28th Apr 2020 10:34
(Alliance News) - Weir Group PLC on Tuesday said its performance for the first quarter of 2020 declined year-on-year, due to significantly weaker oil & gas market conditions.
For the three months to the end of March, the FTSE 250 engineering firm said orders at continuing operations were 13% lower, both on a year-on-year and like-for-like basis.
Orders in the Minerals division were down 5% on a year-on-year and like-for-like basis, but Weir said the effect of the Covid-19 pandemic on the business was relatively limited despite the travel restrictions and staffing.
Gold markets remained strong, while copper and iron ore remained robust, even though thermal coal markets were more challenging, Weir said.
In the ECSO business, which provides ground engaging tools, orders were down 7%, as core demand remained strong, but softened when it came to discretionary products such as buckets and blades in construction markets, particularly in North America and Europe.
However, the major decline came from the Oil & Gas division, where orders dropped by 34%, following a deep downturn in oil & gas markets since the start of 2020 due to the historic oil price decline, leading to a fall in the US land rig count and a reduction in demand for pressure pumping.
Looking ahead, Weir expects Covid-19 to have a greater impact in the second quarter of the year; however the group said it will implement a first round of mitigations which will help underpin first half profitability.
Looking even further, the group has provided no guidance for the rest of 2020, due to the uncertain market environment.
"While there remains a high degree of uncertainty over the full impact of Covid-19, we are taking a prudent approach to managing costs and conserving cash and are ready with a range of further actions should market conditions require them. More broadly, our recent portfolio changes have positioned Weir to benefit from long-term structural trends, including carbon transition, as a key technology provider making mining smarter, more efficient and sustainable," said Chief Executive Jon Stanton.
Shares in Weir were up 2.1% at 886.40 pence on Tuesday in London.
By Dayo Laniyan; [email protected]
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