Manufacturer Rotork's share price drops after warning oil slump will hit profits

 
Madeline Ratcliffe
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Shares in Rotork, the British manufacture that makes pressure valves for oil extraction equipment, fell as much as 16 per cent in morning trading after it issued a profit warning, the latest victim of the oil price bear-pit.

The FTSE 250 company said it expected revenues for the year to fall to £530-550m, down from the £594.7m recorded for 2014.

It said operating profit would be lowered to the range of £120-1230m, from £157.2m.

Rotork is the world's largest producer of the opening and closing devices for valves in shale oil and gas safety equipment, and said it had been affected by the “challenging trading environment,” particularly in August, which has led to more cancellations and deferred orders.

The International Energy Agency earlier this month predicted that production of US shale oil would drop off next year as a result of falling oil prices, which had “slammed the brakes” on the industry.

Oil prices have halved to around $45 a barrel, and last week Goldman Sachs' predicted surplus production could drive oil down to $20 a barrel.

Rotork said: “We continue to see an encouraging level of quote activity and a large pipeline of opportunities. However, the timing of order placement and product delivery remains difficult to forecast. A number of orders expected to be placed in the third quarter have been delayed with delivery now anticipated in 2016, impacting the group's results for the current year.”

Another valve and pump maker, Weir Group, fell 4.2 percent. It was also hurt by its demotion from the FTSE 100 following a quarterly reshuffle.

Rotork's shares were down 12.04 per cent at pixel time, at a three-month low of 190.00.