Weir Group Regulatory News (WEIR)

12 Jan 2010 07:00



12 January 2010

THE WEIR GROUP PLC

 Trading Statement

The Weir Group PLC today issues the following trading statement in respect of the 531 weeks ended 1 January 2010.

During the final quarter, the Group continued to perform well, with strong profitability and more robust input trends. 

Profits have benefited from the proactive management of our cost base and favourable volumes at Weir SPM, partly offset by an increased interest charge. In addition we have also seen a continued positive foreign currency translation effect on revenues and profits. 

Order input2 in the final quarter was broadly in line with the third quarter and for the 531 week period was 18% lower than the prior year, compared to 22% lower for the 39 week period. Aftermarket input has continued to demonstrate resilience during the quarter.

Divisional Overview

Minerals input2 was 20% lower for the 531 week period, compared to 22% lower at the end of the third quarter. The final quarter benefitted from some significant original equipment awards in South America. Input levels do indicate a bottoming of the market but the timing of sustained recovery is still open.

Oil & Gas input2 was 8% lower compared to 17% lower at the end of the third quarter. This improving trend was principally due to a good final quarter for Weir SPM with growth in after market sales reflecting a modest rise in rig count and increased product use in more aggressive shale environments across North America. Forward visibility however, remains limited.

Power & Industrial input2 was 8% lower compared to 10% lower at the end of the third quarter, reflecting continued strength in power orders most notably from China. 

Material Events

On 11 January 2010 the Group announced the appointment of Jon Stanton as Group Finance Director. He will join in the Spring following completion of existing client commitments. 

Financial Position

Cash generation in the final quarter remained strong. 

To further improve the Group's financial flexibility, on 11 January 2010, the Group issued, through a Private Placement, the equivalent of US$250m of five year (US$110m) and eight year (US$140m) fixed rate notes in a combination of US$ and Sterling at an average US$ equivalent interest rate of 4.8%. The proceeds will be used to repay existing borrowing facilities. Associated floating-to-fixed interest rate swaps have been cancelled resulting in an increase in the expected 2009 interest charge.  While the Group continues to hold committed revolving credit facilities totalling £625m this issuance broadens the Group's funding sources and maturity profile.

Outlook

As a result of the Group's good performance in the final quarter, the Board now expects profit from continuing operations before tax, intangibles amortisation and exceptional items for the 531 weeks ending 1 January 2010 to increase to around £185m3.  

While the Group enters 2010 in a strong position, with some positive emerging trends across our principal end markets, the lower opening order book and uncertainty over speed of recovery means that it remains too early to call any significant upside to the 2010 outlook.

The Group's preliminary results for the 53 weeks ended 1 January 2010 are scheduled to be announced on 9 March 2010.

Notes:  

1 The comparison of 53 weeks ended 1 January 2010 with 52 weeks in the prior year period has no material impact on the year-on-year trends.

2  Input is reported on a constant currency basis, including the impact of prior year acquisitions and disposals.

3  Group guidance for continuing operations profit before tax, intangibles amortisation and exceptional items at 2 November 2009 was the upper end of analyst forecasts as at 30 October 2009 which ranged from £151.6m to £177.1m. Reuters Knowledge Consensus at 8 January 2010 for profit before tax, intangibles amortisation and exceptional items was £176.6m with a range between £175.0m and £188.2m.