5th Nov 2019 08:26
(Alliance News) - Engineering firm Weir Group PLC on Tuesday said third-quarter sales rose overall year-on-year but warned on full-year profit in its Oil & Gas division after experiencing difficult trading conditions.
Orders from continuing operations in the quarter ended September 30 rose by 4% from last year, though Weir added they were flat on a like-for-like basis.
In the Oil & Gas division, orders were 32% lower year-on-year, with the FTSE 250 firm attributing this to a tough market conditions in North America.
Weir added: "As a result of lower volumes in North America, the division was only moderately profitable in the third quarter and is anticipated to be sequentially lower in the fourth quarter."
The firm said that there is a lack of visibility as to when trading conditions will improve and, in turn, it has undertaken a GBP30 million cost reduction programme, which will trim its North American workforce by 20%. The cost-cutting will result in an exceptional restructuring charge of GBP20 million.
Total orders in the Minerals division were up 17% year-on-year in the third quarter, with original equipment orders soaring by 72% helped by the GBP100 million Iron Bridge magnetite project order in Australia.
In ESCO, the subsidiary it acquired for USD1.29 billion in July 2018, orders grew by 9% year-on-year.
Chief Executive Jon Stanton said: "The growth delivered in Minerals and ESCO reflects our integrated solutions strategy and the continued strength of our aftermarket business model. Our project pipeline in mining remains encouraging but in the third quarter we saw some project approvals deferred due to negative macro sentiment.
In North American oil and gas markets, demand was impacted by an intensified focus on cash preservation in the quarter. In response we have undertaken a circa GBP30m cost reduction programme in this division to support competitiveness in the short-term. Looking forward, we now expect 2019 full year operating profits in the Oil & Gas division to be below our previous range with guidance for both Minerals and ESCO divisions unchanged."
Shares in Weir Group were 0.3% higher at 1,441.00 pence each in London early on Tuesday morning.
By Eric Cunha; [email protected]
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