Weir's CEO steps down as group reports drop in first half earnings

Weir Group announced on Thursday that chief executive Keith Cochane is stepping down as the engineering giant reported a drop in first half pre-tax profit.

Cochrane, who leaves the company after 10 years on the board, will be replaced by group finance director Jon Stanton on 1 October 2016.

The firm posted a 25% fall in pre-tax profit to £82m in the six month to 30 June 2016 on a reported and constant currency basis. Revenue declined 12% on a reported basis and dipped 13% at constant currency to £866m as weak oil prices hurt the Oil & Gas business. Earnings per share was down at a reported 23% to 29.6p.

However, Cochrane said the first half was ahead of market expectations.

“While markets remained challenging, the Minerals division fully captured available opportunities, Flow Control improved margins and Oil & Gas grew market share in important product categories,” he said in a statement.

“As a whole, the group continued to be highly cash generative and aggressively reduce costs, while also extending its technology leadership in products and services which are vital to our customers' operations.”

Weir left its guidance for a reduction in full year operating profits at constant currency. On a reported basis the full year will benefit from a positive currency effect if current rates remain broadly unchanged.

The company also warned that activity in oil and gas remains at "very low levels" with only a modest improvement expected in late 2016. In contrast, the group has seen signs of mining markets normalising, supported by commodity prices and an improving pipeline of brownfield opportunities.

“Looking ahead, we will continue to prioritise strong cash generation and invest in the strategic priorities which will ensure the group is positioned to benefit fully as markets recover,” said Cochrane.

The dividend was left at 15p.

Shares fell 2.56% to 1,485p at 0951 BST.