Weir expects fall in oil and gas orders to continue

WEIR GROUP, the listed engineer, said it expects its full-year results to be more weighted towards the second half, as a drop in orders at its oil and gas division and weak trading at upstream businesses hurt second-quarter performance.

The Weir Group's Todmorden foundry

Weir shares fell as much as 5.7 per cent in early morning trading on the London Stock Exchange.

The Scottish company, which makes valves and pumps for the energy and mining industries, has been hit by a slowdown in North American oilfield activity as crude oil prices remain depressed and explorers and producers slash capital spending. The company said its oil and gas order input was 34 per cent lower in the first five months of 2015 than in the prior year period.

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Weir, whose North American operations accounted for about a third of its 2014 revenue, said it had temporarily suspended operations for a week at its Fort Worth, Texas facility to cut costs.

“The overall tone of the update suggests a possibly tougher second quarter than management had thought...

“Some improvement is expected in the second half, but the statement will likely create some small downside risk to consensus EPS,” UBS analysts wrote in a note.

Analysts at Liberum Capital said: “Trading in oil and gas is challenging. April and May saw a sequential decline.

“Order input for the first five months is minus 34 per cent. We forecast full-year revenue of minus 25 per cent, which may be nudged down.”

They added: “A takeover by a US leviathan is a threat to our Sell recommendation.”

Weir Group said in April that it planned to cut another 125 jobs, mostly in its North American oil and gas business. The company first began taking cost-saving measures in November.

The firm’s EU headquarters for minerals is in Todmorden and employs around 350 people.

Weir also has a controls and valves division in Elland employing around 200 people.