The most eye-catching figure in these impressive results from Scottish pump-maker Weir was the operating margin, which rose from 14 per cent to 19.5 per cent. Although revenues in the core Minerals division actually fell 8 per cent, because the pump-maker’s mining clients in South America and South Africa ordered less new equipment, after-market sales are so profitable they more than made up for the shortfall helping both margins and profits in this division rise strongly.
The other reason for the margin improvement was rapid growth in Weir's SPM business, which sells pumps to shale gas and oil drillers in North America. This is a boom industry, and likely to remain so since the BP disaster in the Gulf of Mexico constrained deepwater drilling. Sales in the group's Oil & Gas division, including SPM, surged by £77m to £224m, most of which dropped straight through to profits. SPM is now a significant part of the group, accounting for $200m (£131m) of revenues in the first half, and management is now targeting SPM revenues of $400m this year, almost double the $206m reported last year.
Evolution Securities expects full-year pre-tax profits of £253m and EPS of 85.4p (£187m and 64.1p in 2009).
WEIR (WEIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,220p | MARKET VALUE: | £2.57bn | |
| TOUCH: | 1220-1222p | 12-MONTH HIGH: | 1,266p | LOW: 549p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 16 | |
| NET ASSET VALUE*: | 382p | NET DEBT: | 12% | |
| Half-year to 2 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 710 | 83 | 28.4 | 4.8 |
| 2010 | 775 | 136 | 45.7 | 6.0 |
| % change | +9 | +64 | +61 | +25 |
Ex-div: 6 Oct Payment: 5 Nov *Including intangible assets of £762m, or 362p per share | ||||
