TIDMWEIR
RNS Number : 3966L
Weir Group PLC
19 April 2018
The Weir Group PLC Interim Management Statement for the period
to 31 March 2018(1)
Strong order(2) momentum continued in the first quarter
-- First quarter orders +22%; all divisions ahead of the prior year
-- Minerals orders +13% with strong demand for both original equipment and aftermarket
-- Oil & Gas orders +50% driven by pressure pumping demand in North American shale
-- Flow Control orders +2% with encouraging growth trends
-- Full-year constant currency expectations unchanged
-- US$1,285m acquisition of ESCO Corporation, 7.4% placing and
intended disposal of Flow Control announced separately
Jon Stanton, Chief Executive, commented:
"The Group performed strongly in the first quarter,
outperforming its main markets through an intense focus on helping
its customers meet their operating goals in improving
conditions.
In mining, our largest market, our 2017 investment in sales and
engineering capability enabled us to provide more solutions to
miners focused on increasing productivity from their current
assets. In Oil & Gas, shale continued to demonstrate its
increased relevance with record North American production supported
by our leading technology pressure pumping products and services.
Flow Control benefited from operational improvements and
encouraging momentum in its main markets.
Our good start to the year reflects our anticipated progress at
this stage of 2018 and our full year outlook of strong constant
currency revenue and profit growth remains unchanged."
First quarter review
First quarter orders were 22% higher than the prior year period.
Group-wide aftermarket orders increased 19% with original equipment
up 27%. Revenues, on a constant currency basis, were in line with
expectations and ahead of the prior year. The Group generated a
positive book to bill ratio of 1.14 over the three-month period
supporting the growth expected during the balance of the year.
Divisional review
Minerals
Global mining markets continued to benefit from supportive
commodity prices with the industry remaining focused on optimising
the production and efficiency of current mining operations. The
division took full advantage of its previous investments in
extending its on-the-ground engineering and sales capabilities, and
built on its unrivalled global service centre network. Orders for
the first quarter were up 13% compared to the prior year with
original equipment 19% higher, supported by a number of small
expansion and brownfield projects, while aftermarket orders
increased 11%. On a sequential basis, both aftermarket and original
equipment orders both grew. The division's order book increased in
the quarter with a book to bill ratio of 1.16.
Full year divisional expectations are unchanged, with the
division anticipated to deliver moderately higher constant currency
revenues and slightly higher full year operating margins.
Oil & Gas
Strong drilling and completion activity levels continued in
North American onshore oil and gas markets as the division
reinforced its position as the preferred provider of equipment and
services to major shale pressure pumpers. International markets
remained challenging with competitive pricing although there was an
increase in project activity. Overall, divisional orders for the
first quarter were 50% higher than the prior year period and 47%
higher on a like for like(3) basis. As reported, original equipment
orders increased 91%, from a relatively low base, driven by good
demand for pumps and power ends as customers prepared their frack
fleets for the year ahead. Aftermarket orders were 40% higher. On a
sequential basis orders were also higher reflecting the increased
rig count and activity levels in North America and modestly
improving conditions in international markets. US frack fleet
utilisation remained high with modest pricing gains in some product
lines as expected. The division's book to bill ratio in the first
quarter was 1.13.
Assuming market conditions remain supportive at or around
current levels, we continue to expect a strong increase in constant
currency divisional revenues and profits, delivering mid-teens
operating margins.
Flow Control
The division's main markets continued to show early signs of
recovery with increased quotation activity, particularly in
Liquified Natural Gas and downstream. As a result, divisional
orders for the first quarter were up 2% on the prior year period.
Original equipment orders were down 3%, including the impact of
project delays, while aftermarket orders increased 6% - the fourth
consecutive quarter of aftermarket growth.
The division is still expected to deliver broadly stable full
year constant currency revenues. Operating profit and margin
expectations are also unchanged, with the divison expected to
deliver mid-single digit operating margins for the full year.
Foreign Exchange and Net debt
Based on quarter one average foreign exchange rates
(GBP/USD$1.39), we expect to see a full year GBP18m translational
foreign exchange headwind at operating profit level compared to the
prior year. This is consistent with our previous expectation. Net
debt at 31 March 2018 was higher than that reported at 31 December
2017 but in line with normal seasonal patterns. The group remains
confident of delivering strong cash generation and further balance
sheet deleveraging in 2018.
Notes:
1. Financial information is given for the three months ended 31
March 2018 and relates to continuing operations and excludes
exceptional items.
2. Orders are reported on a constant currency basis. First
quarter refers to the financial period for the three months ended
31 March 2018.
3. Like-for-like excludes the impact of acquisitions. KOP was
acquired on 27 July 2017 and excluded for 2017.
Analyst and investor conference call
A conference call for analysts and investors will be held at
0815 BST on Thursday 19 April 2017 to discuss this statement.
Participants can join the call by registering in advance by
visiting www.global.weir/investors and following the link on the
page.
A recording of this conference call will be available until
Tuesday 1 May 2018.
Enquiries:
------------------------------ ---------------------------------------
Investors: Stephen Christie +44 (0) 141 637 7111 / (0) 7795 110456
------------------------------ ---------------------------------------
Media: Raymond Buchanan +44 (0) 141 637 7111 / (0) 7713 261447
------------------------------ ---------------------------------------
Brunswick: Patrick Handley /
Nick Cosgrove +44 (0) 20 7404 5959
------------------------------ ---------------------------------------
About The Weir Group PLC
Founded in 1871, Weir is one of the world's leading engineering
businesses providing mission-critical equipment and aftermarket
solutions to energy and natural resources customers in more than 70
countries. The group, which employs around 15,000 people, comprises
three divisions: Minerals; Oil & Gas; and Flow Control, and is
headquartered in Glasgow, Scotland, UK.
Weir's ordinary shares trade on the London Stock Exchange
(ticker: WEIR LN) and its American Depositary Receipts trade
over-the-counter in the USA (ticker: WEGRY).
Appendix 1 - quarterly order trends (constant currency)
Reported growth(1) Like for like growth(1,
2)
2017 2017 2017 2017 2018 2017 2017 2017 2017 2018
Division Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Original Equipment 4% 25% 19% 10% 19% 4% 25% 19% 10% 19%
Aftermarket 13% 7% 9% 8% 11% 13% 7% 9% 8% 11%
Minerals 10% 12% 12% 9% 13% 10% 12% 12% 9% 13%
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Original Equipment 56% 143% 92% 130% 91% 56% 143% 82% 97% 84%
Aftermarket 48% 98% 52% 46% 40% 48% 98% 50% 43% 38%
Oil & Gas 50% 106% 59% 60% 50% 50% 106% 56% 52% 47%
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Original Equipment -18% -33% -8% -1% -3% -18% -33% -8% -1% -3%
Aftermarket -3% 6% 7% 17% 6% -3% 6% 7% 17% 6%
Flow Control -11% -15% -2% 6% 2% -11% -15% -2% 6% 2%
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Original Equipment 5% 19% 21% 23% 27% 5% 19% 20% 18% 26%
Aftermarket 21% 27% 22% 20% 19% 21% 27% 21% 19% 19%
Continuing Ops(1) 15% 24% 21% 21% 22% 15% 24% 21% 19% 21%
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Book to Bill 1.14 1.06 0.95 0.94 1.14 1.14 1.06 0.95 0.94 1.14
-------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(1) Continuing operations (excludes American Hydro Corporation
and Ynfiniti Engineering Services which were disposed of in Q2
2016).
(2) Like-for-like excludes the impact of acquisitions. KOP was
acquired on 27 July 2017 and excluded for 2017.
This information includes 'forward-looking statements'. All
statements other than statements of historical fact included in
this presentation, including, without limitation, those regarding
The Weir Group PLC's ("the Company") financial position, business
strategy, plans (including development plans and objectives
relating to the Company's products and services) and objectives of
management for future operations, are forward-looking statements.
These statements contain the words "anticipate", "believe",
"intend", "estimate", "expect" and words of similar meaning. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the Company's present and future business
strategies and the environment in which the Company will operate in
the future. These forward-looking statements speak only as at the
date of this document. The Company expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained herein to reflect any
change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based. Past business and financial performance cannot
be relied on as an indication of future performance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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