Weir hikes its profit target

 
City A.M. Reporter
engineer Weir Group yesterday raised its forecast for full-year profits after oil company appetite for pumps spiked in the third quarter.

The maker of pumps and valves said order input from customers operating in the upstream oil and gas space rose 232 per cent in the 39 weeks to the beginning of October, compared to a rise of 166 per cent in the first half of the year.

Chief executive Keith Cochrane said Weir, whose products are also used by mining and power generation companies, had seen “an exceptional third-quarter spike” in its oil and gas business. “We do recognise that is not something that’s going to occur every quarter at that sort of level. I wouldn’t expect the same level of input in the fourth quarter of this year,” he said.

Weir said the surge in orders from oil and gas companies would help it enter 2011 with a strong order book given the lag time between orders being converted to revenues.

Strengthening demand for Weir’s equipment was fuelled by customers in the North American shale market, where its pumps are used in fraccing – forcing sand and chemicals into rock formations to push out gas and oil.

Weir is expected to post a full-year pre-tax profit of £278m. The company which joined the FTSE 100 index in September said the strong performance of both oil and gas and mining offset weakening demand from the power and industrials sectors.