Weir Group on track despite slide in oil and gas orders

Weir Group, the Scottish engineering heavyweight, is on track to meet its full-year goals after a solid first-quarter performance.

The Scots firm has grown to become a major global player with thousands of staff. Picture: Weir Group
The Scots firm has grown to become a major global player with thousands of staff. Picture: Weir Group

In a trading update covering the three months to the end of March, the Glasgow-headquartered group said that overall orders from continuing operations were up 18 per cent, boosted by its bumper acquisition of US-based Esco. With Esco stripped out, orders were down 7 per cent as a result of reduced oil and gas refurbishment activity.

The firm highlighted “good momentum” from mining markets, with a 3 per cent year-on-year increase in orders. Aftermarket orders were 9 per cent higher as the division took advantage of strong market conditions, although original equipment orders were 10 per cent lower amid “lumpy” demand.

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Oil and gas orders were down 23 per cent, reflecting the “significantly reduced levels of demand” for refurbishment and replacement among North American oilfield service companies compared to 2018.

Weir said there was no change to the division’s expectations for 2019 with operating profit expected to be in the £55 million to £95m range.

The group also confirmed that the sale of its non-core flow control division was on track for completion in the second quarter of the year.

Chief executive Jon Stanton told investors: “Weir has continued to deliver, with our first-quarter performance in line with our expectations.

“We benefited from our strengthened leadership position in mining where we are helping more customers meet their priorities of optimising current operations and planning for future expansions.

“Esco’s performance remained ahead of initial expectations with good demand for its premium technology.

“As expected, oil and gas markets were at similar levels to late 2018 as a result of capital and pipeline capacity constraints in North America and the absence of the strong levels of first-half refurbishment activity seen last year.

“The group’s full-year outlook of good constant currency revenue and profit growth remains unchanged.”

John Moore, senior investment manager at Brewin Dolphin, said: “Weir Group has had a good start to 2019 and a great deal of that can be put down to the smooth integration of Esco.”

Weir will have a global headcount of about 15,000 following the flow control sale.

Results for 2018, released in February, revealed that sales from continuing operations were up by 15 per cent on a like-for-like basis to £2.45 billion. Orders were up by a similar percentage to just over £2.5bn.

Operating profit from continuing operations before exceptional items increased by 13 per cent to £348m.