Weir hammered by falling commodity prices

Cash-strapped oil companies have reacted to the tumbling valuation of Brent crude by drastically reining in spending. In North America, Weir's biggest market, the rig count fell by 61 per cent, causing demand for the engineer's pressure control equipment and services to almost completely dry up. Even after implementing £40m of cost savings, which included axing 40 per cent of the US workforce, divisional operating profit still slid more than three quarters to £58m.

Mining markets weren't very forgiving, either. During the year prices for iron ore, copper and gold fell 40 per cent, 26 per cent and 12 per cent, respectively, as appetite in key nations such as China continued to slow. That backdrop ultimately led capital expenditure in the mining sector to drop by about a quarter in 2015, triggering a 13 per cent slide in the minerals arm's operating profit.

As prospects for both of these core divisions look unlikely to reverse in the year ahead, management announced another round of cost-cutting measures. Further consolidation of manufacturing and service facilities is expected to generate £40m in savings, while plans to sell non-core assets could raise up to £100m.

More innovation may also be on the cards as the group's bosses do their best to ensure that Weir remains competitive during the downturn, and ready to excel when commodity prices recover. In the reported period, research and development spend rose 17 per cent and underpinned the launch of several new products designed to meet customer demand for increased efficiency and performance. Bloomberg consensus forecasts give adjusted EPS of 70.9p, down from 78.4p in 2015.