gate': David Cameron goes to war with the press over 'swivel-eyed loons' slur
Revealed: Eerie new images show forgotten French apartment that was abandoned at the outbreak of World War II and left untouched for 70 years
- 1 Heading for America? Prepare for the longest US immigration queues ever
- 2 Notes from a small island: Is Sealand an independent 'micronation' or an illegal fortress?
- 3 You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
- 4 'Swivel-gate': David Cameron goes to war with the press over 'swivel-eyed loons' slur
- 5 It’s official: thanks to Stephen Hawking's Israel boycott, anti-Semitism is no more
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...
£450 - £500 per day: Orgtel: Sourcing Manager - Banking - London - Up to £500p...
To be discussed at interview.: Queen Elizabeth's School: An experienced and ef...
£294.05 - £330.92 per day + 150 per day travel and accommodation: Orgtel: A le...