Weir Group 's share price plummeted by 10 per cent this morning after the oil and gas company warned of a “significant reduction” in revenues for the year ahead.
Though its results for the year to January 2 were just below expectations, investors were left more unsettled by the forecast of bid drop in demand for oil and gas, as a result of pricing pressures.
Operating profit was down four per cent from £467m to £450m, while profit before tax dropped two per cent to £409m. Revenues were flat at £2.44bn.
Dividend per share was up five per cent to 44p.
Net debt has also risen from £747m in 2013/2014 to £861m.
Why it's interesting
By now it's no surprise that oil and gas companies are being affected by the slump in oil price. What is interesting is that despite some commentators suggesting there could be a rebound, Weir is not sounding too confident.
What they said
Chief executive Keith Cochrane's comments were quite telling.
"While visibility in oil and gas remains limited, it is clear that the group's strategic progress and cost initiatives will only partly offset the impact of a substantial reduction in demand and the associated pricing pressure," he said.
"As a result we are planning for a significant reduction in constant currency group revenues and lower operating margins in 2015. However, we will continue to invest in extending the group's global leadership positions and increasing market share, supported by a strong balance sheet and the cash generative nature of the group."