Orbital Corporation Ltd has announced Thursday that volatile situations in the global equity markets have prompted the company to back down from its planned capital raising, adding that the proposed acquisition of an alternative fuel system business would be withdrawn for now.

Citing the present situation and the attending general uncertainty in the equity markets, the company board has decided that capital raising and acquisition would run against the best interests of Orbital's shareholders.

Orbital chairman Peter Day said the prospect of acquisition would have been a solid strategic decision for the Perth-based company but "the prevailing market conditions meant the timing was not conducive to completing the capital raising on a satisfactory basis."

Company chief executive Terry Stinson added that Orbital's decision was unfortunate but he gave assurance that for the time being, "they will be focusing on generating an operating profit in FY11 along with positive cash flow from our existing business streams."

He said that for 2009/10, Orbital is expecting profit after tax to come in between $4.3 million and $4.7 million, as compared to the $2.5 million net loss incurred in the prior corresponding period.

As of 1145 AEST, Orbital shares were trading at 3.2 cents.