Weir ‘on target’ despite fall-off in fracking

Results showed first quarter orders at the pumps and valves maker sank by as much as a third in some areas, due mainly to the fall-off in orders from fracking projects, which were extraordinarily high in the same period last year.

Overall orders in oil and gas for the 13 weeks to the end of March fell 14 per cent compared to the same period last year, while those for original equipment slid 32 per cent.

Analysts said the fall in orders had been largely expected and some were actually heartened by the results. “I’m a still a little bit cautious on Weir but overall I think it was a very resilient set of numbers,” Juho Lahdenpera, analyst at Nomura, said.

“In minerals, there’s a general slowdown in the equipment area which we’ve seen across the industry but actually Weir’s orders fell less than some of its competitors,” he added.

Excluding the contribution from acquisitions, Weir said it expected revenue to be flat or slightly down for the year but it stuck by its latest guidance for low-single digit revenue growth this year.

Weir has profited from its expertise in pressure pumping, a part of the environmentally controversial fracking process. The industry as a whole has cooled due to a dip in natural gas prices.

Demand for equipment on the mining side has also weakened and the oil services sector as a whole is showing signs of strain. Weir’s shares have gained 15 per cent this year so far.

Weir said the upstream oil and gas market remained challenging, with average US rig count, an important indicator for the company, 12 per cent lower year on year. The engineer also announced that its chairman, Robert Smith, would step down at the end of the year to be replaced by Charles Berry, who will serve as deputy chairman until then.

Weir Minerals has a base in Todmorden, West Yorkshire.