Weir Group share price: H1 profit slides

Weir Group share price: H1 profit slides

Weir Group Plc (LON:WEIR) today updated investors with half-yearly performance for the six months ended June 30. Following are the highlights from the company’s statement.

**Highlights:**
Financial performance overview
Order input and revenue on a constant currency basis decreased by 18% and 14% respectively, with Oil & Gas declining sequentially through the period. Aftermarket input declined 13% while original equipment orders fell by 29%. Aftermarket represented 71% of total orders, from 67% last year. On a like-for-like basis, input was down 21% and revenue was down 17%. On a reported basis, revenues were 13% lower, supported by a £24m foreign exchange tailwind. In constant currency terms, operating margins declined 500bps and profit before tax of £108m was down 43%, primarily impacted by the declines in North America oil and gas.

First half results in-line with June trading update expectations
Strong cash generation in challenging markets; 124% EBITDA cash conversion ratio
Oil & Gas: North American rig count down 55%; order input down 39%
Minerals: a resilient performance with aftermarket revenues increasing
Power & Industrial: operational efficiencies improving margins
R&D spend prioritised – up 38%; new products delivering growth:
• New continuous duty frack pump and high-yield hydro-cyclone launched
Acquisition of Delta expands valves product range and extends presence in mining and oil sands markets
Aggressive focus on cost competitiveness:
• 32% reduction in North American Oil & Gas workforce since November 2014
• Further measures taken across all divisions and Group functions in June/July
• Exceptional restructuring costs of £47m recognised, including £33m of asset impairments
• In total actions taken expected to deliver annualised savings of £85m by the end of 2015
Board and management changes announced
Keith Cochrane, Chief Executive, commented:
“This is the most severe downturn in oil and gas markets for nearly thirty years, and as a result North American upstream activity has reduced substantially. As we indicated through the first half, this has had a significant impact on the Group’s interim financial performance. During this period, we have remained focused on responding to these conditions, executing effectively and generating cash. Reflecting our ongoing confidence in the long term structural growth prospects of our markets, we continue to invest in our strategy and extend our global leadership positions.
Looking ahead, oil and gas will continue to be tough, with industry expectations of a modest improvement at best in North American activity levels towards the end of the year. However, with the normal seasonal bias of the Minerals and Power & Industrial divisions, increased restructuring benefits, further cost savings and a good contribution from recent acquisitions, we expect a meaningful sequential improvement in our financial performance in the second half of 2015, alongside continued strong cash generation.”
As of 07:28 BST, Thursday, 30 July, The Weir Group PLC share price is 1,531.00p.

By Veselin Valchev
Veselin is a data scientist with extensive experience in commodities and natural resources within the FTSE 100. His data analysis skills ensure he reports without missing the fine details.
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