Energy boost for Invensys

This solid set of half-year results from engineer Invensys has left concerns about its underperforming controls division on the back burner – at least for now. Instead, strong growth in operations management, brighter prospects for rail and a cut in the pension deficit helped lift the shares.

Energy-hungry emerging markets drove a 19 per cent surge in revenue, to £618m, at the operations management unit – half the group total – pushing operating profit in the division up by a fifth to £54m. Strip out last year's big nuclear deal with China and order intake at the unit grew 20 per cent.

Prospects for the railway signalling business look good, too. True, growth in sales and profits there was modest, but a £420m contract in Saudi Arabia and a new £170m deal in Turkey will mean a significant boost. Moreover, eight Network Rail framework agreements are up for grabs and plans to build metro systems across China "could be worth billions", according to chief executive Wayne Edmunds. However, the division that makes controls for domestic appliances remains the weak link – sales fell 16 per cent there and operating profit dropped 42 per cent to just £14m. Still, new products could help steady the second half.

Peel Hunt expects full-year adjusted pre-tax profit of £252.7m, giving adjusted EPS of 23.7p (£222m and 19.6p for 2010).

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