Improving oil market in USA boosts profits at engineer Weir

CEO says group took advantage of better market conditions to increase sales

A strong upturn in the oil and gas market in North America helped Scottish engineering giant Weir Group post a significant rise in full-year profits.

Overall revenues in the year to December 31 were 28% ahead of 2016 levels at £2.35 billion, while pre-tax profits were 47% higher at £250 million.

The Glasgow-headquartered group reported a 67% increase in orders into its oil and gas division, largely due to an almost doubling of business from the upstream sector in North America.

The improvement in conditions pushed the division to a full-year operating profit of £92m, a significant turnaround from the £9m loss in the previous 12 months.

Weir acknowledged that forecasts of how the oil and gas market will develop in 2018 were varied, but said it expected further progress if the current conditions continued.

There was a mixed performance from Weir’s two other principal trading units.

The minerals business saw overall revenues rise 11% year-on-year, but operating profits were marginally lower at £227m

However, the flow control business was the main concern with orders down 6% as a result of tough trading conditions.

The business reported a £3m loss for the year, down from a £32m operating profit in 2016. The declared loss included £13m of one-off costs.

Jon Stanton, chief executive officer, said the firm had taken advantage of improving market conditions.

“That proactive approach saw minerals deliver great order momentum, underlined by the consistent growth in its high margin, cash generative aftermarket and positioned it decisively for the anticipated upturn in the mining capital cycle,” he said.

“Oil and gas took full advantage of improving markets in North America to deliver an outstanding operating performance, while flow control turned the corner after a challenging first half.

“We have also made significant progress in developing the strategic framework that will drive sustainable medium term performance.”

A Weir engineer inspects a steel pipe.

Weir Group chief executive Jon Stanton.