Pre-tax profits up 12% to £486m
Engineering firm Weir Group has reported “record” pre-tax profits for the 2012 year on an 11 per cent rise in revenue.
The Glasgow-based group, which supplies engineering solutions to the mining, oil and gas and power markets, said revenues rose to £2.53 billion last year (2011: £2.29billion) and pre-tax profits rose 12 per cent to £486 million (2011: £396 million).
Revenue, calculated on a like-for-like basis, rose four per cent on the previous year, lifted by strong demand from the mining sector which helped to offset a muted performance from the oil and gas division.
The record rise in profits is based on continuing operations before exceptional items, and pre-tax profits on a like-for-like basis were up four per cent.
Profits for the year beat analysts' consensus estimates of £434 million.
Shares in Weir rose 3.6 per cent in early trading following publication of its results.
However, order input for the year was down two per cent to £2.39 billion when restated at 2012 average exchange rates and was down nine per cent on a like-for-like basis.
Original equipment orders were down 13 per cent – and down 23 per cent on a like-for-like basis.
Weir said the drop was a result of “the impact of North American pressure pumping market weakness” which was partly offset by growth in most key minerals markets and “very good input growth” at its power and industrial division.
Accounts filed for the year to December 28, 2012, show a nine per cent rise in aftermarket orders – up four per cent like for like – and Weir said there were “double digit increases in minerals and power and industrial orders".
Aftermarket orders represented 57 per cent of overall input compared to 52 per cent in 2011.
Weir has increased its full-year dividend by 15 per cent to 38 pence and said a “further double digit increase” is planned in 2013.
Financing costs rose to £45.1 million last year (2011: £17.1 million) which Weir said was down to the increase in net debt following the Seaboard and Novatech acquisitions and related US private placement issue.
Weir acquired US shale fracking wellhead specialist Seaboard Holdings in a $675million (£431 million) deal in November 2011.
The group acquired US-based pump maker Novatech in a £113 million deal in January 2012.
Weir also reduced its net debt by £16 million last year to £688.9 million (2011: £673.2 million).
Chief executive Keith Cochrane said: “Weir delivered a strong performance for shareholders in 2012 despite challenging pressure pumping markets.
“We responded rapidly to changing market conditions, realigned capacity, reduced costs in affected areas and continued to maximise operational and cost efficiencies.
“This allowed us to deliver 2012 results in line with our mid-year expectations. We continued to invest in the group's capabilities, underpinning our strategy to grow ahead of our end markets.”
Weir has also warned 2013 performance will be broadly on a par with 2012.
Cochrane said: “Looking ahead into 2013, despite more challenging markets, the group will continue to deliver profitable growth through new product introductions and a range of operational initiatives.
“Assuming a gradual economic and end market improvement, we expect to deliver low single digit revenue growth and broadly stable margins in 2013 with lower first half profits offset by growth in the second half.
“Alongside substantially higher cash generation, the group plans the eighth consecutive year of double digit dividend growth.”
Last week Weir announced three acquisitions in three different countries collectively valued at £55 million.
The group acquired the Canadian-based R Wales group of companies, a manufacturer of specialist rubber and wear-resistant linings for the mining, minerals processing and oil sands industries.
Weir also acquired the business and assets of the Cheong foundry in Malaysia, which supplies casings to a number of industries, including mining and power.
In addition, Weir has also acquired the plant, equipment and buildings of Xmeco Foundry Pty Ltd, a specialist large casting foundry in Port Elizabeth, South Africa.