Uncertainties for the outlook have been expressed. Order input on a like for like basis was 1% lower when excluding recent acquisitions. Original equipment orders were 2% lower (13% lower on a like for like basis). Order input at its Oil & Gas business declined by 7%. Largely thanks to acquisitions, group net debt has risen from £673 million as of the end of 2011 to £844 million. The group focuses on business sectors which are highly dependent on economic growth. The economic outlook remains uncertain, with concerns over Europe prominent. The Gulf of Mexico oil spill and nuclear power station difficulties in Japan have raised some uncertainties.
Order input 8% higher on a constant currency basis to £1.31 billion. Order input on a like for like basis was 1% lower when excluding recent acquisitions. Revenue grew by 29% to £1.33 billion. Profit before tax from continuing operations before exceptional items and intangibles amortisation increased by 27% to £226 million. An interim dividend of 8.0 pence was announced, an 11% increase from H1 2011. Full year profit before tax, amortisation and exceptional items is expected to be between £440m-£460m with the low end of the range reflecting no improvement on Q2 in upstream Oil & Gas.
Half year results: The update broadly disappointed investors, with the share price down by over 5% in early trading. Whilst the performance during the period proved to be generally in line with expectations, uncertainties over the outlook increased. Although management anticipates some improvement for its important Oil & Gas upstream pressure pumping aftermarket, it also highlighted the uncertain timing of any improvement. Frac pump overcapacity was expected to lead to minimal original equipment orders well into 2013. In all, a better performance for its Mineral and divisions could potentially be more than offset by a worse than previously expected performance for its Oil & Gas division. On balance, the group's position in supporting major resource companies combined with expected long term demand for resources weighs against current concerns for the global economic outlook,
In 1872, two brothers, George and James Weir, founded the engineering firm of G & J Weir. Over the past 15 years the company has turned itself from a basic pumps maker into a more broadly based "infrastructure equipment" supplier, with 2,000 products including valves and specialised actuators as well as pumps. Approximately one third of Weir’s staff of slightly more than 12,000 are engineers – with 90% of the total being based outside the UK, particularly in India, Australia and Brazil. The group is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
In spite of the poor market reaction to Weir's interim figures on Tuesday, Investec has retained its 'buy' recommendation for the Scottish engineering group, saying that the results 'should be taken positively'.
The broker uses Weir's international peers to derive its price target (currently trading at 12.5 times next year's earnings), which is lifted from 1,770p to 1,850p.
Galvan Research and Trading has labelled engineering group Weir as a 'buy', saying that there is 'rebound potential' in the shares.
"The underperformance from Weir Group's oil and gas division earlier in the year was taken literally by the markets as a signal to sell the stock, with the 25% profits gain for the previous year also ignored," said Galvan's head of research Andrew Gibson.
"But the reiteration of full-year guidance and Jefferies's positive appraisal has caught the markets on the hop, and in the view of the Galvan Research team merits a 'buy' rating for Weir Group at current levels," he said.
0628 GMT [Dow Jones] Nomura initiates Weir Group (WEIR.LN) at reduce with a 1350p target. Says it expects Weir's FY 2012 revenues of its oil and gas division to fall 6% against consensus of 0% as it expects oil and gas Original Equipment volumes to fall 20%, causing 60 basis points of price pressure. Adds it expects service to slow from around 40% per annum in FY2010-2011 to 7% in FY2012 and 4% in FY2013. Nomura's estimated FY 2012 oil and gas margin is seen declining 130 basis points (against consensus for an increase of 90 basis points). Shares closed Tuesday at 1502p. (firstname.lastname@example.org)
There seems to be a huge difference in share price from this time last year, is there low expectations for the interim results on 31st July? I understand analysts aren't expecting massive growth but does that warrant a 25% lesser market cap? Or is it something else like caught up in a technical **** storm?
INVESTORS added £140 million to the stock market worth of Weir Group after the Glasgow engineer issued what an analyst reckoned amounted to an earnings upgrade.
Ahead of briefings with analysts yesterday Weir said it intended to re-confirm the guidance for its full year results which the company issued in May.
The group said then it had enjoyed a strong performance during the first quarter and continued to expect a year of "further good progress" in line with previous guidance.
However, investors were rattled by news in last month's interim management statement that order input in the key oil and gas division fell 26% on a like-for-like basis in the quarter. Weir noted then there was uncertainty about the market for pumps used in fracking for gas, following falls in the price of the commodity.
Yesterday, the company highlighted a strong performance by its minerals division.
The company told investors: "The minerals management team will highlight the market leadership positions in the division's core markets; its broadening and differentiated product and service offerings, and product innovation; and a number of future growth opportunities which are well developed."
Weir said the company's success in winning £1 billion orders for new equipment since January 2010 underpinned the division's ambition of doubling divisional 2011 operating profits by 2016.
Harry Phillips at Oriel Securities said: "They've put in a very punchy growth target for their minerals business which is in our view more than just a reiteration of guidance for the current year. It's a surprisingly up-tempo target they've set."
The update may help to offset concerns about the outlook for Weir generated by last month's IMS. The shares closed 66p firmer at 1503p.
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