Invensys surges on profits rise

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The Independent Online

The engineering group Invensys was the biggest riser in the FTSE 350 yesterday, after posting a strong set of results suggesting that it has not been affected by the downturn in the US market as badly as had some of its competitors.

Operating profits rose 41 per cent to £61m for the second quarter of the year, while margins were more than two points higher at 9.6 per cent.

Net debt fell from £730m at the end of June to £291m, following a refinancing which saw the company raise £340m in a rights issue, and sell off its building systems business for £126m.

Shares in Invensys climbed 17 per cent to 274.5p, valuing the group at £2.2bn, on the back of a series of bullish broker notes and upgrades.

About 40 per cent of the company's turnover is in the US, but only about 10 per cent of its £2.5bn annual sales are directly dependent on US consumer spending on items such as fridges and washing machines, which contain Invensys-built controls.

Unlike its rival Tomkins, Invensys is not so exposed to the new housing market in the US, which has fallen very sharply this year.

Orders were 2 per cent down for the quarter at £635m due to the delay in the formal awarding of some large rail systems contracts.

But Ulf Henriksson, Invensys chief executive, said he was pleased with the overall progress that the group had made.

He added that although the prospects for the controls market, which accounts for a third of sales, were unpredictable, the company was confident of further progress in the second half.