Weir Group’s (LON:WEIR) share price rose today after the industrial engineer, which manufactures valves and pumping equipment for miners and oil and gas companies, said it was “taking further action to support profitability” after a challenging first quarter.
The company today reported a 23 percent fall in orders for oil and gas in the first three months of the year and said it expected the decline to continue into the second quarter.
“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,” Weir’s chief executive, Keith Cochrane, stated. “In response the group is taking further actions to support profitability, including additional workforce reductions and service centre consolidations,” Cochrane added.
The engineer revealed that it planned to make an additional 125 job cuts and close a number of service centres. This would result in a further £10 million of cost savings, Weir noted.
Announcing its latest annual results in February, the group warned that the plummeting oil price will hit profitability this year, saying it expected a “significant reduction” in group revenues and lower operating margins in 2015. At the time, the firm revealed plans to slash 22 percent of its North American workforce, taking total job cuts to 1,200.
Investors have reacted positively to Weir’s fresh cost-saving measures, sending the company’s shares more than six percent higher today. By 15:30 BST, the stock had gained 6.39 percent to 1,849.00p.
As of 16:00 BST, Wednesday, 29 April, The Weir Group PLC share price is 1,803.00p.