Weir Group misses second quarter profit forecasts, confident on full-year

Weir Group saw a sharp improvement in top-line growth driven by its Oil & Gas division - together with a favourable tailwind from foreign exchange rates - with management sounding a confident note on the full-year outlook.

However, at £92.0m interim profits before tax were 8% lower on the year-ago period (Numis: £121.5m), partly as a result of one-off charges.

Over the six months ending on 30 June, total revenues jumped by 26% on an as reported basis to hit £1,091m and by 10% on a constant currency basis.

In 2016, the engineer's sales fell 2% on a reported basis and by 11% once fluctuations in FX markets are stripped out.

Commenting on the group's results, Weir chief Jon Stanton highlighted strong growth in US shale markets, telling shareholders that margins in that unit had improved "rapidly" in recent weeks.

"In our two main businesses (Minerals and Oil & Gas) we are transitioning from an intense downturn into a recovery and growth phase," he said.

Looking out to the rest of the year, that led Stanton to forecast strong revenue and profit growth - "assuming supportive commodity prices".

At constant exchange rates, revenues at its Minerals arm were flat at £611m, up by 53% to £314m in Oil & Gas and off by 6% at the Flow Control unit.

Weir's falling profitability was the result of a drop in the firm's operating margins from 11.9% to 10.3%, which saw Weir's return on capital employed decline from 8.6% to 7.2%.

Its flow control division also booked £13.0m in one-off charges.

Cash from operations was also weaker, falling 41% on a reported basis to £78.0m.

Meanwhile, the company's net debt increased by £34.0m to £869.0m.

Weir kept its half-year dividend payout at 15.0p.

As of 1102 BST the company's shares wer down 4.23% to 1,834.0p.