Weir shares fall on profit warning despite oil boost

Shares of Glasgow-based engineering giant Weir Group fell almost 7% after it said in a trading statement it expects operating profits to be slightly lower than previously indicated “as a result of minerals project phasing, investment in growth and one-off plant reconfiguration costs.”

Nonetheless, Weir said its third quarter group orders increased 21% driven by “customer and technology focus in improving markets.”

Weir said oil and gas orders increased 59% “leveraging the division’s market leading pressure pumping position.”

Minerals orders rose 12% “with increased focus on customer production and efficiency improvements.”

Flow control orders fell 2% “reflecting bottoming of later-cycle markets, with aftermarket up 7%.”

Weir CEO Jon Stanton said:  “In 2017 we continue to build on our leadership positions in rapidly improving main markets whilst investing to maximise the significant opportunities ahead of us.

“As the North American onshore oil and gas industry continues to demonstrate its increased relevance as a source of global supply, our oil & gas business is fully leveraging its market leadership position in support of higher activity levels among customers.

“While international markets remained challenging the division has accelerated in 2017 as we expected and is well placed to continue to fully capture future opportunities.

“In minerals our brownfield solutions delivered good order growth with an increasing pipeline of future opportunities.

“Profits will be slightly lower than previously indicated due to project phasing, incremental investment in growth and one-off plant reconfiguration as we ensure the business is well set to benefit from increased momentum in 2018 and beyond.

“At a group level, we anticipate strong growth in full year constant currency revenues and profits. 

“Minerals profits are expected to be slightly lower than previously indicated while expectations for oil & gas and flow control are unchanged.”