4th Nov 2013 08:26
LONDON (Alliance News) - Weir Group PLC Monday cut its guidance after warning that revenues and profits were slightly below expectations in the third quarter as it suffered further project delays in its minerals division and a more-gradual-than-expected recovery in its oil & gas markets.
The engineering company said it expects full-year profit before tax, amortisation and exceptional items to be between GBP425 million and GBP435 million at constant currencies, and a further GBP8 million to GBP12 million lower taking exchange rate move into account due to recent weakness in the US and Australian dollar and most emerging market currencies. It kept its guidance that margins will be broadly in line with last year, but cut its revenue guidance on a divisional basis.
In a trading update, the company said order input was 5% up on the year in the third quarter on a like-for-like basis, and up 7% including acquisitions. An increase in aftermarket orders is offsetting a decline in original equipment orders.
Order intake was up 4% in its minerals division, but it warned that mining markets remain challenged. It now expects full year revenues at the unit to be broadly flat on the year, and below the expectation it had in July, hit by project delays and unrest in South Africa. It sill expects second-half margins to be in line with the first half.
Order input in its oil & gas unit were up 33% in the third quarter, slightly below its hopes.
"Upstream markets expanded more gradually than anticipated, with US rig count actually declining over the third quarter and the number of wells drilled and completed in line with the second quarter despite oil prices remaining supportive of high activity levels. US gas prices remained below incentive levels," the company said in a statement.
It warned that full-year revenues at the unit are now expected to be "somewhat" lower than in 2012, and second-half margins will also be down on the year.
Its power and industrial unit order input fell 19% on the year, and while it still expects good full-year revenue growth, second-half sales will be below previous guidance. Full-year margins for the division will be down due to investments it is making.
The company's shares were down 6.8% at 2,103 pence Monday morning, the biggest decline on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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