Glasgow group's warning
Weir Group shares slip on profits alert
Jon Stanton: investing to maximise significant opportunities
Shares in Weir Group plunged 6% to 1,969p in early trade after it warned that profits will be slightly lower as a result of phasing of a minerals project, investment in growth and one-off plant reconfiguration costs.
The cautionary tone came in spite of a 21% rise in third quarter orders over the prior year period. Group-wide aftermarket orders increased 22% with original equipment up 21%.
These trends reflected increased activity levels in North American onshore oil and gas markets and demand from miners for solutions that delivers productivity gains.
Revenues, on a constant currency basis, were significantly ahead of the prior year, albeit Minerals and Flow Control saw some project work being re-phased into the fourth quarter and early 2018.
Group operating margins were higher than the prior year principally driven by increased activity levels within the Oil & Gas division.
Jon Stanton, chief executive of the Glasgow-based engineer, commented: “In 2017 we continue to build on our leadership positions in rapidly improving main markets whilst investing to maximise the significant opportunities ahead of us.
“As the North American onshore oil and gas industry continues to demonstrate its increased relevance as a source of global supply, our Oil & Gas business is fully leveraging its market leadership position in support of higher activity levels among customers. While international markets remained challenging the division has accelerated in 2017 as we expected and is well placed to continue to fully capture future opportunities.
“In Minerals our brownfield solutions delivered good order growth with an increasing pipeline of future opportunities. Profits will be slightly lower than previously indicated due to project phasing, incremental investment in growth and one-off plant reconfiguration as we ensure the business is well set to benefit from increased momentum in 2018 and beyond.
“At a group level, we anticipate strong growth in full year constant currency revenues and profits. Minerals profits are expected to be slightly lower than previously indicated while expectations for Oil & Gas and Flow Control are unchanged.”