London, May 30: Struggling engineering firm Invensys posted a record net loss, but said proceeds from the sale of more than half of its business would easily beat market forecasts of £1.8bn ($2.9bn). “Given our track record, we are comfortable that we can substantially exceed this,” said Invensys after reporting a fall of almost 20% in annual core operating profit to £250m, meeting its own forecast flagged in April.
Invensys, hammered by the downturn in spending by telecom and information technology companies and a weak commercial building market, embarked on the disposals last year to soothe concerns about its debt and covenants, but analysts are concerned about the profitability of the remaining businesses.
The bottomline loss for the year to March 31 widened to £1.4bn ($2.34bn) from £869m a year earlier, following losses on disposals after goodwill plus a writedown of 585m for its troubled Dutch software unit Baan. Merrill Lynch analyst Raymond Greaves said the pension deficit of £931m was worse than he had estimated.
“Ultimately we need to see a stabilisation in the group and recovery in trading before becoming more positive on the shares,” Mr Greaves, who kept a ‘neutral’ rating, said in a report. A second investment bank analyst, on condition of anonymity, said, “There are lots of issues still unresolved.” Bureau Report