Weir rally overdone

There was a clear shift in the contribution last year from equipment sales toward higher-margin aftermarket work - almost two-thirds of orders were for spares. It was particularly noticeable at the oil and gas division where overcapacity in the fracking industry contributed to a 42 per cent slump in equipment sales. Demand for spares jumped by more than a fifth. Profit here still fell 29 per cent to £181m, but aftermarket orders surged in the third quarter and were up by over half in the final three months of the year. An equally dramatic increase is expected at the beginning of 2014, albeit against easy comparatives. Sequential growth after that should be far more modest, admits finance boss John Stanton. "Gas prices have risen recently, but we need a sustained increase for gas drilling to pick up," he says.

Minerals stood out again. Capital expenditure in the mining industry tumbled 16 per cent in 2013, and another double-digit decline is likely this year. Yet equipment orders fell just 6 per cent at Weir, and a small increase in spares orders edged like-for-like profits up 4 per cent to £269m. There'll be extra aftermarket work in 2014, too, as a number of new mines are finally commissioned, and divisional revenue at constant currency should be slightly ahead compared to 2013.

Overall, underlying pre-tax profit fell 5 per cent to £418m, in line with expectations. UBS expects the same again in 2014, giving adjusted EPS of 145.3p (from 44.9p in 2013). Those forecasts include a currency headwind, put at 7 per cent by Mr Stanton.