Engineering company Weir Group reported full-year operating profit above analysts’ expectations, helped by a 67 per cent rise in its oil and gas business orders.
Weir Group, a maker of pumps and valves for mining and energy industries, saw operating profit rise 36.4 per cent to £292m for the year ended December 31. Analysts on average had expected an operating profit of £273.68m.
Total orders rose around 20 per cent, on a constant currency basis, to about £2.4bn, primarily helped by increasing activity in the North America oil and gas markets, Weir said.
Jon Stanton, CEO of Weir Group, said: “We worked closely with customers to identify opportunities to increase their productivity and invested early to take full advantage of improving conditions.
“That proactive approach saw Minerals deliver great order momentum, underlined by the consistent growth in its high margin, cash generative aftermarket and positioned it decisively for the anticipated upturn in the mining capital cycle.
“Oil and gas took full advantage of improving markets in North America to deliver an outstanding operating performance, while Flow Control turned the corner after a challenging first half.
“We have also made significant progress in developing the strategic framework that will drive sustainable medium term performance.
“Looking to 2018, assuming market conditions remain supportive and despite anticipated foreign exchange headwinds, we expect to deliver strong revenue and profit growth and further balance sheet deleveraging.”
Orders in its oil and gas business rose to £732m from £438m, with North America orders increasing 82 per cent.
The company said it expects to see a strong increase in constant currency revenues and profits with mid-teens operating margins in 2018 in the business as oil companies, especially in North America, boost their spending.
Weir expect its minerals business to also deliver moderately higher constant currency revenues and slightly higher full-year operating margins as miners continue to spend more. Orders in the business rose 11 per cent to £1.35bn in 2017.
The company said in October that it expected annual operating profit to be slightly lower than its previous estimate, due to higher costs and investments in the mining business.
Full-year revenue rose 27.7 per cent to £2.36bn, also above analysts’ estimate of £2.31bn.