US shale slowdown hits Weir oil & gas profits

Mining industry supplier Weir Group said a slowdown in US shale production would impact full year profits at its oil and gas unit.

The division now expected operating profit now expected to be in the range of £90m - £100m, down from forecasts of £140m. Chief executive Jon Stanton described the US slowdown as “a short-term pause in growth”.

“Oil & Gas delivered good year-on-year order growth but from late August was progressively impacted by the temporary slowdown in activity in North American onshore markets that was prompted by industry capacity constraints in the Permian basin,” he said.

Operating margins were expected to be slightly lower than the prior year reflecting the recent decline in volumes and consequent manufacturing under-recoveries, with fourth quarter demand expected to be impacted by operators taking extended seasonal breaks.

Overall, divisional orders for the third quarter were 13% higher year on year and 10% higher on a like-for-like basis.

Original equipment orders increased 37%, against a weak comparator, and aftermarket orders were 6% higher.

“However, there was a sequential decline in North America across both original equipment and aftermarket orders which accelerated late in the quarter,” Weir said.