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UPDATE 1-Weir Group expects revenue recovery as oil firms replace parts
November 3, 2015 / 9:22 AM / 2 years ago

UPDATE 1-Weir Group expects revenue recovery as oil firms replace parts

(Adds Weir CEO comment, details, share movement)

By Mamidipudi Soumithri

Nov 3 (Reuters) - Engineering company Weir Group Plc expects its revenue to recover from recent decline as customers are forced to replace parts, but said it would continue its cost-cutting efforts by eliminating 400 more jobs.

Weir shares, which were knocked out of the FTSE 100 index in September, rose as much as 6.8 percent to 1148 pence on Tuesday morning in London.

The company, which has cut its workforce in its North American oil and gas operations by more than a third in the last 12 months amid sliding oil prices, reported a fall in its third-quarter revenue and operating margins.

Weir's revenue is currently suffering as its customers attempt to minimise purchases, Chief Executive Keith Cochrane said, adding that at some point they will need to invest in equipment.

"Basic common sense would tell you that at some point you run out of units you can strip parts off," Cochrane told Reuters.

The company said cost-cutting in the quarter would lead to the loss of 400 more jobs as business in its North American oil and gas and African mining operations suffered.

Weir makes pumps and valves used in oil rigs, as well as parts used in the mining industry.

Oilfield services company Hunting Plc said separately it expected a 90 percent plunge in profit from continuing operations for 2015.

Shares in Hunting fell as much as 4.9 percent to 342 pence, their lowest since 2008.

Both companies have been hurt by the massive reduction in spending announced by energy companies, which are battling a prolonged decline in oil prices.

Europe's oil majors have reduced 2015 spending programmes by about 15 percent to near $107 billion, and more cuts are seen next year. (Reporting By Mamidipudi Soumithri in Bengaluru; Editing by Gopakumar Warrier)

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