ENGINEERING GIANT Weir Group yesterday announced record pre-tax profits of £443 million.
The Glasgow-based group saw profits rise 12% in the year to December, with sales up 11% to £2.538 billion.
However, orders slipped by 2% to £2.397 million and chief executive Keith Cochrane said revenues were not expected to rise as strongly during 2013.
The total dividend for the year will be 38p, a 15% increase and the 29th consecutive year of dividend growth.
Mr Cochrane said: “Weir delivered a strong performance for shareholders in 2012, despite challenging pressure pumping markets.
“We responded rapidly to changing market conditions, realigned capacity, reduced costs in affected areas and continued to maximise operational and cost efficiencies.
“This allowed us to deliver 2012 results in line with our mid-year expectations.
“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.
“Assuming a gradual economic and end market improvement, we expect to deliver low single-digit revenue growth and broadly stable margins in 2013, with lower first half profits offset by growth in the second half.”
Weir’s strong financial performance was underpinned by record operating margins in its minerals division thanks to robust activity in most key mining equipment markets, strong aftermarket growth and procurement, productivity and cost initiatives.
It said oil and gas had been resilient in the face of a substantial downturn in North American pressure pumping markets, while the power and industrial division had delivered profit growth despite the global power sector being subdued.
Acquisitions Seaboard and Novatech were said to have been successfully integrated into the oil and gas division, with both businesses performing well in challenging market conditions.
At the end of the year Weir bought US pressure control products company Mathena.
Original equipment orders were down 13%, with pressure pumping markets affected by US natural gas prices falling below economic incentive levels and relatively high, stable oil prices, resulting in a shift of drilling and completion activity from dry gas to oil and liquids-rich shale formations. However, aftermarket orders were up 9%, with double-digit increases in the minerals and power and industrial divisions.
Weir’s annual report said: “Over the medium term, the group remains well positioned to benefit from the structural growth expected in each of our end markets.
“Demand for minerals, oil and gas and power is underpinned by continuing population growth and industrialisation in developing economies.
“Growing desire for energy security will support the international development of unconventional oil and gas resources and industrialisation, environmental concerns and ageing power plants will accelerate the need for new and refurbished power infrastructure.”
Yesterday also saw offshore engineering and training group Petrofac, which operates training bases in Montrose, announce a 17% rise in net profits to $632 million on sales of $6.3 billion, which were up 9%. Its full-year dividend was up 17% to 64 cents.
Chief executive Ayman Asfari said: “We have delivered another year of strong financial results and good operational performance.
“Our portfolio of existing projects is in excellent shape, which we expect will help us to maintain our sector-leading onshore margins and we see many new and attractive opportunities across our business.
“Petrofac has a clear strategy for long-term sustainable growth based on three key drivers expanding our existing business into new geographies, developing our leading engineering, procurement and construction offering offshore and delivering on our plans for integrated energy services.
“I am excited and confident about our prospects for the coming year and beyond.
“We expect to deliver good growth in net profit in 2013 and our strategy underpins long-term earnings growth, including the achievement of our 2015 earnings target.”
Subsea 7 has announced it has won a $285 million contract from Talisman Sinopec Energy to install two 5km pipeline bundles as part of the redevelopment project of the Montrose field, 130 miles east of Aberdeen and the surrounding area.
The pipelines will tie the Caley field to the new bridge-linked platform attached to the Montrose Alpha facility.
The contract also includes 17.5km production, water injection and gas lift pipelines and control umbilical to tie the Shaw field to the BLP.
Engineering and project management will begin immediately from Subsea 7’s Aberdeen office, with offshore operations in 2014 and 2015.
Steph McNeill, Subsea 7’s vice-president in the UK and Canada, said: “This contract award continues our long-standing business relationship with Talisman.
“The complexity of this project further illustrates our bundle system’s unique ability to offer a highly cost-effective single product which neatly integrates all necessary pipelines and control lines.”
Pelamis Wave Power has been awarded a £1.4 million project from The Energy Technologies Institute to fund development work to enhance the cost-effectiveness of wave energy converter arrays in UK waters.
The funding will support the first phase of work this year ahead of a larger demonstration programme, if the results prove encouraging.
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