Weir Group PLC (LON:WEIR) saw its shares fall over 2.5% Wednesday after it reported a 22% drop in full year profits, although the pumps manufacturer reported a return to growth in the fourth quarter as prospects in the oil and gas sector improved although it still
The FTSE 250-listed firm saw its pretax profits fall to £170mln for the six months to December 31, down from £219mln a year earlier, impacted by the severe oil and gas market downturn which saw oil prices plunge.
First-half revenues fell by 2% to £1.845bn, but the company reported a 10% rise in order growth in the fourth quarter as mining and oil and gas markets showed signs of recovery.
In North America, Weir said its Oil & Gas Division broke-even in the same quarter and the company expects a return to "modest profitability".
Weir’s chief executive, Jon Stanton said: “Oil and Gas extended its technology leadership amidst difficult end markets and Flow Control benefited from its recent restructuring which supported margins in challenging downstream energy markets.”
He added: "At a group level, we expect to deliver strong cash generation and good growth in constant currency revenues.
“Profit growth will be further supported by foreign currency translation benefits, partly offset by incremental investments in people and technology."
Weir maintained its interim dividend at 44p a share.
In early trading, Weir shares shed nearly 2.8%, or 6p at 1,966p.
In a note to clients, analysts at Peel Hunt said: “The outlook is more low key than some might have expected with the key to the 2017 number being Oil & Gas. 22.5x is full enough and we therefore maintain our Hold recommendation and 2100p price target.”
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