Weir Group sees worse Covid impact after Q1 orders fall

Weir Group said it expected the Covid-19 crisis to have an increasing effect on its business after orders fell 13% in the first quarter of 2020.

Original equipment orders dropped 22% and aftermarket business fell 10% in the three months to the end of March, Weir said.

The engineering group said oil and gas orders fell by a third as minerals orders declined 1%. In April oil and gas demand was weaker after the price of oil plunged. Weir said it expected the oil and gas division to post a loss in 2020 but to be cash positive.

Weir scrapped its final dividend for 2019 in March to preserve cash during the coronavirus crisis. The company said it expected to cut costs by about £75m in 2020 including cutting more than 800 jobs in the first quarter. Exceptional cash costs will be £25m.

Cancelling the dividend and other measures will preserve £140m in the first half, Weir said. The company said it had £500m of cash and committed lending facilities and was eligible for up to £300m under the UK government's commercial paper purchase programme.

Jon Stanton, chief executive, said: "While there remains a high degree of uncertainty over the full impact of Covid-19, we are taking a prudent approach to managing costs and conserving cash and are ready with a range of further actions should market conditions require them."

The FTSE 250 company said it was still to early to assess the full impact of the Covid-19 crisis on business this year.

Weir said: "After a resilient first quarter, we expect Covid-19 to have a greater impact in the second quarter … Given the uncertain environment no specific guidance is provided for the remainder of the year, although we will update as and when visibility improves."