Invensys Slumps After Unveiling $92 Million in Surprise Cost
January 14, 2012, 6:27 AM ESTBy Sabine Pirone
(Updates share price from second paragraph.)
Jan. 13 (Bloomberg) -- Invensys Plc, the British maker of washing-machine controls and factory gear, dropped the most in almost nine years in London trading after revealing 60 million pounds ($92 million) in additional costs to fulfill contracts.
Full-year earnings will be “significantly” below last year as a result of the expenses, the London-based company said today. Invensys shares fell as much as 27 percent to 166.8 pence, the steepest intraday plunge since February 2003.
Invensys is already battling weaker demand for its appliance controls in North America and Europe. More work is needed to supply the controls for eight nuclear reactors under construction in China, hurting results by 40 million pounds at the operations management unit, it said. A review of rail contracts also highlighted additional costs, clipping profit by an added 20 million pounds, the company said.
“We see significant downside risk to consensus expectations for this year,” Glen Liddy, an analyst at JPMorgan, said in a note.
Invensys traded at 180 pence as of 8:28 a.m., valuing it at about 1.46 billion pounds. The company had been expected to report operating profit of 253.6 million pounds in its current fiscal year ending March 31, down from 262 million pounds a year earlier, according a survey of 12 analysts by Bloomberg.
The financial burden of the extra engineering and equipment delivery delays overshadowed a framework contract for signaling equipment with the U.K.’s Network Rail, also unveiled today. Invensys, formed through a purchase of BTR Plc by Siebe Plc in 1999, has a three-pronged focus on factory automation gear, software for railways and controls for machinery.
--Editor: Benedikt Kammel
To contact the reporter on this story: Sabine Pirone in London at spirone@bloomberg.net
To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net
