Weir waiting on oil and gas markets to pick up

Scottish engineering firm Weir has advised that full year profits are likely to come in below market expectations if there is no pick-up in the upstream Oil & Gas markets.

The cautious outlook statement overshadowed a solid set of interim figures from the group. Revenue in the 26 weeks ended June 29th rose 29% to £1,031m from £1,325m the year before. Order input failed to keep pace with revenue growth, however, advancing 8% to £1,312m from £1,220m the year before.

Profit before tax, excluding exceptional items and intangibles amortisation, jumped 27% to £226m from £178m in the first half of 2011.

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Reported profit before tax was £202.8m, up from £166.8m the year before.

Adjusted earnings per share (EPS) were up 27% to 76.4p from 60.1p in 2011, while reported EPS rose 24% to 69.9p from 56.3p.

"Effective execution of our growth strategy in Minerals and Power & Industrial and a good first contribution from acquisitions have offset the challenging pressure pumping market conditions faced by Oil & Gas,"said Keith Cochrane, Chief Executive of Weir Group.

"In the second half we anticipate a strong performance from the Minerals and Power & Industrial Divisions and some improvement in Oil & Gas upstream pressure pumping after-market demand relative to the second quarter, although the timing of any improvement remains uncertain," Cochrane added.

Assuming no significant change in macro economic conditions, full year profit before tax, amortisation and exceptional items is expected to be between £440m-£460m, with the performance likely to be at the low end of the range if there is no improvement on the second quarter's performance in upstream Oil & Gas.

The current median forecast for Weir's profit before tax among a group of 18 brokers covering the stock is £453.5m.

The interim dividend per share has been lifted to 8p from 7.2p at the half-way stage last year.

JH