24th Feb 2016 07:33
LONDON (Alliance News) - Weir Group PLC Wednesday reported a substantial pretax loss in 2015 after impairments, a fall in revenue, and lower operating margins negatively impacted its results, as the company warned 2016 is expected to be "another challenging year".
The engineering company, which serves the natural resources and power sectors, reported a GBP199.8 million loss before tax from continuing operations in the year ended January 1, swinging from a GBP149.1 million profit in 2014.
Despite the loss, Weir maintained its dividend in 2015 at 44.0 pence per share.
Before exceptional items, Weir managed to report a pretax profit from continuing operations in 2015, but this was down year-on-year to GBP219.8 million from GBP408.5 million.
Exceptional items dragged Weir to that loss in 2015, with impairments totalling GBP365.0 million, including a GBP225.0 million impairment against its oil & gas division.
Lower revenue in 2015 also contributed to the results, falling to GBP1.91 billion from GBP2.43 billion last year, whilst cash from operations experienced a slight fall to GBP396.0 million from GBP421.0 million.
That pushed its operating profit down to GBP259.0 million from GBP450.0 million as its operating margin was squeezed to only 13.5% from 18.4%.
Weir said it is "aggressively responding" to current market conditions, which is seeing miners and oil and gas companies scale back on investment due to falls in commodity prices. Weir said it delivered GBP110.0 million in annualised savings in 2015, and plans to make a further GBP40.0 million saving this year.
Weir also lowered its net debt in 2015, which stood at GBP825.0 million at the end of 2015 compared to GBP861.0 million at the end of 2014.
"Given ongoing market conditions, 2016 will be another challenging year. As a result, we are planning for a further reduction in constant currency group operating profits, driven primarily by lower activity levels in upstream oil and gas markets," said Chief Executive Keith Cochrane.
By Joshua Warner; [email protected]; @JoshAlliance
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