WEIR Group chief executive Keith Cochrane is calling for Britain to speed up its entry into the shale gas industry to help the country become more self-sufficient in meeting its power requirements.
The head of the Glasgow-based engineering giant said that the UK could grow its shale gas sector “much more quickly than people currently think” because it has the right technical infrastructure in place to start harnessing gas trapped between rocks under the earth.
Cochrane said that the FTSE 100 constituent has about 200 staff at its pumps business in
Aberdeen who are already selling shale gas equipment to markets in Europe and Russia.
He told The Scotsman: “The UK has a the infrastructure and skills already established to take advantage of what to my mind is a significant opportunity.
“I don’t think it will be the game-changer that some people think it will be but it will be an important part of meeting our energy needs and improving our self-sufficency.
“Taxation, planning and the regulatory environment would be the key drivers. We can make this happen quicker than people currently think.”
Cochrane said that Weir also stands to benefit from electricity market reforms in the UK, which are expected to lead to more gas-fired and nuclear power stations being built.
“80 per cent of the world’s nuclear power stations contain one piece or another of Weir’s equipment,” he added.
“What’s important is to speed up the process of deciding what power stations we need to stimulate companies in the supply chain, like Weir.”
His comments were made as the company overcame “challenging” conditions in its oil and gas pumps market to post a 12 per cent rise in profits for 2012 to a record £443 million.
The increase allowed Weir to raise its full-year dividend for the 29th year running – up 15 per cent to 38p – which also marked the seventh year of double-digit growth in the payout.
Growth in Weir’s minerals and power businesses pushed group revenues up 11 per cent to £2.5 billion.
Cochrane is targeting an eighth year of double-digit dividend increases in the year ahead as he targets the 30th successive year of payout rises.
Scott Cagehin, an analyst at Numis Securities, said Weir’s balance sheet “provides scope for yet further acquisitions”.
He added: “In the longer-term, growth prospects appear strong, driven by both structural end market demand and organic initiatives. We continue to view Weir as a high-quality business with leading-market positions, excellent margins and strong cash generation.”
But analysts at Nomura said: “We see the results as a non-event, confirming the well-
expected slowdown in oil and gas and some caution on the minerals outlook.”