(Alliance News) - Weir Group PLC on Tuesday reported lower profit from continuing operations for 2020, on revenue that was hit by disruption in the mining activity of customers.
The Glasgow-based engineering firm reported pretax profit of GBP184 million, down 2.6% from GBP189 million in 2019.
The 2020 results included costs from intangibles amortisation of GBP39.3 million, related to assets recognised through acquisitions and ongoing investment activities. Other exceptional items include Covid-19 related restructuring costs and an asbestos related provision of GBP11.8 million.
On an adjusted basis, pretax profit from continued operations were down 5.2% at GBP255 million from GBP269 million.
Revenue meanwhile, declined 3.9% year-on-year to GBP1.97 billion from GBP2.05 billion. On a constant currency basis, revenue was down 1%.
Segmentally, Weir's Minerals division reported a 0.6% decline in revenue to GBP1.47 billion, amid a 12% drop in orders from a fall in original equipment orders and Covid-19 related project delays.
In addition, the pandemic led to overall ore production, including gold, copper and iron dropping 15% in the second quarter of 2020, affecting machine utilisation, as well as a significant decline in infrastructure market demand due to construction shutdowns.
Meanwhile ESCO revenue, dropped 13% to GBP468 million, driven by temporary mine shutdowns and lower utilisation of mining machines.
ESCO is a Portland, Oregon-based mining equipment firm acquired by Weir in 2018 for USD1.29 billion.
In early February, Weir completed the sale of its Oil & Gas business to Caterpillar Inc, after agreeing to the same in October 2020.
On a constant currency basis, total orders dropped 13% year-on-year to GBP1.86 billion from GBP2.14 billion.
Weir did not declare a final dividend, as its markets continue to recover from Covid-19 disruption, and also to support further deleveraging.
However, the group said future payouts will follow Weir' new capital allocation policy, which includes a target to payout 33% of adjusted earnings per share through the cycle.
Looking ahead, Weir is targeting mid-to-high single digit revenue growth in the medium term.
"The group delivered a highly resilient performance in what was an extraordinary year," said Chief Executive Officer Jon Stanton.
"We've had a good start to 2021 and we expect to deliver growth in full year constant currency profits subject to any further disruption from the ongoing Covid-19 pandemic. More broadly, underlying conditions are favourable and with the strong platform we've created we're confident of outperforming our markets over the next three years and delivering sustainable long-term profitable growth," Stanton added.
Shares in Weir were down 3.7% at 1,932.50 pence on Tuesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Weir Group (WEIR)