More after-sales orders boost Weir Group

4th Nov 2014 07:56

New order growth accelerated to 14% at oil services supplier Weir Group in an extended third quarter period as a strong trend in after-sales oil and gas orders counter-balanced a worse performance in power and industrial.With order input at its minerals division largely flat as falling commodity prices hit sentiment, the FTSE 100 group held its full year guidance steady, citing the "uncertain economic and end-market outlook".Group third quarter input growth rose 14% in constant currency for the 39 weeks between 5 July and 3 November, up from 10% growth in the first six months of the year, with revenues and operating margins in line with expectations as double digit constant currency revenue growth was partially offset by foreign currency headwinds.For the full year, a continuation of current foreign exchange rates would see reported operating profits hit by an estimated £38m adverse foreign currency exchange rate movement.Original equipment orders, almost a third of total order input, slipped 4% while after-market orders were up 25% with strong growth in each division.Minerals saw order input up 1% against the prior year period, slightly ahead of the second quarter despite the 18% decline in original equipment orders, while oil and gas enjoyed strong order input of 40% against the prior year period, ahead of expectations and slightly up on the second quarter thanks to increased drilling levels.The company said the recent fall in the price of oil had not so far had any impact on activity levels.The smaller power and industrial arm saw order input fall 4% on the prior year period, worse than had been expected as project delays continued to hamper power, industrial and downstream oil and gas markets.Chief executive Keith Cochrane said: "Our large installed base continues to provide a solid platform for high-quality, recurring aftermarket revenues that drive growth."We've also continued to make good operational and strategic progress in the third quarter, taking actions to further improve efficiency across the group and accelerating our minerals strategy with the acquisition of Trio."A new group-wide cost-cutting programme has identified £35m of annual savings that can be taken out in 2016.Weir shares rose 14p or 0.6% to 2255p at 08:42 in London.