Invensys resumes dividend payment despite economic climate

19 May 2009

Invensys is to make its first dividend payments since 2003, following a year of strong performance despite the current economic downturn. Ulf Henriksson, the company's chief executive, said the recommendation of 1.5p a share had been set 'at a prudent level which should allow for a progressive dividend policy going forward'.

And this news coming, as it does, during the worst recession in living memory provides, further evidence that the process industries could have seen the bottom of the economic cycle and will now be looking at a brighter future.

Orders, which rose by 38% to £2,806 million compared to £2,036 million in 2008. were driven by strong performances by Process Systems and Invensys Rail. Revenue was up by 8% to £2,284 million although operating profit was down 4% to £244 million with an excellent performance again from Invensys Rail and robust results from Process Systems offsetting a sharp second half decline in domestic division Invensys Controls.

The continued strengthening of financial position with no debt, net cash and deposits
totalling £309 million, together with a £400 million banking facility led to the board's decision to recommend a final dividend of 1.5p per share.

Henriksson commented: “I am pleased to be able to report that we achieved a robust performance during the past year against the background of one of the most difficult global economies in decades. We had strong order intake, which is testimony to our customers’ belief in our ability to deliver projects and solutions. We had strong cash flow across the Group which has further strengthened our financial position; we are debt free with £309 million of net cash and deposits on the balance sheet.

“We have managed our pension assets and liabilities to reduce volatility and have agreed the future funding schedule with the Trustee of the UK Pension Scheme with no change to our annual payments. We have undertaken restructuring where there has been a need to realign capacity and improve productivity. This overall performance has given the Board confidence to recommend the resumption of dividend payments to shareholders.

“Relative to the market, there is strength in demand for our projects and solutions within our newly formed Invensys Operations Management division and Invensys Rail has been successful in both its core and export markets. This gives us confidence that both will continue to perform well during the current financial year. Invensys Controls faces continued weakness in its markets and we continue to manage it for positive cash flow.

“Our strong financial position is enabling us to take further actions in the current year to protect profitability and cash flow across the Group and, based upon our current expectations, we anticipate that restructuring charges in the current year will be around £65 million. Overall we look to the future with confidence and expect to improve our performance in the current year.”