Weir pumps profit past forecasts

1st Nov 2010 07:02

Pumps manufacturer Weir expects to beat full-year profit forecasts thanks to high demand for its equipment from the mining and oil exploration sector and stronger than expected aftermarket activity.The company, which entered the FTSE 100 in September, said it continued to perform well in the third quarter, reporting improving order trends across the Minerals and Oil & Gas divisions."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," it said Monday.Third quarter revenues were high than last year for every division, boosting operating profit across the board. Order input at constant currency for the 39 weeks to 1 October was up 32% against the year before, with original equipment orders up 44% and aftermarket orders up 23%.They rose 24% at the minerals unit, reflecting a pick up in general activity levels, especially in South America and Australia, while order input at the oil and gas division soared 91%, or 232% for upstream input."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," Weir explained."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." The power and industrial business was down again though, dropping 7% due to phasing of major nuclear orders and continued weakness in industrial markets, especially Canada.