Business

Invensys shares plunge on profit warning

 

Shares in UK engineering firm Invensys have plunged after it warned that its 2011 operating profit would be "significantly below" that of the previous year.

The firm blamed delays and additional work needed on the safety systems of eight nuclear reactors it is installing in China, which will lower profits by £40m.

Invensys also found additional costs in its rail unit, to the tune of £20m.

Its shares fell 22% to 176.90 pence.

For the year ending in March 2011, it made an operating profit of £262m.

"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."

In October, Invensys Rail was part of a Spanish consortium that won a contract to build a high-speed rail link in Saudi Arabia.