Weir readies oil and gas exit

Volatility in North America prompted the impairment, which pushed Weir into a pre-tax loss, after exploration and production companies in the region shifted their focus away from growth and limited capital expenditure, focusing on sustaining cash generation instead. Weir’s second half suffered as a result, which exacerbated an already stark situation of oversupplied pressure pumping markets, with frack fleet utilisation rates sitting at around 55 per cent. In response, Weir enacted a £35m cost savings programme that included reducing staff numbers by a fifth. 

Weir will instead concentrate on becoming “a mining technology pure play”. The minerals and ESCO mining equipment divisions accounted for nearly 80 per cent of turnover last year, with both segments achieving margin increases. A record £100m order for a new magnetite iron ore development in Australia helped drive up the value of original equipment orders for the minerals segment by 22 per cent.

Bloomberg consensus estimates forecast are for adjusted earnings per share of 94p for 2020, rising to 107p in 2021.