Weir Group Regulatory News (WEIR)

3 Nov 2009 07:00



THE WEIR GROUP PLC

INTERIM MANAGEMENT STATEMENT

The Weir Group PLC today issues the following interim management statement in respect of the 13 weeks ended 25 September 2009.

During the third quarter, the Group has continued to perform well despite ongoing trading uncertainties in many of its markets. As expected revenue was adversely impacted by first half input trends, although operating results benefited from a greater proportion of aftermarket sales, the realignment of the cost base at a number of operations and a continued positive foreign currency translation effect. Order input1 for the 39 weeks ended 25 September 2009 was 22% down against the same period in 2008 (H12: -21%), with aftermarket input1 down 4% (H12: -2%). 

Divisional Overview

Minerals

The minerals market continues to be impacted by the general economic slowdown and reduced levels of capital spending. Divisional order input1 for the 39 weeks was down 22% compared to the same period in 2008 (H12: -20%) with original equipment orders down 39% (H12: -37%) offset by a stabilisation in aftermarket input reflecting the resilience of our business model. Whilst increasing enquiry levels represent the first signs of improving market conditions, the timing of conversion into firm orders remains open.

Oil & Gas

Divisional order input1 for the 39 weeks was down 17% compared to the same period in 2008 (H12: -12%) with upstream activities continuing to be impacted by lower natural gas prices and rig count offset by continued good progress in the downstream businesses. Weir SPM remains on track to deliver against our revenue and margin expectations for the year and we are becoming more confident that we have seen a bottoming out of this market, although any recovery is likely to be slow. The division's service operations continued to perform well with good levels of activity in the North Sea and North America offsetting the continued soft market in Dubai. 

Power & Industrial

The division continues to perform well with order input1 for the 39 weeks down 10% compared to the same period in 2008 (H12: -21%) following a good level of power orders in the quarter from China and first input recognised on the 15 year Canadian Naval Engineering contract. Across the division, power enquiry levels continue to be strong, although the industrial markets remain sluggish.

Material Events

Following the announcement of 16 September 2009, Keith Cochrane took over from Mark Selway as Chief Executive on 2 November 2009. Mark will remain with the Group until 31 December 2009. The search for a new Group Finance Director is progressing.

Financial Position

Net debt at 25 September 2009 was below 26 June 2009 (£200m) benefiting from strong operating cashflow generation.

Outlook

The Group's strong performance in the quarter and ongoing foreign currency translation benefits gives increased confidence in the outlook for the 53 weeks ending 1 January 2010. The Board now expects an increase in current year profit from continuing operations before tax, intangibles amortisation and exceptional items to around the upper end of current analyst forecasts3. 

Notes:  

1  Input is reported on a constant currency basis.

2 H1 refers to order input for the 26 weeks ended 26 June 2009 compared to the 26 weeks ended 27 June 2008.

3 Reuters Knowledge Consensus at 30 October for profit before tax, intangibles amortisation and exceptional items was £166.6m with a range between £151.60m and £177.10m.