LONDON, May 1 (Reuters) - British engineering company Weir was confident recent acquisitions would allow it to meet its targets for this year after taking an expected hit from a cooling of last year’s boom in gas fracking in the United States.
Results on Wednesday showed first quarter orders at the pumps and valves maker sank by as much as a third in some areas due mainly to the falloff in orders from fracking projects, which were extraordinarily high in the same period last year.
Overall orders in oil and gas for the 13 weeks to end-March fell 14 percent compared to the same period last year, while those for original equipment slid 32 percent.
That helped prod the shares around 1 percent lower compared to a 0.4 percent rise for London’s blue chip FTSE 100 index, but analysts said the fall in orders had been largely expected and some were actually heartened by the results.
“I‘m a still a little bit cautious on Weir but overall I think it was a very resilient set of numbers,” Juho Lahdenpera, analyst at Nomura, said.
“In minerals there’s a general slowdown in the equipment area which we’ve seen across the industry but actually Weir’s orders fell less than some of its competitors,” he added.
Excluding the contribution from acquisitions, Weir said it expected revenue to be flat or slightly down for the year but it stuck by its latest guidance for low single digit revenue growth this year.
Weir has profited from its expertise in pressure pumping, a part of the environmentally controversial fracking process. The industry as a whole has cooled due to a dip in natural gas prices.
Demand for equipment on the mining side has also weakened and the oil services sector as a whole is showing signs of strain. Norway’s Aker Solutions posted a profit warning on Monday, leading to its stock plunging 20 percent.
Weir’s shares have gained 15 percent this year so far.
Weir said the upstream oil and gas market remained challenging, with average U.S. rig count, an important indicator for the company, 12 percent lower year on year.
The engineer also announced that its chairman, Robert Smith, would step down at the end of the year to be replaced by Charles Berry, who will serve as deputy chairman until then.