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Weir orders slump; Faroe; Direct Line; Regus

Keith CochraneWeir Group has cut jobs as part of a further £25 million of savings as it responds to the lower oil price environment.

The savings take the total to £110m on an annualised basis and follow a 25% fall in like-for-like equipment orders and 33% slump in aftermarket orders in the third quarter.

Weir chief executive Keith Cochrane (pictured) said challenges “intensified’ but the company expects full year earnings line with expectations.

He said: “The challenges in our end markets intensified during September and October. Mining customers took measures to preserve cash by delaying investments, reducing purchases of consumables and mothballing or curtailing production volumes at higher cost mines.

“Trading conditions in oil and gas markets were impacted by a double-digit decline in North American rig count as WTI oil prices fell below $50. In response to these market-issues, the group has taken further action to support profitability.

“These measures will generate an additional £25m in annualised cost savings and include additional workforce reductions and service centre consolidations. We continue to invest in technology to further extend our global leadership positions, ensuring the group is positioned to fully benefit from the good long-term structural growth prospects of our end markets.

“Looking ahead, we expect trading conditions to remain challenging through the fourth quarter with further declines in upstream oil and gas activity.  We will focus on delivering further cost and procurement savings, alongside strong cash generation.  We continue to expect a sequential improvement in our second half performance with our full year earnings expectations broadly in line with market consensus.”

Andrew Neilson, director of strategy and corporate affairs will become interim company secretary with effect from 18 December.  The appointment is in addition to his other responsibilities.

Faroe Petroleum said the Blink exploration well in the Norwegian Sea in which it has a 25% stake, has failed to reveal oil.

 Graham Stewart, chief executive, said: “Whilst the results of the Blink well, the last in this year’s campaign, are disappointing we look forward to advancing the options for monetising the significant combined Pil, Bue and Boomerang discoveries, on which the Blink well result has no bearing.

“The Company continues to perform very well despite continuing low oil prices, with low operating costs, a good cash position and strong production rates. Faroe’s consistent strategic focus and prudent approach to financial management have ensured that we have a strong balance sheet and are well placed to progress our portfolio work programme and take advantage of further good quality emerging opportunities.”

Direct Line said gross written premiums for ongoing operations were up 1.3% for the first nine months with 4.1% growth in Motor partially offset by Home, and for the third quarter up 3.1% with 6.8% growth in Motor.

Paul Geddes, chief executive, said: “Our strategy is progressing well and we continue to see the benefits of our programmes to improve customer experience and differentiate our brands, with a strong performance in motor helping us deliver overall growth in our gross written premium. At the same time, we have also realised further efficiencies throughout the business, with costs reducing 7% compared to the first nine months of last year.

“We will continue to build on these developments through investment in the future capability and technology of our business, with the aim of making insurance much easier and better value for our customers.”

Regus, the serviced offices company,  said group revenue in the three months to 30 September increased17.3% to £478.8m. For the nine months it rose 16.7%.

Underlying cash generation has been strong, increasing 54% year-on-year to £137.8m (nine months to September 2014: £89.6m), reflecting the good trading performance.

The pipeline of openings remains strong and, with a number of late 2015 openings now scheduled to open in early 2016, visibility on net capital expenditure for the whole of 2015 is approximately £250m, representing  about 550 locations.

The company has £65m available for its 2016 growth pipeline. It is focused on making increased use of partnering in new investments, reducing capital expenditure per location and, thereby, de-risking and improving financial returns.

It said it is pleased with the continued strong performance of the business which remains in line with management expectations.

“Our investments are continuing to deliver attractive returns well ahead of our cost of capital.

“Looking forward to the remainder of 2015, we remain confident in the outlook. Our business is performing strongly and our network investment continues to deliver good returns and drive long-term shareholder value.”

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