25th Feb 2015 07:26
LONDON (Alliance News) - Weir Group PLC Wednesday increased its full-year dividend, saying it was for the 31st consecutive year, despite reporting a small drop in earnings, but warned it is preparing for a "significant reduction" in revenue and operating margins in 2015.
For the year ended January 2, the oil and gas service company reported a rise in revenue to GBP2.77 billion from GBP2.27 billion in 2013, caused by the company's investment in new products which has "driven" revenue growth.
Weir's operating profit for the year was GBP450 million, slightly down from GBP467 million a year earlier, leading to a profit before tax of GBP409 million, also a slight drop from GBP418 million.
Despite the small drop in earnings, the company increased its dividend to 44.0 pence per share, compared to the 42.0 pence paid in 2013.
"While visibility in oil and gas remains limited, it is clear that the group's strategic progress and cost initiatives will only partly offset the impact of a substantial reduction in demand and the associated pricing pressure," said Chief Executive Keith Cochrane.
"As a result we are planning for a significant reduction in constant currency group revenues and lower operating margins in 2015," he added.
The company said that during 2014, it made GBP46 million in procurement savings, and said it will deliver GBP20 million worth of savings in 2015 as part of its savings programme announced in November to try and save a total of GBP35 million per year. Weir also reduced its North American workforce by 22% in 2014.
Total exceptional items in 2014 totalled GBP212 million, primarily driven by GBP49 million of efficiency review costs and GBP160 million in non cash impairment caused by the slide in the oil price, it said in a statement.
"In terms of outlook for 2015, we will continue to make progress in delivering our strategy while responding to market conditions as they evolve. The group has already acted following steep price declines in key commodities, particularly oil, taking additional measures to reduce operating costs," said Cochrane.
By Joshua Warner; [email protected]; @JoshAlliance
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