The Investment Column: Invensys shares on the shelf as Yurko tries to ditch dowdy image

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ALLEN YURKO, the chief executive at Invensys, is desperate for his company to be seen in a new light. The world's largest maker of factory controls and equipment, born from the February merger of Siebe and BTR, wants to shed its dowdy engineering tag and re-invent itself in investors' minds as an electronics or technology play. The change would help trigger a re-rating.

Since the merger, the automotive and paper divisions have been sold while the company attempts to "move up the technology curve". With a disposal programme worth a total pounds 1.8bn in up to 30 separate deals, it is an ambitious, and demanding, task.

To the City's relief, there were no nasty surprises tucked away in yesterday's maiden interims, although the shares slipped 21.5p to 302p. Profit before tax and exceptionals came in at pounds 502m, in the middle of analysts' forecasts. And with pounds 815m worth of sales already completed, Invensys claims it remains on course to complete the disposals by early 2000. Merger-related savings in the six months to September were pounds 25m and Invensys remains committed to a target of pounds 300m annual savings by 2002. Of the pounds 1bn earmarked for share buybacks, pounds 320m has been deployed to date and the balance will follow.

In most respects, the tide appears to running Mr Yurko's way. Three of the four main divisions - Intelligent Automation. Power Systems and Controls - reported solid progress and prospects in key European and North American markets appear good. The trio accounts for almost 85 per cent of Invensys' business. The fourth division, Industrial Drive Systems, struggled as orders stalled and profits slipped to pounds 75m from pounds 84m. The recovery since the end of the half was described as "patchy".

The main problem is that investors will not see the benefits from the tie-up start to flow through strongly until well into next year. But margins at existing businesses are targeted to improve from 15-18 per cent over the next three years. On full-year profit forecasts of pounds 1.06bn the shares trade on a forward p/e of 14. Hold off for now.