Shale recovery in US helps boost revenues at pump maker Weir

SHARES in industrial pump maker Weir dipped 2pc yesterday despite upbeat results from the firm that suggested the market had turned a corner.

The weaker pound lifted revenues at the company, whose biggest customers are in oil and gas and the mining sector. Sales in the six months to the end of June rose 26pc to £1.1bn. At constant exchange rates the increase was a more modest 10pc.

Pre-tax profit of £92m was 12pc higher; stripping out the currency uplift it was down 8pc.

Jon Stanton, chief executive of the FTSE 250 business, said: “The outlook is good for both the oil and gas, and mining sectors with strong fundamentals. We’ve seen the rig count in North America double and the cost of producing shale energy there has come down.”

Shale was seen previously as an expensive form of energy production. However, advances in technology have made the method of extraction cheaper, meaning it is profitable even with the oil price stuck at the current level of around $50 per barrel.

Weir cut its North American workforce by half, to 1,000 staff, between 2014 and 2016 as demand for shale energy – which pumps liquid into rocks to extract hydrocarbons – fell because of the low oil price.

The company has since recruited back 300 staff and its main production centre in Texas has gone from a single shift working four days a week to three shifts.

Mr Stanton added that copper – the metal Weir is most exposed to through its customer base – was likely to experience strong demand as electric car and battery demand grew.

Earlier this month, Weir upgraded its guidance to reflect strong demand in North American oil and gas markets, and some analysts believe yesterday’s share price decline is the result of overly positive reaction to the earlier update from the group.

Weir opted to maintain its dividend at 15p a share. Shares closed at £18.76.