Major Scottish engineering firm Weir Group received a boost yesterday after obtaining strong credit ratings from two leading agencies.
Shares in the Glasgow-based FTSE-100 firm edged ahead in morning trading after Weir announced it had achieved a BBB+ (stable) rating from Standard & Poor’s and a Baa1 from Moody’s.
The firm said it had commissioned the ratings in order to expand the range of financing options available to the group.
“Weir is committed to retaining a strong investment grade credit rating and a capital structure in line with the parameters outlined in its risk appetite statement,” the firm said.
The move was revealed as Weir gave a first trading update to investors after putting an end to its pursuit of a merger with Finnish rock-crushing specialists Metso last month.
The proposed deal which would have created a multinational giant worth more than 11.5 billion euros collapsed after the Scandinavian firm’s board rebuffed a second merger offer by Weir valuing Metso at 4.6bn euros and declined to engage in talks with its suitor.
Weir chief executive Keith Cochrane ruled out any further bid for Metso “at this time” after the deal fell through.
In its update to the markets yesterday, Weir said its performance in the past two months had been in line with expectations and consistent with trading earlier in the year.
The firm, a pumps and valves specialist with a presence in more than 70 countries, also hosted a presentation for shareholders and analysts focused on its oil and gas operation.
“The Oil & Gas division continued to benefit from strengthening pressure-pumping market trends, while mining end markets remained challenging, including the effect of the ongoing platinum mine strikes in South Africa,” Weir said in a statement yesterday.
“Foreign currency headwinds have strengthened over the course of the first half of 2014, contributing to full-year reported revenue and profit being weighted more towards the second half.
“The group’s full-year constant currency revenue and margin guidance remains unchanged.”
Shares in Weir slipped back to close the day down 33p at 2,609p following yesterday’s trading session.