WEIR Group is notoriously conservative with its forecasts, so yesterday’s profit upgrade came as little surprise to shrewd investors.
Growth in its minerals order book of 24 per cent is encouraging, up on 21 per cent in its first half. Its oil books also rocketed 91 per cent (compared to 47 per cent in the first half) as demand in the horizontal drilling market surged. It has an enviable position in niche growth markets, with high market share and growth potential.
Profitability has bounced back strongly and management is looking to double this by 2014 making it a strong long-term bet.
Net debt has increased after a Malaysian acquisition but it enjoys stable margins and strong cash generation.
However, as the profit forecast upgrade was anticipated by the market, its share price actually fell on the news. Weir is a great long-term investment but don’t expect to see any immediate surge in its stock price.