9 May 2012 – interim management statement
A trading statement from Weir Group covering the period from the start of the year to 8 May has disappointed the market. Although the group has reported a strong first quarter, and expects a year of further good progress in line with previous guidance, analysts remain unconvinced of prospects. The group has admitted that the pressure pumping market is likely to be difficult this year, adversely affecting results in its Oil & Gas division, but this should be offset by strong trading in the Minerals and Power & Industrial divisions. Clearly, the performance of the Oil & Gas division is disappointing and market conditions are likely to remain difficult here for some time but with the other two divisions doing well, we think the fall in the share price today has been overdone. Even allowing for a 10% reduction in profit forecasts for 2012, which the company does not believe will happen, the shares are still on a p/e ratio of just over 10x and we think today’s fall provides a buying opportunity. BUY.