Scottish engineering company Weir Group upgraded its profit forecast yesterday as it reported a continuation of the progress that helped it to break into the FTSE 100 recently.
The Glasgow-based manufacturer of pumps and valves for the oil and mining industries said orders increased by 32% year-on-year during the 39 weeks to October 1, up from the rate of 24% reported in July.
Weir employs 9,000 people in global operations for customers including BP, BAE Systems and the Ministry of Defence.
In its previous profit forecast in summer, Weir predicted its second-half performance would be better than the previous year’s £95.6million, but this has been upgraded by about £50million.
The group has benefited from growing demand for crude oil fuelled by global economic recovery, which helped to boost orders for its pumps used in the extraction, transport and production of oil.
There has also been an increased demand for pumps used in mining and the production of minerals, which were up 24% amid strong demand in South America and Australia.
Despite the stronger-than-expected forecast for 2010, Weir’s shares fell 21p to £15.37 as investors locked in profits after a 400% rise in two years; a performance that sent the company into the FTSE 100 list of top UK blue chips in September.
Jeremy Batstone-Carr, an analyst at broker Charles Stanley, said: “Weir is bucking concerns over the weak economic output driven by its exposure to emerging markets.
“After a performance like Weir’s over recent months, it’s little surprise that you are going to see some profit-taking, but the company should continue to command a premium rating.”
Only orders for pumps used in the power-production and industrial sector were down, by 7%, caused by a weakening of demand from nuclear power stations in Canada.
The company made two acquisitions recently: Malaysian company Linatex, which supplies products to the mining industry, for £138million and Indian valve business BDK Engineering for £20.9million.