UPDATE 2-Invensys keeps forecast but poor orders hit shares

* Still expects year to be ahead

* H1 revenue, op profit broadly in line

* Analysts say Operations Management orders raise concerns

* Shares down as much as 10 percent

(Adds CEO comments, analyst reaction, shares)

LONDON, Nov 5 (Reuters) - British engineer Invensys Plc revealed a sharp fall in orders for its Operations Management (IOM) unit, sending its shares down as much as 10 percent to their lowest in a month.

Reporting a 15 percent drop in first-half operating profit to 102 million pounds, the group said on Thursday orders for its IOM unit from oil and gas producers and large industrial companies had fallen 23 percent year-on-year.

"We expect disappointment to centre on IOM after what has been a surprisingly weak second quarter in terms of orders," Nomura analyst Lisa Randall said in a note.

Invensys (LSE: ISYS.L - news) said it still expects its full-year performance to beat a year ago, but its shares were down 5.5 percent at 282.8 pence by 1100 GMT, having dropped as low as 270.9p -- their lowest since early October.

The shares have outperformed the index of leading UK companies by 52 percent since the start of the year.

The company, which makes components for washing machines, railway signalling and nuclear power stations, posted first-half revenue of 1.07 billion pounds ($1.8 billion), 2 percent lower than a year ago.

Chief Executive Ulf Henriksson said Invensys had delivered a solid performance in tough markets, particularly for its controls units and IOM.

"In IOM we are not declining as fast as our competitors," he said. "However, North America at the moment has slowed down dramatically and orders are still there but they are smaller."

Morgan Stanley (NYSE: MS - news) said although IOM raised questions, management might be able to meet its forecasts if rail continued to achieve 21-22 percent margins against company expectations of 17-18 percent sustainable rail margins.

RAIL ON TRACK

Rail continued to perform well, Henriksson said, although orders were down 13 percent due to the effect of large contracts a year ago in Spain and Britain's Network Rail pausing before the next stage of network renewal.

The controls division, which supplies appliance makers, saw orders drop 12 percent, but demand in North America was stabilising and the rate of decline in several European countries was slowing.

"We are starting to see the bottom of the recession," Henriksson said. "We are beginning to see some signs of stabilisation and possible modest recovery."

Henriksson said IOM should improve significantly in the second half and would help the company deliver a better performance than last year.

"We have tremendous momentum into the second half as a group -- overall we are on line to meet our expectations," he said.

Analysts expect the company, which competes with Switzerland's ABB (Stockholm: ABB-U.ST - news) , France's Alstom (Paris: FR0010220475 - news) and Germany's Siemens , to post yearly revenue of 2.3 billion pounds and an operating profit of 204.5 million, according to Thomson Reuters I/B/E/S.

The group resumed its interim dividend with a payout of 1.0 pence a share. (Editing by David Holmes) ($1=.6071 Pound)