29th Apr 2015 06:52
LONDON (Alliance News) - FTSE 100-listed engineering company The Weir Group PLC on Wednesday said its order input in the first quarter was dragged lower by weak demand in oil and gas markets, which it expects to continue in the second quarter and which will result in further cost cuts being made.
Weir said group order input in the first quarter was down 9%, with revenue declining broadly in line with the fall, dragged lower by a 23% fall in order input from upstream oil and gas markets, where capital expenditure levels have come under pressure from the declining oil price.
The group said its operating margin in the quarter was down 400 basis points, largely due to decline in its North American oil and gas business.
The hit taken from the weakness in oil and gas end markets means the company is intending to take further cost-cutting actions in order to mitigate the impact on profitability, with a further GBP10 million in cost cuts set to be made in its oil and gas business.
Weir said its minerals business has remained resilient, with order input rising 5% and continued aftermarket growth partially offsetting the oil and gas-related challenges.
"While mining markets remained subdued, the performance of the minerals division once again demonstrated its resilience. Trading conditions in oil and gas markets were challenging through the quarter with a steeper decline in the North American rig count than the market had anticipated," said Weir Chief Executive Keith Cochrane.
"OIl and gas activity levels are still falling and we expect a further decline in divisional revenue in the second quarter. In response, the group is taking further actions to support profitability, including additional workforce reductions and service centre consolidations," Cochrane added.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Weir Group