Weir group share price rises four per cent as it unveils cost-saving measures

 
Jessica Morris
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Weir group reported a 23 per cent fall in orders for oil and gas in the first quarter of 2015 (Source: Getty)

Shares in Weir Group rose this morning after the Glasgow-based engineer unveiled more cost-saving measures, as the company fights to stay profitable at a time when commodity prices are extremely low.

In mid-morning trading it was up around four per cent at 1,809p per share.

The figures

The FTSE 100 company reported a 23 per cent fall in orders for oil and gas in the first three months of 2015 - and added that it expects the decline to continue into the second quarter. It echoes a similar warning made in February.

However, Weir also said it was planning another £10m in cost reductions through its oil and gas segment, through 125 job cuts, mostly in its North American oil and gas business, as well as other measures.

The company's full-year results released in February unveiled plans to shrink its North American workforce by 22 per cent. It took the total number of planned job cuts to 1,200, and followed an announcement for 350 job cuts in November last year,

Why it's interesting

Weir Group is one of a number of companies which have suffered due to plunging global commodity prices. Oil prices are currently hovering at around $60 per barrel, down from a peak of about $115 in June last year.

This has forced affected companies to introduce cost-saving saving measures like reducing investment, as well as cutting jobs. On one hand, these steps are vital if they want to stay afloat - but commentators have voiced concerns a lack of investment is creating future problems for the industry.

What Weir Group said

Weir chief executive Keith Cochrane said:

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. Oil and gas activity levels are still falling and we expect a further decline in divisional revenues in the second quarter. In response, the group is taking further actions to support profitability, including additional workforce reductions and service centre consolidations.

In short

Weir Group is struggling amid low global commodity prices - but it's taking the steps necessary to stay afloat.

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