Glasgow engineering giant Weir Group banks on mining as profits cool

Weir Group, the Glasgow-headquartered global engineer, has suffered a 41 per cent drop in fist-half, pre-tax profits amid the downturn in oil and gas markets.

Weir Group is focused on the mining, oil, gas and power markets. Picture: Weir Group
Weir Group is focused on the mining, oil, gas and power markets. Picture: Weir Group

Chief executive Jon Stanton pointed to “unprecedented times” but said the group had “adapted quickly to the challenges of Covid-19”. He highlighted resilient demand in Weir’s core mining markets.

The FTSE 250 firm posted a profit before tax of £63 million for the six months ending 30 June, down 41 per cent from the £106m banked a year earlier. Overall revenue fell 17 per cent to just under £1.1 billion.

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Weir, which is not proposing to pay an interim dividend due to the “ongoing uncertainty”, is focused on the mining, oil, gas and power markets. It has taken a knock during the coronavirus crisis due to the slump in oil prices.

Stanton said: “Our core mining technology businesses showed their inherent resilience and the critical role they play in keeping essential activities running. Our oil & gas team also skilfully navigated extremely challenging market conditions.

“As we look ahead, while the business is performing well, it is too early to provide guidance on the full-year given ongoing uncertainty due to Covid-19.

“More broadly, the long-term outlook for mining remains positive, supported by demographic trends, carbon transition, the long-term decline in ore grades and the need to reduce waste and water and energy consumption.”

Analysts at brokerage Shore Capital noted: “Weir announced in February 2020 that it is considering options with regards to the disposal/exit of the oil and gas division.

“This would result in Weir becoming a pure-play mining-focused business which reduces volatility and enhances its earning quality via its aftermarket earnings profile (i.e. less cyclicality).

“We retain our hold recommendation,” they added.

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