Oil and gas orders rise but Weir shares fall

Group says it is on track for full year but stock price falls

Global engineering group Weir saw its stock price fall yesterday despite reporting a jump in oil and gas orders in the first quarter of 2017.

Shares in the Glasgow headquartered firm pushed more than 6% lower in trading yesterday despite investors being told the group was on track to meet current full-year profit expectations.

The company – which has been trading for 146 years and employs more than 14,000 staff across its minerals, oil and gas and flow control business units – reported a 15% increase in new orders in the first quarter. The majority of the increase came from within its oil and gas division, which saw a 50% rise in new work in the period compared with 2016.

Chief executive Jon Stanton said the group was seeing the start of a “cyclical upturn” in its main markets, but he cautioned that prices in the energy sector remained low and it would take longer for the power and mid and downstream markets to recover.

However, he said that the business was now on track for the full year.

“Assuming commodity prices remain supportive, we continue to anticipate good growth in constant currency revenues and strong cash generation, with full year profits anticipated to be in line with current market expectations and weighted towards the second half,” Mr Stanton said.

“The minerals division is expected to perform as anticipated with more challenging conditions in flow control partially offsetting additional momentum in oil and gas.”

Scottish temporary power supplier Aggreko also maintained its full year guidance as it updated on trading ahead of its AGM yesterday.

The company – which has supplied power to the Olympics, Ryder Cup and World Cup – warned last month that issues in the Argentine market would impact on full-year pre-tax profits, a situation that has not changed.

Aggreko also decided to withdraw resolutions relating to its directors’ remuneration policy and its new, linked restricted share plan (RSP) after low support for the latter item.

The existing remuneration policy from 2015 will continue.

Chairman Ken Hanna said: “Whilst both resolutions would have gained majority support, the level received for the RSP element is not one that we are comfortable proceeding with.

“This is disappointing as we believe our proposal aligned shareholder, company and management interests.”

Assuming commodity prices remain supportive, we continue to anticipate good growth in constant currency revenues and strong cash generation. JON STANTON, CEO, WEIR GROUP