Interim Management Statement

RNS Number : 8661F

Weir Group PLC

04 May 2011

 



4 May 2011

THE WEIR GROUP PLC

INTERIM MANAGEMENT STATEMENT for the quarter ended 1^st April 2011^(*1)

The Weir Group PLC will today advise shareholders that the strong performance during the first quarter has increased its confidence in achieving further good progress in 2011.

First quarter performance was strong with the Group benefiting from a record opening orderbook, a positive contribution from the 2010 acquisitions and significant input growth, including record quarterly orders for the Minerals and Oil & Gas divisions.  Based on this performance, the Board now anticipate full year profit before tax and intangibles amortisation will be around £20m ahead of our previous expectations after taking account of year to date adverse foreign currency translation effects.

Order input^(*2) was up 39% against the prior year period on a reported basis and up 30% on a like for like^(*3) basis.  Original equipment orders were up 49% (up 39% like for like) and aftermarket orders up 31% (up 22% like for like).

Strong revenue growth was achieved in the quarter driven by both organic growth and an encouraging first contribution from the acquisitions made in 2010.  Operating profits are up on the prior year period and operating margins are in line with our expectations.

MINERALS

On a reported basis, order input was up 13% against the prior year period.  Original equipment orders were down 3% versus a prior period comparative that included the award of a C$50m contract to our Canadian business.  Aftermarket input was up 28% benefiting from a first contribution from Linatex. 

Order input, excluding the Linatex acquisition and also excluding the impact of the Canadian contract, was up 18%. Original equipment orders on the same basis were up 24% benefiting from increasing activity levels in mining across South America, Africa and Australasia.  Aftermarket orders excluding the Linatex acquisition were up 15% although this was largely due to strong growth in the provision of ancillary products and services, with aftermarket spares volumes only slightly ahead of expectations.  As a consequence, whilst we would now anticipate a modest increase in full year revenues and operating profits against our previous expectations, our guidance for divisional operating margins remains unchanged.

OIL & GAS

Order input for the 13 weeks was up 129% with upstream input up 187%. There have been no acquisitions within the division and therefore this is on a like for like basis.  During the first quarter, there was a further increase in the North American horizontal drilling rig count focused on oil and liquids rich shale formations. This, together with lengthening original equipment lead times and continued market share gains, has resulted in stronger than expected first quarter input levels which were slightly ahead of the final quarter in 2010.  Consequently we now expect full year upstream input to be broadly around 2010 levels assuming a more normalised volume of original equipment orders over the second half.

To meet customer needs, we have accelerated execution of the $40m capital investment plan at Forth Worth, which we announced previously, to add further manufacturing and service capacity and will also extend the use of the Group's North American manufacturing base.  We expect this to positively impact revenues in 2011.  The downstream and Service operations continue to trade in line with expectations. Divisional revenues, operating profits and margins will reflect our increased expectations for 2011.

POWER & INDUSTRIAL

Order input for the 13 weeks increased 27% on a reported basis and 2% on a like for like basis.  The integrations of the YES, American Hydro and BDK acquisitions are progressing well with a number of good growth opportunities identified.  Quotation activity remains strong and we have seen no immediate impact from the Japan earthquake on our Nuclear business.  As previously guided, we expect to see divisional input, revenue and operating profit progression over the full year.

NET DEBT

There has been no material change in net debt at 1 April 2011 as compared to 1 January 2011.  We have further invested in working capital to support business growth.

NON-EXECUTIVE DIRECTOR

We announce the appointment of Melanie Gee to the Board as a non-executive director, with effect from the conclusion of the annual general meeting which is being held today.  Ms Gee is a Managing Director in Lazard's UK Investment Banking business and was previously a Managing Director at UBS.

Notes:

1.   Financial information is given for the 13 week quarter ended April 1 2011

2.   Order input is reported on a constant currency basis

3.   Where growth is provided on a like for like basis, like for like is defined as comparison of current year results to the equivalent prior year period for those businesses that have been part of the Group throughout the current and prior year reporting period, on a constant currency basis.

A conference call for analysts and investors will be held at 8 a.m. (UK time) on Wednesday 4 May to discuss this statement.  

For dial-in details please contact Maitland on [phone]  

Contact details:
The Weir Group PLC
Vicky Ferrier, Head of IR & Communications	Tel. [phone] (Mobile: [phone])
Maitland	Tel. [phone]
Suzanne Bartch
Rowan Brown

This information includes 'forward-looking statements'.  All statements other than statements of historical fact included in this release, including, without limitation, those regarding the Weir Group's 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.

 

END

 

 

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