Weir warns over profits amid tough Middle East market

Glasgow-based engineering giant Weir Group today warned its annual profits would fall short of City hopes amid tougher trading conditions in the Middle East.

Weir Group is facing tougher conditions in the Middle East oil and gas market. Picture: Joe Raedle/Getty Images

New chief executive Jon Stanton, who took over the reins from previous boss Keith Cochrane at the start of last month, said the firm had seen signs of improvement in its core markets during the third quarter, with orders from the minerals sector returning to growth, and oil and gas customers in North America beginning to plan for “higher activity levels next year”.

But he said that, with little recovery seen in the pricing environment, combined with “tougher conditions in the Middle East”, the group’s oil and gas division is expected to turn in a slight loss for the year as a whole.

Stanton added: “Therefore, including a small further foreign exchange benefit, the group’s full-year 2016 profits are expected to be slightly lower than current market expectations.”

During the three months to the end of September, Weir saw order input at its oil and gas arm fall by 10 per cent as customer activity declined compared with a year earlier. Original equipment orders tumbled 24 per cent, with aftermarket orders down 6 per cent.

Challenging conditions in the mining sector led to a 7 per cent decline in order input at the group’s minerals division, driven by a 28 per cent drop in original equipment orders, which the group said reflected a “strong prior year comparator” that included a number of significant project wins.

However, Stanton insisted that Weir – which is on track to deliver annualised cost cuts of £160 million since the end of 2014 – was well placed to benefit as markets recover and has a “robust platform for long-term growth”.

The group was founded in 1871 and employs about 14,000 people around the world.

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