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Customers delay orders

Weir profits halve on oil price slump

Keith CochranePumps and valves firm Weir Group saw pretax profit almost halved as the oil price slump created “unprecedented” market challenges.

Annual pretax profit fell 47% from £409 million to £220m on revenue down 2% to £1.92 billion.

The company also saw strong cash generation, with free cash flow up 67% to £132m. Net debt was also reduced by £36m, despite a £48m foreign exchange headwind, and the company said up to £100m would be realised from the disposal of non-core assets in the 2016 year.

Keith Cochrane, chief executive, said: “Despite market challenges which are unprecedented in recent years, Weir has delivered a resilient performance in minerals, maintained leadership and market share in oil & gas, and created an additional platform for growth with the new flow control division.

“As Weir has always done, we adapted quickly to market conditions. Costs were aggressively reduced while the cash generative nature of the business supported continued investment in our strategic priorities.

“Given ongoing market conditions, 2016 will be another challenging year. As a result, we are planning for a further reduction in constant currency Group operating profits, driven primarily by lower activity levels in upstream oil and gas markets.

“We will continue to invest for the medium term supported by our aftermarket-focused business model, further cost reduction initiatives, non-core asset disposals and a clear focus on cash generation, to ensure we benefit fully and quickly when markets improve.”

The board is recommending a standstill final dividend of 29p resulting in a total dividend of 44p for the year.

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