LONDON, July 30 British engineer Weir Group posted a smaller than expected fall in first-half profit and said a recovery in the U.S. shale industry should help to offset weaker mining equipment markets in the months ahead.
Shares in Weir, which makes pumps and valves for the mining, oil and gas industries, rose 4 percent in early Tuesday trading after the group kept its full-year forecasts for revenue and margins.
Some analysts had feared these could be cut after mining equipment makers such as Caterpillar, Sandvik, and Atlas Copco reported falls in order bookings as lower metal prices force miners to cut costs, often by delaying new projects.
However, Weir Chief Executive Keith Cochrane said a fall in mining equipment orders was being offset by supplying tools and services to miners looking to increase efficiency at, or expand, existing plants.
"These results demonstrate our ability to deliver in line performance despite challenging market conditions," he said during a call with reporters.
First-half pretax profit was down 14 percent at 193 million pounds ($296 million), ahead of analyst forecasts of 188 million pounds, according to Thomson Reuters I/B/E/S data.
Weir maintained its full-year forecast for a single digit percentage rise in revenue with broadly stable margins.
Cochrane said Weir's resilience over peers was partly down to the diversity of its customer base, so that a slowdown in conventional mining projects could be offset by demand in oil sands or coal bed methane industry, where business is picking up after a slowdown in the second half of last year.
Andrew Douglas, analyst at Jefferies, said the profit had come in below his expectations but was encouraged by stable orders for the mining division.
"We like the fact that order intake in minerals for the second quarter was broadly flat year on year," he said.
Analysts at Bank of America/Merrill Lynch were encouraged by the numbers and said they regarded Weir stock as one of the cheapest in Britain.