Management at Weir Group (WEIR) is putting on a brave face despite "the most severe downturn in oil and gas markets for 30 years". Chief executive Keith Cochrane anticipates that recent remedial cost initiatives will deliver a "meaningful sequential improvement" through the remainder of 2015. But the engineering group's half-year figures make for grim reading: operating profits down 36 per cent to £129m on a 470 basis-point reduction in margins, and order input down a fifth on the corresponding period in 2014.
The collapse in Brent crude prices was the chief culprit, driving down revenues at the oil and gas segment by 30 per cent to £328m on a constant currency basis. Glasgow-based Weir could hardly be accused of timidity in its response. The group, which has large exposure to the US shale industry, has reduced its North American energy headcount by a third. Three sites were closed in the first part of the year, and another three are scheduled to shut between now and December. The cuts have been implemented along with changing shift patterns and additional leave furloughs. The end result is that Weir now expects to deliver annualised savings of £85m by the end of the year - up appreciably from last November's target of £35m.
JPMorgan Cazenove expects adjusted full-year EPS of 111p, against 141p for the previous year.
| WEIR GROUP (WEIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,542p | MARKET VALUE: | £3.3bn | |
| TOUCH: | 1,540-1,543p | 12-MONTH HIGH: | 2,786p | LOW: 1,454p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 651p* | NET DEBT: | 58% | |
| Half-year to 3 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 1.14 | 158 | 53.3 | 15 |
| 2015 | 1.00 | 38.7 | 17.5 | 15 |
| % change | -13 | -75 | -67 | - |
Ex-div: 8 Oct Payment: 6 Nov *Includes intangible assets of £1.58bn, or 739p a share. | ||||
