Its operations management (IOM) unit, which makes systems for industrial facilities and nuclear power stations, had a strong half, offsetting a “significant downturn” in its domestic appliance business, Invensys said.

Chief executive Wayne Edmunds said robust demand for oil, gas and power, and new rail networks in emerging markets, were insulating Invensys from economic upheaval in Europe and North America.

“We expect that exposure to those higher-growth markets will give us some protection in the event there might be some slowdown in the Western economies..”

Invensys, which competes with ABB, Honeywell International and Siemens, posted operating profit of 102 million pounds ($163 million), on revenue 7 percent higher at 1.23 billion, and said it still expected to make progress in the full year.

Invensys shares, which have fallen 41 percent since Jan. 1, were 6.2 percent higher at 222 pence by 1010 GMT, compared with a flat mid-cap index.

J. P. Morgan Cazenove said profit was broadly in line, with IOM ahead of expectations and controls falling short.

“The disappointment of very weak operating cash flow in the first half was counterbalanced by the decline in the pension deficit and the recent strong order inflow for the rail division,” the broker said.

Paul Morland at Peel Hunt said while the results were a little shy of his expectations due to a weak performance from the controls unit, the IOM business was strong.

“Although we expect small downgrades today, the ‘buy’ case remains very much intact with IOM performing strongly in developing markets and rail starting to enjoy some key contract wins. The company now has a high technology content in its offering and looks oversold to us on the back of weakness in the Industrials sector,” he said.

First-half order intake slipped 5 percent to 1.09 billion pounds. The group said its rail division had since won major deals, including a 420 million-pound order from Saudi Arabia and 170 million contract for a metro lines in Turkey.

Invensys had emerged as a leader in rail signalling in the Middle East, both in metropolitan and mainline rail networks, Edmunds said.

“These awards in the last few days have already surpassed all of last year’s order book,” Edmunds said.

“We are expecting a very robust rebound on a full-year basis for rail.”

While the domestic controls business was being hit by weak demand in North America and Europe, customers such Whirlpool and Electrolux expected the market to bottom out in the final quarter of 2011 or early 2012, he said, adding: “We are preparing to run the business on these lower lines over the next 3-6 months and relook at it when we get better visibility.”

The interim dividend was raised 10 percent to 1.65 pence.