Interim Management Statement
The Weir Group PLC today issues its Interim Management Statement
for the period to 29 October 2010. Financial information is
given for the 39 weeks ended 1 October 2010.
During the third quarter, the Group has continued to perform
well. Improving order trends were evident across the Minerals and
Oil & Gas divisions reflecting a greater demand for original
equipment and stronger than expected aftermarket activity.
These positive trends and some further foreign exchange
translation benefit means we now expect that profits for 2010 will
be slightly ahead of our previous expectations and are now
targeting profit before tax and intangibles amortisation for the
second half of 2010 to be broadly in line with the first half.
Strong order input over the first half of 2010 resulted in third
quarter revenues for each division being higher than the prior year
period in constant currency terms. This, together with
continued aftermarket strength meant third quarter operating
profits and margins also increased relative to the prior year
period.
Order input1 for the 39 weeks was up 32%
(H12: 24%) against the prior year period with original
equipment orders up 44% (H1: 28%) and aftermarket orders up 23%
(H1: 22%).
Minerals
Order input for the 39 weeks was up 24% (H1: 21%) with original
equipment orders up 33% (H1: 29%) reflecting a pick up in general
activity levels, particularly in South America and Australia.
In addition, major new project enquiry levels remain strong.
Aftermarket orders were up 19% (H1: 16%), and this will have
a positive impact on 2010 full year operating profits and margins
relative to our previous expectations.
Oil & Gas
Order input for the 39 weeks was up 91% (H1: 47%), with upstream
input up 232% (H1: 166%). During the third quarter,
there was a further increase in the North American horizontal
drilling rig count largely due to the growing development of oil
and liquid rich shale formations. The increased rig count,
along with a surge in forward pump orders and weak prior year
comparatives, has resulted in an exceptional third quarter spike in
SPM order input. Given order lead times, this will have only
a limited positive impact on 2010 revenues relative to our previous
expectations but will ensure we enter 2011 with a strong opening
order book. As expected, downstream input continues to be
lower year on year and this market is subject to ongoing pricing
pressures.
Power & Industrial
Order input for the 39 weeks was down 7% (H1: down 1%)
reflecting phasing of major nuclear orders and continued weakness
in industrial markets, especially Canada, where the restructuring
of our service operations is ongoing. We continue to expect
to see full year margin progression although full year revenues
will now be broadly in line with 2009 in constant currency
terms.
Material events
On 17 September 2010, the Group completed the acquisition of the
Linatex group of companies based in Kuala Lumpur ("Linatex"), a
global provider of wear-resistant products to the mining and sand
& aggregates industries for a cash consideration of US$200m
(£138m). Integration is progressing well.
On 22 September 2010, the Group secured a new 4 year US$800m
multi currency revolving credit facility with a syndicate of twelve
banks. This facility replaces the £625m bilateral facilities
which were due to mature in the third quarter of 2011.
On 11 October 2010, the Group completed the acquisition of the
valves business of BDK Engineering Industries Limited, based in
Hubli, Karnataka, India. The business generated sales of
£20.9m (INR 1.52bn) in the year to 31 March 2010. Integration
work is now underway.
Financial Position
Net debt at 1 October 2010 was higher than that reported at 2
July 2010 primarily due to the acquisition of Linatex and an
increased investment in working capital to support business
growth.
Notes
1 Order input is reported in constant currency
terms
2 H1 refers to the 26 weeks ended 2 July 2010
A replay of the conference call for analysts and
investors is available until Sunday 7 November 2010
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Contact details:
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The Weir Group PLC
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Helen Walker, Public Relations Manager
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Tel. 0141 308 3739 (Mobile: 07789 032296)
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Maitland
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Tel. 020 7379 5151
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Suzanne Bartch
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(Mobile: 07769 710 335)
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Rowan Brown
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(Mobile: 07834 434 662)
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