Improving oil and gas receipts boosted half-year results at Scottish pump manufacturer Weir (WEIR), but that was more than offset by currency movements. Adjusted operating profits fell 7 per cent to £201m, but would have grown 4 per cent without the foreign exchange hit.
Weir previously flagged weak demand for its kit from the retrenching mining industry, which was exacerbated by the impact of prolonged industrial action in South Africa. That weighed on the group margin, which fell from 18.1 to 17.6 per cent.
The good news is that Weir's total order book has increased 9 per cent since the year-end, helped by a rise in the number of active US oil rigs. The engineer also benefited from continued growth in the US shale energy market; sales of replacement parts have been particularly buoyant. Adjust for currency effects and the oil and gas segment delivered double-digit increases in both revenues and cash profits, while order input was up by an impressive 40 per cent. Weir has boosted the division's performance by upping research and development spending and expanding the related product offering. With Brent crude trading well above $100 a barrel, prospects remain bright for the remainder of the year.
JPMorgan Cazenove anticipates adjusted EPS of 147p for 2014, rising to 159p next year.
| WEIR GROUP (WEIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,569p | MARKET VALUE: | £5.5bn | |
| TOUCH: | 2,559-2,562p | 12-MONTH HIGH: | 2,848p | LOW: 2,036p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 687p* | NET DEBT: | 51% | |
| Half-year to 28 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.2 | 165 | 56.6 | 8.8 |
| Half-year to 4 July | ||||
| 2014 | 1.1 | 158 | 53.3 | 15.0 |
| % change | -5 | -5 | -6 | +70 |
Ex-div: 8 Oct Payment: 7 Nov *Includes intangible assets of £1.54bn, or 722p a share. | ||||
