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Pumps and valves provider to the oil and gas, mining, and energy sectors, Weir Group (LSE:WEIR), beat market expectations after ending 2012 with annual profits beyond market consensus, pushing shares up on the London Stock Exchange on Wednesday.
The FTSE 100 engineering firm gained as much as 5.5% to £22.84 by 13:00 GMT, following the company’s report of a 12% increase in pre-tax profit to £443 million, accredited to its resource division and despite a fall in its oil and gas arm.
“Weir delivered a strong performance for shareholders in 2012,” Chief Executive, Keith Cochrane, said in a statement, adding that the company was able to respond rapidly to market changes.
Weir was hit at its oil and gas division last year as orders for pumping equipment used in hydraulic fraccing fell on account of overabundance of supply of gas in the United States, forcing producers to cut extraction activities and cancel orders from the firm.
The company provides valves, pumps, storages, and engineering support for onshore and offshore, upstream and downstream markets estimated to be worth £5.3 billion.
Notwithstanding, the Scotland-based group said its oil and gas division delivered a “resilient financial performance” despite a 22% drop in revenue from £870 million down to £677 million, or 28% of the total revenue earned last year.
Weir maintains that the medium term outlook remains positive as high oil prices give incentive to producers to increase production as well as the US’ move to become energy-independent.
The bulk of Weir’s source of revenue for 2013 will come from its minerals division as demand from emerging markets coupled by falling ore grades will prompt orders for the company’s products as miners strive to meet quota, the company’s outlook implied.
“Looking ahead into 2013, despite more challenging markets, the Group will continue to deliver profitable growth through new product introductions and a range of operational initiatives,” Cochrane said.
Weir is providing a dividend of 38 pence, 15% higher than the previous year on account of a 32% rise in cash from operations at £399 million.
