Glasgow-headquartered engineering firm Weir Group has seen a 23% drop in oil and gas orders as activity in North America has fallen in the first quarter of the year.
In the three months to 31 March, Weir , which makes pumps, wellheads and valves, reported an increase in orders of 18 per cent including at Esco, the US mining tool firm it bought for £900 million last year. But, excluding Esco, its orders were down 7% reflecting reduced oil and gas refurbishment activity.
Weir said there was good momentum from mining markets with minerals orders up 3%.
It said the sale of its flow control division for £275 million to a US private equity firms is on track for completion in the second quarter of this year.
Jon Stanton, Weir chief executive, said: “Weir has continued to deliver, with our first quarter performance in line with our expectations.
“We benefited from our strengthened leadership position in mining where we are helping more customers meet their priorities of optimising current operations and planning for future expansions.
“Esco's performance remained ahead of initial expectations with good demand for its premium technology.
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“As expected, oil and gas markets were at similar levels to late 2018 as a result of capital and pipeline capacity constraints in North America and the absence of the strong levels of first half refurbishment activity seen last year.
“The group's full year outlook of good constant currency revenue and profit growth remains unchanged.”
John Moore, senior investment manager at Brewin Dolphin, said: “Weir Group has had a good start to 2019 and a great deal of that can be put down to the smooth integration of ESCO.
"While oil and gas orders fell nearly a quarter on 2018, the mining division is performing beyond expectations. If anything, today’s results further support the management team’s decision to make the business simpler, more focussed, and more competitive.
"The level of debt has seen a slight increase, which in part can be explained by seasonality. However, investors will be looking for signs that this will move lower as the year progresses. The recent oil price increase offers the potential for a much-needed pick-up in activity from levels reported at the oil and gas division, but it may well be that a sustained period of firm oil prices is required to recover some of the ground already lost.”
