Record results fail to support Weir’s shares

SHARES in Weir Group took a tumble yesterday after the Glasgow-based engineering giant warned that profits at its oil and gas division would struggle to meet the City’s full-year forecasts.

The FTSE 100 firm said there had been a slowdown in orders from North America’s “fracking” industry – which shoots jets of chemicals, sand and water into rocks to free oil and gas – because the industry is shifting from gas extraction to oil extraction and so less equipment is being ordered.

Weir’s other divisions are expected to make up for the shortfall in oil and gas profits for the full-year, chief executive Keith Cochrane said.

“I can’t predict when the upturn will come in the oil and gas division because it will depend on when individual customers begin ordering parts from us again,” he said. “But this is a big division and other parts – such as operations in the Middle East – are performing very well.”

His comments came as Weir posted record interim results, with pre-tax profits for the six months to 29 June jumping by 27 per cent to £226 million, triggering an 11 per cent rise in the dividend to 8p. Sales soared by 29 per cent to £1.3 billion.

Shares closed down 2.9 per cent or 49p at 1,655p. Stephen Swanton, an analyst at UBS, said “now is an opportune time to buy” Weir’s shares because of upbeat comments from oil and gas customers.

Jonathan Jackson, head of equities, Killik & Co, added that Weir also remains a takeover target.