THE chief executive of Invensys, the engineering group, is set to step down and be replaced by chief operating officer Ulf Henriksson.

The company yesterday insisted that there were no plans for Rick Haythornthwaite to depart, but boardroom sources said there was a clear understanding that he would stand down once the company was seen to have overcome the worst of its problems.

Invensys was formed from the merger in 1998 of the engineering groups BTR and Siebe. It was the standard bearer of British engineering but recently it has been struggling to reduce heavy debts, sell off non-core businesses and rejuvenate flagging sales.

Earlier this year it was forced into a £2.7 billion financial restructuring after putting on hold plans to raise cash through a wholesale programme of disposals.

It faces a crucial test on November 11 when it reports interim results. Investors will be keen for an update on trading in the company’s key rail and process systems divisions, and progress on the sale of two remaining businesses slated for disposal, Lambda and Baker.

Another key figure will be the company’s net debt. It was nearly £1 billion at the end of last year, but was reduced to £713m at the end of June.

One source close to the Invensys board said that the company’s directors recognised Haythornthwaite’s efforts in drastically restructuring the group. “But I think there is a feeling that a different personality might be required in the future. This has become quite a different company to the one that Rick took over when he arrived.”

If Haythornthwaite does leave, there will be a lot of City interest in the size of his payoff. In May 2003, Invensys directors agreed to a request for his notice period to be reduced from one year to one month.

His place will be taken by Henriksson, who was recruited from the hydraulics division of one of Invensys’s American rivals, Eaton Corporation. Invensys paid Henriksson a “golden hello” of more than £2m in cash, shares and relocation expenses when he was hired in April.