Engineering giant looks to sell oil and gas division

Scottish engineering giant Weir Group is looking to sell its oil and gas business and focus its efforts on its mining division.

A downturn in the American shale gas market saw Weir incur losses and a £546 million oil and has impairment charge saw it report a pre-tax loss of £372 million for the year ending December 31, 2019, down from £86 million profit in 2018.

Despite this, the group’s operating profits rose to £352 million, up from £348 million in 2018. The minerals arm of its mining division posted a 4 per cent revenue rise to £1.478 billion, along with a 7 per cent operating profits increase to £270 million.

Discussing these results and the decision to sell, Weir Group chief executive John Stanton said: “2019 saw a strong performance from our mining businesses with margin expansion in both Minerals and ESCO.”

“North American oil and gas market conditions deteriorated significantly through the year and we undertook a major cost reduction programme in response.”

“While the long-term prospects for shale remain positive, current market dynamics mean it now has a very different investment case to our premium mining technology positions.”

“We are therefore taking actions so that we can maximise value for shareholders whenever the right opportunity is identified.”

The group’s total dividend has increased 2 per cent to 46.95p and its board said that the decision to sell reflected “confidence in the long-term prospects of the group.”

Looking to the year ahead, Stanton said there was “uncertainty over the impact of coronavirus on the global economy and demand for natural resources.”

He added that: “Assuming underlying demand does not change, we expect further good constant currency growth in our mining-focused businesses to be offset by the continued challenges in North American oil and gas markets.”

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