More major cost-cutting planned by Weir Group

Engineering: Action will help group when markets improve

Glasgow-based Weir Group is to cut costs by another £40 million this year to survive in a market of “unprecedented” challenges.

The minerals, oil and gas, power and industrial engineers suffered a 46% fall in pre-tax profit at £220m from continuing operations last year.

Revenue was down 21% at £1.9 billion.

The group, which employs 14,000 people in 70 countries, slashed its costs by £110m as orders plummeted on the back of the oil price crash.

After absorbing £365m of exceptional costs, including a £225m impairment for oil and gas, Weir sustained a £200m pre-tax loss.

On the plus-side, Weir had generated 67% more free cash flow at £132m, and net debt was down by £36m despite £48m in foreign exchange costs.

Up to £100m would be realised by selling non-core assets, research and development was up 17% and new products were being delivered.

Chief executive Keith Cochrane said the group had adapted quickly to market challenges that had been “unprecedented in recent years”.

“Costs were aggressively reduced while the cash generative nature of the business supported continued investment in our strategic priorities,” he continued.

A further reduction in constant currency group operating profits was forecast.

Weir would invest for the medium term with an aftermarket-focused business model, and measures in cost reduction, asset disposals and cash generation “to ensure we benefit fully and quickly when markets improve”.