Shares in Weir (WEIR) fell 9 per cent after the industrial pump maker warned investors to brace themselves for a "significant reduction" in revenues and margins as energy companies slash their capital expenditure. The group, which makes valves and pumps for the energy and mining industries, has cut 22 per cent of its US workforce in a bid to reduce operating costs. Management also expects to garner £35m of annualised savings from factory closures and headcount reductions, but doesn't expect that to fully offset the impact of plummeting oil prices.
This is particularly bad news considering it was Weir's oil and gas division that largely salvaged the group's results for 2014. Strip out currency headwinds and £212m of exceptional costs - including a £160m hit from an oil-related impairment charge against its pressure control unit - and pre-tax profit was up 7 per cent. Meanwhile, at constant currencies, sales and orders both grew by 9 per cent as strong oil and gas markets earlier in the year offset troubles in the mining sector.