Glasgow-based engineer Weir Group today said it plans to cut a further £40 million of costs this year after seeing its annual profits almost halve.
The firm, which said it is facing “unprecedented” market challenges, delivered annualised savings of £110m during the year to 1 January as orders fell across the oil and gas and minerals sectors.
Overall revenues dropped 21 per cent to £1.9 billion, with pre-tax profits tumbling by 46 per cent to £220m as a result.
Chief executive Keith Cochrane said: “Despite market challenges which are unprecedented in recent years, Weir has delivered a resilient performance in minerals, maintained leadership and market share in oil and gas, and created an additional platform for growth with the new Flow Control division.”
This arm has been formed from the group’s previous power and industrial business and will incorporate the downstream-orientated pump operations.
Cochrane added: “As Weir has always done, we adapted quickly to market conditions. Costs were aggressively reduced while the cash generative nature of the business supported continued investment in our strategic priorities.
“Given ongoing market conditions, 2016 will be another challenging year. As a result, we are planning for a further reduction in constant currency group operating profits, driven primarily by lower activity levels in upstream oil and gas markets. We will continue to invest for the medium term supported by our aftermarket-focused business model, further cost reduction initiatives, non-core asset disposals and a clear focus on cash generation, to ensure we benefit fully and quickly when markets improve.”
Following the drop in profits, Weir said it was planning to hold its total dividend for the year steady at 44p a share, with a proposed final dividend of 29p due to be paid on 6 June.