ENGINEERING group Weir was the FTSE 100’s biggest gainer yesterday after reassuring the City on this year’s expected profits despite a weak third quarter in the oil and gas sector.
In its interim management statement, the Glasgow-headquartered group said full-year pretax profit was forecast to be between £440 million and £450m, slightly ahead of the current market consensus.
Chief executive Keith Cochrane said conditions remained “mixed” across the end markets due to global macro-economic uncertainty and falls in certain commodity prices.
The value of total orders received shrunk 15 per cent in the third quarter on an underlying basis with a 47 per cent fall seen in like-for-like orders from oil and gas customers. Shale gas customers in the US and oil customers in Canada were seeing less activity and Weir pointed out that the comparative quarter in 2011 was “exceptional” in terms of forward ordering.
Weir said it was benefiting from its plan to cost cuts in its oil and gas division and reported a strong quarter in its power and industrial unit, which provides equipment to power stations, with orders up 12 per cent. Mining customers in the gold and copper sectors continued to be active although there was a slightly weaker performance in iron ore and coal.
Jonathan Jackson, head of equities at Killik, said with the shares trading on 12 times consensus 2013 earnings he remained positive on the company given its market position and potential attractions to a bidder.
“Weir remains an attractive target in a consolidating sector, given its strong position in growth markets,” he said.
Chris Dyett, an analyst at Investec which has a buy rating on the shares, also described it as a “solid update”. Shares in Weir closed up 80p, or 4.57 per cent, at 1,831p.