Elaine Maslin, 2nd August 2011
Scottish engineering group Weir said yesterday it expected to beat its own year-end projections after record growth in its oil and gas division.
The Glasgow-based company said revenue in the division grew by nearly 50% in its first half to July 1 to £324million on the back of the onshore drilling boom in North America.
New orders in the 12 months to the same date reached a record £1billion for the division, which specialises in well pumps and flow-control equipment, specifically for the unconventional oil and gas markets.
Weir said the American horizontal-rig count had risen by 13% this year alone, as firms clambered for shale oil in the region.
“More than half the active North American rig count is now focused on oil, a level unseen since the mid-1990s,” it added.
As a result, Weir said it was to spend £45.7million increasing its North American manufacturing capacity over 18 months, on top of a £24.4million capacity expansion programme due to be completed by January.
Weir, which has a five-year plan to double its 2009 profits by 2014, said first-half revenue grew by 33% to £1.03billion, with pre-tax profits up 24% to £178million.
Chief executive Keith Cochrane said: “Weir Group has delivered another positive set of results, with revenue and profit growth and record orders.
“Strong order trends in our minerals division, as well as an excellent performance from our upstream oil and gas operations demonstrate our ability to serve market needs by executing effectively on our strategic growth agenda.
“The group will continue to invest to grow ahead of our end markets and we now expect profits for the full year ahead of our previous expectations.”
Weir said its minerals division also performed well, because of rising global demand underpinned by emerging markets.
The power and industrial division continued to be challenged in Europe, however, and as a result of the continuing unrest in Libya the firm’s UK-based service business was likely to lose £2million as a result of having to pull staff out of a project.
Market conditions in downstream oil and gas had also been challenging.
Weir said a new cross-divisional oil and gas forum and the Weir Advanced Research Centre, a partnership with Strathclyde University, would aid its focus on engineering capabilities, product development and innovation. Its emerging-market presence was also boosted by the purchase of a South Korean valve business in June and the launch of a joint venture in downstream oil and gas in China.
º WEIR Group was founded in 1871 by brothers George and James Weir in the west of Scotland at the height of the Victorian era of industrial innovation.
º They began producing their own pumping equipment, primarily for Clyde shipyards and steam ships being built there.
º In its time, the firm has also built cars and buses, prefabricated housing, oil pipelines, desalination plants, armaments during the two World Wars and helped development of the precursor to the helicopter.
º It now employs 500-600 people in Scotland spread between its Glasgow headquarters, Alloa and Aberdeen.
º The Granite City operation services the upstream oil and gas industry.
º Weir also has UK operations in Yorkshire and also in Ireland.
º In total, the company employs 9,000 people across more than 40 countries.