26th Mar 2020 09:13
(Alliance News) - Weir Group PLC on Thursday said it has decided against paying a previously declared dividend as it looks to weather the Covid-19 pandemic.
Weir, which provides engineering services to industries such as oil & gas and mining, had declared a final dividend of 30.45 pence per share at the end of February. However, this has now been withdrawn.
The Aberdeen-based company said trading was in line with expectations across all divisions in the first two months of 2020, but the environment then changed "rapidly".
In oil & gas, order activity in North America began to slow due to the crash in the oil price and the subsequent drop in expenditure. This is expected to continue, Weir said, and it believes 2020 industry capital expenditure on exploration & production will fall 30% in 2019 in the region.
In Minerals and the ESCO businesses, demand has so far remained robust, but there has been a slowdown in March in original equipment orders.
Given the uncertainty, Weir is withdrawing all guidance for 2020. It is taking action to reduce costs, such as cutting all non-essential capex.
In oil & gas, Weir will be looking at a further USD30 million of annual cost reductions, including slashing 25% of the workforce in North America.
Weir has available liquidity of around GBP500 million, and the firm expects to remain "highly" cash generative despite the downturn.
Shares were 2.9% lower on Thursday morning in London at a price of 715.82 pence each.
By George Collard; [email protected]
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