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Engineer sees signs of recovery

Weir Group profits plunge on oil and gas woes

Weir Group suffered a slump in profits as the oil and gas downturn continued to weigh on performance.

The Glasgow-based company, whose operations are almost entirely outwith Scotland, returned to growth in the fourth quarter as its main markets showed signs of improvement.

It also benefited from on-going investment in new technology and long-term customer relationships.

Order input at £1.86 billion decreased by 8% on a constant currency basis primarily due to the significant downturn in oil and gas markets.

Revenue of £1.84bn was 11% down on a constant currency basis mainly reflecting the fall in orders in the oil & gas division. Reported revenues fell 2%, supported by a foreign exchange benefit of £183m.

Profit before tax from continuing operations (before exceptional items and intangibles amortisation) fell 22% to £170m (2015: £219m). The reported profit before tax from continuing operations (including exceptional items and intangibles amortisation) of £43m compares to a loss before tax of £174m in 2015.

Operating profit from continuing operations (before exceptional items and intangibles amortisation) decreased by £44m or 17% to £214m on a reported basis.

The board is recommending a final dividend of 29p resulting in a total dividend of 44p for the year, unchanged from 2015.

 Chief executive Jon Stanton said: “In recent months I have been encouraged by macro commodity trends and the signs in our mining and oil and gas markets that point to a cyclical upturn. 

“Our new strategic priorities will strengthen our capabilities and enable us to fully capture opportunities presented by improving markets, although there is a range of views about the precise shape of the recovery in 2017. 

“At a group level, we expect to deliver strong cash generation and good growth in constant currency revenues.  Profit growth will be further supported by foreign currency translation benefits, partly offset by incremental investments in people and technology.”

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