Weir warns of continuing oil and gas challenges
Engineering group Weir yesterday warned of continuing difficult trading conditions in its oil and gas division.
Order input in the unit over the first five months of 2015 was 34 per cent lower than the same period last year.
In an update to shareholders and analysts, Glasgow-based Weir said weak trading in the upstream pressure pumping and control businesses reflected factors including falling drilling activity.
In line with actions taken by a number of employers in the North American oil and gas industry to reduce costs, the firm recently suspended operations for a week at its Fort Worth, Texas facility. It has also announced plans to cut 125 jobs, mostly in its North American oil and gas business and is to consolidate its service centres in the region in a bid to deliver cost savings of £10 million.
Weir said the trends in the sector were expected to contribute to full-year sales and profits being weighted more towards the second half than in prior years.
Keith Cochrane, Weir’s chief executive, said: “As indicated in our trading statement in April, the second quarter is proving to be very challenging for the oil and gas division with the US rig count continuing to decline, albeit at a slower rate over the past month.”
He said minerals, the group’s largest division, continued to demonstrate “resilience in subdued markets”.
Analysts at Killik said the current share price rating implied a recovery in US onshore rig activity which they said left Weir exposed if the uptake in rigs by US drillers is more subdued than expected. The broker said the full-year picture “remains unclear” and added prospects for the shares were largely dependent on the oil price.