LONDON (ShareCast) - Bosses at Invensys expect the engineer to make further progress this year following an 18% increase in full year operating profit despite weakness at its Controls business.

The firm, whose shares have been popular in 2008 so far, said operating profit for the year ended 31 March 2008 rose to £254m from £216m the year before on revenue up 5% to £2.11bn.

However, orders slipped 3% to £2.04bn as an improvement at Process Systems was offset by a decline at Rail, reflecting uneven order intake, and the anticipated reduction at Controls.

The Controls unit, which provides components, systems and services for residential and commercial building markets, saw orders fall 7% to £618m and revenue by 6% to £624m.

It blamed most of the decline on some softening of demand in the US and Europe as housing markets deteriorate. The division makes up around 30% of group sales.

DSG International plans to slash its dividend in half, beginning with the full year to 3 May 2008, as part of a five point plan for the renewal and transformation of the group, announced today.

The company, which has issued two profit warnings in 2008, is also writing off around £395m in the 2007/08 results, £340m of which relates to the struggling Italian operations.

It wants to cut costs by £50m in 2008/09, but will need to boost capital expenditure, currently at £160m a year, by around £110m in total over the next three years to deliver the programme.

The news came as DSG said sales rose 8% in the 53 weeks ended 3 May and by 1% on a like for like basis in very challenging trading conditions, especially in the UK, Italy and Spain.

Full year underlying profit before tax is still expected to be between £200m and £210m, in line with previous indications.

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