Group confident profits will remain on track from strong growth in other divisions
Weir Group has reported a sharp fall in revenues from its oil and gas division in the first four months of the year but remains upbeat it will meet profit targets.
The news saw Weir's share price fall by eight per cent in early trading.
The Glasgow-based company said the 26 per cent drop in revenues from the division compared with the same period last year as a result of the “rapidly changing” pressure pumps market.
US energy firms have moved to pumping oil and liquids from shale 'fracking' rather than gas, which has impacted Weir's order book in that division.
However the revenue drop was offset by record orders in the group's mineral division, up 18 per cent on last year and well ahead of expectations.
Revenues from the power and industrial division are also ahead of expectations, with order input up 27 per cent on the same four months last year.
Weir said revenues from its SPM division, acquired in an £328 million deal in 2007, and Mesa, bought in a £20 million deal in 2008, would be lower than expected and behind previous guidance figures.
Overall, Weir said revenues and profits rose in the first quarter and the overall order book value rose by 15 per cent on last year.
Original equipment orders also rose by 14 per cent on the same period?) last year and aftermarket orders by 15 per cent.
Weir said in a statement: “Strong revenue growth was achieved in the quarter driven by both organic growth and a first contribution from recent acquisitions.
“Operating profits are up on the prior year period and together with operating margins are in line with our expectations.
“Although we remain vigilant given current macro-economic uncertainty and the rapidly changing pressure pumping market, this performance underpins our confidence in delivering further good progress in 2012 in line with our previous guidance for the overall.”