Weak pound working in Weir's favour

Published on Tuesday 3 November 2009 20:00

WEIR Group, the Glasgow-based engineering giant, yesterday upgraded its profits forecast for the second time this year, with full-year earnings now expected to come in at almost £180 million.

Keith Cochrane – who this week took over as chief executive from Mark Selway – said "good levels of activity" in the North Sea and North America oil and gas sectors had compensated for a "soft" market in Dubai.

While revenue in the 13 weeks to 25 September was "adversely" affected by lower workflows during the first half of the year, the weakness of the pound continued to act in the group's favour.

Consensus forecasts had put Weir's full-year pre-tax profit at 166.6m, with analysts predictions ranging between 151.6m and 177.1m.

Strong operating cashflow generation led to net debt being reduced to below 200m.

Cochrane told The Scotsman: "The group's in great shape from a balance sheet perspective. Net debt has come down further and we're continuing to see strong cash generation.

"Sometime over the next six or 12 months I'd like to think there would be opportunities for takeovers. We're spending time identifying businesses that would fit well with our portfolio and strategy."

Shares in Weir Group fell 3 per cent, prompting Michael Blogg, an analyst at Arbuthnot, to say: "Some of the bulls were probably expecting better news."

But Blogg raised his profits forecast from 162.5m to 175m.