Engineering firm Weir Group suffered a 41 per cent drop in pre-tax profit in the first half of the year, its results showed today, as oil and gas revenues slumped amid falling prices.
The FTSE 250-listed firm’s profit before tax fell 41 per cent in the six months ending 30 June compared to a year earlier. That amounted to a fall from £106m to £63m.
Both orders and revenue were hit hard by the coronavirus-induced global economic slowdown. Orders dropped 19 per cent to £1.14bn while revenue fell 18 per cent to £1.1bn.
The slump in profit drove down its earnings per share 25 per cent, to 31.5p from 42.2p.
It proposed no interim dividend, citing “ongoing uncertainty” and saying it would “support deleveraging”. Weir’s net debt fell by £10m to stand at £1.17bn.
Why it’s interesting
Weir was hit particularly hard during the coronavirus pandemic by the slump in oil prices. Its business is focused on mining, oil, gas and power.
Prices cratered in March after Saudi Arabia and Russia cancelled their production agreement. Coronavirus lockdowns also massively reduced demand.
“These led to a significant reduction in capital spending by North American exploration and production producers,” Weir said. This hit demand for the group’s engineering products.
The firm did not give any guidance for the rest of the year. It withdrew its guidance in March amid high levels of uncertainty around the virus.
What Weir said
Jon Stanton, Weir’s chief executive, said: “Our oil and gas team also skilfully navigated extremely challenging market conditions.
“As we look ahead, while the business is performing well, it is too early to provide guidance on the full year given ongoing uncertainty due to Covid-19.
“More broadly, the long-term outlook for mining remains positive, supported by demographic trends, carbon transition, the long-term decline in ore grades and the need to reduce waste and water and energy consumption.”