Engineering and global technology group Invensys this week warned that problems with systems installations at Chinese nuclear power stations and issues involving a number of rail contracts would reduce its expected operating profits by £60m.
The company’s share price dropped as much as 27% before rising slightly this morning to down 22%. The fall followed the announcement that profit expectations had been revised down £40m due unexpected difficulties in its Chinese nuclear work. A further £20m due to setbacks its rail division were also announced although the company today revealed a new Network Rail contract and was part of a Spanish consortium that won a contract in October to build a high-speed rail link in Saudi Arabia.
Invensys reported an underlying operating profit of £262m in the year to March 31 2011 and had expected to report a rise in operating profits this year but said it now expected underlying operating profit to fall “significantly” year-on-year.
“A review has been carried out of the engineering requirements and associated costs for the three contracts to install and commission control and safety systems into eight nuclear reactors under construction in China,” Invensys said. “This review has concluded that there will be a delay in delivery and the need for additional engineering to be carried out on the first contract.”