LONDON (dpa-AFX) - Shares of Invensys Plc (ISYS.L) are currently trading around 24 percent lower in the London Stock Exchange after the British engineering company said it expects fiscal year 2011 operating profit to be significantly below last year.
In its interim management statement covering the period since September 30, the company noted that the performance of its substantial majority continues to be in line with management expectations.
The anticipated plunge in reported operating profit before exceptional items reflects a number of operational issues relating to certain projects within Invensys Operations Management and Invensys Rail.
Invensys said its Operations Management maintained momentum with growth in revenue supported by continued market strength and its large order book. The company said it conducted a review of the engineering requirements and associated costs for the three contracts to install and commission control and safety systems into eight nuclear reactors under construction in China.
'This review has concluded that there will be a delay in delivery and the need for additional engineering to be carried out on the first contract and, whilst some of this engineering will be reused on the later contracts, this will impact the division's performance this year by around £40 million,' the company said in its statement.
Further, the company said its Rail division has received orders in Saudi Arabia, Turkey and the UK, but detailed reviews of a small number of contracts have identified the need to delay revenue recognition and provide for additional costs. This will reduce the division's results by around 20 million pounds.
At Invensys Controls, the appliance markets in North America and Europe remained weak, partially offset by continued strength in the commercial and wholesale markets, the company noted.
Looking ahead, the company said it remains confident about the prospects.
Invensys shares are currently trading at 173 pence, down 54.10 pence or 23.82 percent in London.
Copyright RTT News/dpa-AFX
