Profits halved at Weir as oil price slump delays customer spending

Engineering firm Weir Group said its pre-tax profit for the year nearly halved, as its customers continued to delay spending in order to weather the slump in oil prices.
The Weir Group PLC - Todmorden foundryThe Weir Group PLC - Todmorden foundry
The Weir Group PLC - Todmorden foundry

Weir, which makes pumps and valves used in oil rigs, said pre-tax profit for the year fell to £220m from £409m a year earlier. The company added that revenue fell 21 per cent to £1.92bn.

The group’s minerals division, the EU headquarters for which is in Todmorden, West Yorkshire and employs around 350 peopele, delivered a resilient performance.

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Keith Cochrane, chief executive of Weir, 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.

“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.”