Invensys cheered its shareholders yesterday by announcing a big increase in first quarter operating profits and cutting its bottom line losses.
The debt-laden engineering group, which has restructured and made disposals, said an 82 per cent jump in operating profits from continuing operations in the three months to June 30 to £32 million was driven by demand from the power generation market.
Invensys, formed by the merger of BTR and Siebe and which provides machinery and services to industrial plants and railway systems, also yesterday announced that it had since won orders worth £30 million from Network Rail.
Operating profits from continuing businesses calculated in accordance with International Financial Reporting Standards rose from £17 million a year ago as orders rose by three per cent to £642 million on a constant exchange rate basis.
Same basis turnover for the quarter fell by two per cent to £577 million while the operating margin grew to 5.5 per cent from 2.9 per cent last time.
After exceptional items, goodwill writedowns and a £16 million hit from adverse currency exchanges, the group pretax loss came in at £24 million compared with £69 million in the same quarter last year, a reduction of 65 per cent.
Invensys said its process system unit, used to boost customers' productivity and cut costs, had lifted prospects.
"Process systems is the major driver here," newly appointed chief executive Ulf Henriksson said.
Increased demand in the power generation market, particularly in China, had served the group well.
The unit's operating profit rose to £ 12 million from £3 million as its margin on sales grew to 7.5 per cent from two per cent.
Some units performed less well, with orders at the controls division, for example, down seven per cent and rail suffering another weak quarter as profits fell to £10 million from £15 million.
Invensys said its revenues were still under pressure from a competitive white goods market and last year's manufacturing glitches, while rail had continued to suffer from the deferral of orders from Network Rail in previous periods.
The company has been selling non-core assets in a bid to cut its debt.
In February last year it launched a £2.7 billion financial re-organisation to steady its balance sheet by injecting fresh equity and restructuring its debt.
It sold its Lambda powersupplies unit last month for £134 million.
Invensys said it was confident that restructuring would benefit earnings for the financial year to March 31.
"I am pleased that we have delivered a significant improvement in performance over the first quarter of the year," said Mr Henriksson said.
"We remain confident that the restructuring programmes within our businesses will improve their performance and benefit the group's earnings during the remainder of this financial year.
"We continue to expect that the results for the year will remain in line with expectations."
Invensys today has few links to the days when it was known as Birmingham Tyre and Rubber.
Most of the BTR sites in the West Midlands have been sold, but the group still employs about 80 people at its Westinghouse rail division at Dudley.