There's no disguising the fact that Weir (WEIR) is navigating through some choppy waters, a point borne out by wholly unfavourable comparables at the half-year mark. The Glasgow-based manufacturer of valves and pumps for the energy and mining industries revealed a double-digit slide in revenue, along with adjusted operating profit down a fifth from the 2015 out-turn. Margins will continue to be under pressure even though energy prices have stabilised to a degree, as the knock-on effects on industry capital budgets will invariably lag any nascent recovery.
There was better news on the mining front, with chief executive Keith Cochrane saying industry conditions are "normalising", with "an improving pipeline of brownfield opportunities". Unlike Weir's product lines for the oil and gas industry, which are largely linked to the well completion phase, its mining components are predominantly destined for existing production facilities. So even though excess capacity continues to exert downward pressure on prices, Weir's revenue streams are far more predictable in this area. Separately, it was announced that Weir's current finance director, Jon Stanton, will take the reins from Mr Cochrane come October.
Ahead of these figures, JPMorgan Cazenove were predicting adjusted profit of £210m for the December year-end, giving rise to EPS of 60.8p, against £259m and 78.5p in 2015.
| WEIR (WEIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,493p | MARKET VALUE: | £3.23bn | |
| TOUCH: | 1,490p-1,493p | 12-MONTH HIGH: | 1,591p | LOW: 765p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 602p* | NET DEBT: | 65% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 981 | 39.0 | 17.5 | 15.0 |
| 2016 | 866 | 25.4 | 11.0 | 15.0 |
| % change | -12 | -35 | -37 | - |
Ex-div: 22 Sep Payment: 4 Nov *Includes intangible assets of £1.54bn, or 713p a share | ||||
