Weir's (WEIR) shares experienced a minor sell-off following the release of the engineering group’s half-year results, presumably in response to a 27 per cent contraction in its oil and gas orders compared with the first half of 2018. "Oil and gas markets in North America continued to be challenging," chief executive Jon Stanton acknowledged, as refurbishment and replacement activity came down significantly. Pressure pumping markets have been oversupplied, and the market “has yet to soak up that excess capacity”, Weir says.
Oil and gas accounted for a quarter of Weir’s first-half revenues, and full-year divisional operating profits are now expected to sit at the lower end of its previous £55m-£95m guidance. But its acquisition of ESCO, an equipment provider for large mining machines in July 2018, helped the group lift its share of mining-related orders to 75 per cent (from 71 per cent last year), with recurring and higher-margin aftermarket sales at almost 80 per cent of total revenues. The acquisition appears to be bedding in well, with annualised cost synergies already hitting $20m (£16.4m) against Weir’s $30m medium-term goal.
Bloomberg consensus forecasts expect full-year 2019 adjusted EPS of 98.5p, rising 116p in 2020.
| WEIR (WEIR) | ||||
| ORD PRICE: | 1,510p | MARKET VALUE: | £3.92bn | |
| TOUCH: | 1,510-1,511p | 12-MONTH HIGH: | 2,032p | LOW: 1,223p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | na | |
| NET ASSET VALUE: | 809p* | NET DEBT: | 63% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.07 | 93.4 | 29.1 | 15.75 |
| 2019 | 1.33 | 106 | 20.3 | 16.50 |
| % change | +25 | +13 | -30 | +5 |
| Ex-div: | 10 Oct | |||
| Payment: | 5 Nov | |||
| *Includes intangible assets of £2.14bn, or 826p a share | ||||
