Invensys Pension Deal Hampered by Market Conditions, CFO Says

Invensys Plc (ISYS), the British maker of railway software and washing-machine controls, said efforts to reduce pension liabilities are being hampered by the current slump in equity markets.

The company reduced its pensions gap in the first half by 140 million pounds ($222 million), London-based Invensys said in a statement. First-half operating profit rose 2 percent to 102 million pounds. Analysts had predicted 106 million pounds.

Invensys is in talks with potential insurers of pensions, Chief Financial Officer David Thomas said today. Its liabilities are among the largest in the U.K. and analysts see the funding gap as an obstacle to disposals and approaches. Siemens AG (SIE) is flush with cash and ABB Ltd. (ABBN) and Schneider Electric SA have made acquisitions. Invensys hasn’t received any approaches from the likes of Siemens, Chief Executive Officer Wayne Edmunds said.

With pensions, “I think it is fair to say that the market is moving against us at the moment,” said Thomas, adding that the company is still pushing ahead with the plan. “I don’t think we ever put something on hold otherwise it just goes stale.”

Invensys rose 12.9 pence, or 6.2 percent, to 220.4 pence at 9:15 a.m. in London trading, giving the company a market value of 1.79 billion pounds.

The positives in the results announcement today include the strength of rail orders, JPMorgan said in a note. Invensys announced a 170 million-pound contract to provide signalling in Turkey.

Further Progress

Invensys, formed through a purchase of BTR Plc by Siebe Plc in 1999, still sees a year of “further progress,” based on a large order book at its factory automation and railway software businesses. The rail unit won two major orders in the first half in Turkey and Saudi Arabia.

Revenue at the company’s machinery controls business fell 16 percent in the first half. The unit should be more stable in the second half, and there is no plan to divest the unit, Chief Executive Officer Wayne Edmunds said in the phone interview.

“There might be tactical changes at product level but not at division level,” said Edmunds.

To contact the reporter on this story: Sabine Pirone in London at

To contact the editor responsible for this story: Andrew Noel at

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