- Full-year results in-line
- Good performance by Minerals division
- Strong outlook for 2014
Engineering solutions provider Weir posted an in-line set of full-year results on Wednesday, as a positive performance by the Minerals division helped to offset an otherwise "challenging" year for the group.
Revenue for the year declined 4% from £2,538m to £2,430m, which reflected a lower opening order book, although the group still achieved record margins as it benefitted from more than £40m in direct cost savings and its Value Chain Excellence initiatives.
Adjusted pre-tax profit fell 5% from £440m to £418m, while earnings per share dropped 2% from 149.0p to 145.4p.
Divisionally, Minerals saw stable like-for-like (LFL) orders, with good aftermarket growth offsetting a fall in demand for original equipment. Operating margins were ahead of expectations, driven by the effects of a higher aftermarket mix, procurement savings and effective cost control benefits.
In Oil & Gas, revenues declined as strong aftermarket growth was more than offset by a substantial reduction in original equipment sales, as had been expected, as a result of frack fleet overcapacity. As expected, operating margins declined but were in line with guidance. A good sequential improvement was seen in the second half of 2013.
Power & Industrial's financial performance was broadly stable year-on-year, although strong Valves revenue growth was offset by power outage and project delays, as well as challenging North American hydro markets.
Chief Executive Keith Cochrane said: "2013 was a challenging year in many of our end markets, but our relative outperformance demonstrated the strength of the group's strategy, the diversity of our portfolio and the resilience of our aftermarket focussed business model.
"This was supported by a robust performance from Minerals and growing momentum in Oil & Gas as we saw a gradual recovery in upstream markets."
Net debt fell £58m over the year to £747m. The dividend payment was increased by 11% from 38p to 42p a share.
Looking ahead, Cochrane added: "In 2014, we anticipate that the group will return to underlying growth despite mixed end market conditions. We will continue to capture profitable aftermarket opportunities, cross selling our full product portfolio across all our end markets and delivering further efficiencies from our Value Chain Excellence initiatives."
Weir expects 2014 to deliver good constant currency revenue and profit growth, with group margins broadly in line with 2013 levels, although it cautioned that its reported results were likely to be affected by recent adverse foreign currency movements.