Weir Group sees oil & gas profits at lower end of guidance

Mining industry equipment maker Weir Group on Tuesday reported flat pre-tax first half profits of £147m as “challenging conditions” in the North American oil and gas market weighed on results.

Operating profit fell 22% on a like-for-like basis to £172m on revenue of £1.3bn, down 4%. The dividend was lifted 5% to 16.5p a share.

Weir said oil & gas operating profit was now expected to be toward the lower end of its previous £55m - £95m range.

North America oil & gas orders fell 27% compared to the same period last year when there was a surge in pressure pumping refurbishment and replacement activity, Weir said.

“That left pressure pumping markets over supplied and the market has yet to soak up that excess capacity,” the company said in a statement.

“We are managing our cost base tightly in this environment where short-term visibility remains limited and we remain focused on the longer-term market opportunity with US shale expected to be the biggest source of global oil supply growth in the medium-term.”

Weir said market conditions in oil and gas and some project delivery deferrals in minerals, alongside growth and normal seasonal patterns, contributed to a £181m working capital outflow which it expected to partly reverse in the second half.