Weir Group hails ‘transformational’ year as revenues jump

Weir Group, the Glasgow-headquartered engineering heavyweight, is forecasting further profit growth after a “transformational” year saw it notch up stronger sales and orders.

Weir is one of Scotland's best-known engineering businesses. Picture: Weir Group

Results for the 12 months to the end of December 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 £348 million.

However, the group took a £209m hit for exceptional items mainly due to its bumper acquisition of US-based Esco and restructuring costs. It meant that reported profit after tax was down 71 per cent from £184m in 2017 to £53m last year.

Chief executive Jon Stanton said: “The last year has been transformational for the group. With Esco, we completed our largest ever acquisition while also agreeing the sale of the Flow Control division.

“The result is a more focused and higher-quality global business that is simpler and stronger with more than 80 per cent of the group’s revenues from attractive upstream mining and oil and gas markets.

“Looking to the full year, we currently expect our mining and infrastructure markets to continue to benefit from positive industry fundamentals with oil and gas activity to improve modestly from current levels.

“Overall, assuming market and macro-economic conditions remain supportive, we anticipate the group will deliver another year of good constant currency revenue and profit growth, supported by strong execution of our ‘We are Weir’ strategy.”

The board is recommending a final dividend of 30.45p, resulting in a total dividend of 46.2p for the year, up 5 per cent, year-on-year.

Alistair Douglas, investment manager at Brewin Dolphin Scotland, said: “Weir Group’s shares have had a strong start to the year and this looks like a positive set of results from the business.

“The integration of Esco appears to be going well, and the recent sale of its Flow Control division will help Weir to reduce the debt taken on to complete this deal.

“Importantly, it backs up the group’s transformation plans of making the business simpler and more focused. Weir should also benefit over the coming years from the investments it has made in technology, which will drive further efficiencies and organic growth.”

Analysts at UBS, which has a “buy” rating on the stock, noted: “Given the strong exit rates for minerals orders and performance in the Esco business, we expect a slightly positive reaction to these results despite the shares having already performed strongly into these results.”