Despite registering preliminary year-end fiscal 2005 financial results that were down slightly from the year-earlier period, Invensys plc CEO Rick Haythornthwaite this week declared that the process and control systems vendor had turned the corner on its recovery and that he would turn over operating control to COO Ulf Henriksson on July 22.
Following a £2.7 billion refinancing last March and progress in its business recovery programs, "the Group now requires the leadership of a manager with sector specific experience who can take Invensys forward to the next state of its recovery," Haythornthwaite said in a prepared statement.
For the fiscal year ended March 31, the company said it had earned £169 million compared with £193 million the previous year. Revenues (for retained businesses) were £2.5 billion, down from the £2.7 billion posted the previous year.
The results, which were in line with analyst expectations, were adversely impacted both by disposals of businesses and currency translation adjustments stemming from a weak US dollar relative to the euro. The financial community, however, expects better results.
According to a research report published this week by JP Morgan, despite the robust order intake in Invensys' fourth quarter, the company's near-term performance has been disappointing. That's likely due to U.S. market share erosion in its controls and process businesses, the report said.
Managing Automation was unable to get officials on the record, but
in an interview posted on a UK-based news outlet, incoming CEO Henriksson confirmed the company's U.S. market shortcomings, while laying out some of his goals. He intends to stabilize cash performance, grow market share in North America, and focus specifically on the Process Systems Group, which is under the leadership of president Mike Caliel. The company recently hired a former Honeywell executive as president of North American operations for Invensys Process Systems.
"If you look at North America particularly, we had a growth of one percentage point. Of course we're not happy," Henriksson said in the online interview. "We are now shifting our concentration for the coming years into how do we grow worldwide, in North America and continue our successes in the Middle East and Asia."
Since Haythornthwaite became CEO in October of 2001
his mission has been to pay down almost £4 billion in debt the company had accrued. The company's debt stood at £792 million at the end of fiscal 2004.
Over the last three years he's sold off a number of non-strategic business including ERP companies Baan and Marcam, as well as Metering Systems, a measurement company, and its UPS business called Powerware. The company's core competencies remain in process systems, controls, rail systems (its APV unit,which is focused on the food, beverage and healthcare industries), and its Eurotherm businesses, which provide industrial control, instrumentation and monitoring products.
Henriksson, who was recruited from Eaton Corp. last year, was immediately thought to be a successor-in-waiting by industry watchers, even though Invensys officials never confirmed speculation. "I think that was the plan, it was the promise they made to him," said Andy Chatha, president of ARC Advisory Group. "And I think it is probably good because Ulf is more of an operations guy, he's more hands on. Rick I think has not been involved in operations -- other than selling businesses he hasn't made any other significant changes. Hopefully Ulf will be more aggressive and make changes."