Weir on road to recovery after ‘prolonged’ downturn

Weir pointed to signs of a 'cyclical upturn' in the mining and oil and gas markets. Picture: Martin Bureau/AFP/Getty Images
Weir pointed to signs of a 'cyclical upturn' in the mining and oil and gas markets. Picture: Martin Bureau/AFP/Getty Images
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Signs are emerging that the downturn in Glasgow-based engineering group Weir’s key markets have bottomed out, according to its new chief executive.

Jon Stanton, who took over the reins of the company in October, predicted “good growth” in the year ahead as the group reported a 22 per cent fall in pre-tax profits in 2016 against a backdrop he described as “really tough market conditions”.

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The group, which serves the oil, gas and mining markets, said it saw a return to growth in the fourth quarter as commodity prices picked up after what Stanton said had been a “challenging and prolonged” downturn.

Pre-tax profits dropped to £170 million on revenues 2 per cent lower at £1.8 billion. Although overall order input fell by 8 per cent to £1.9bn over the year, the fourth quarter saw a 10 per cent increase.

Despite the challenging times caused by the impact of the slump in oil prices, Stanton said the firm was benefiting from ongoing investment in new technology and long-term relationships with customers across its key sectors.

“In recent months I have been encouraged by macro commodity trends and the signs in our mining and oil and gas markets that point to a cyclical upturn,” he said.

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Stanton said the priority for the business was to now ensure it is “absolutely ready” to take advantage of the emerging recovery in its markets.

“Our new strategic priorities will strengthen our capabilities and enable us to fully capture opportunities presented by improving markets, although there is a range of views about the precise shape of the recovery in 2017.”

He said the group expects to deliver strong cash generation and good growth in constant currency revenues. It is recommending a final dividend of 29p a share, giving a total payout for the year of 44p, unchanged from 2015.

Weir also announced that technology sector veteran Geetha Dabir, who spent 13 years with Cisco before moving to Intel in 2014, will join its executive team next month in the new role of chief technology officer.

• Oilfield services contractor Petrofac said yesterday it had delivered “positive” results for 2016, driven by record revenues, cost-

cutting and strong cash generation.

Underlying net profits, before losses on its Shetland gas plant project for Total, came in at $421m (£338m), down from $440m a year earlier, but revenues rose 15 per cent to almost $7.9bn.

Chief executive Ayman Asfari told investors: “Whilst the market remains competitive, bidding activity has increased in recent months.”

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