Weir Group Plc (LON:WEIR) told investors that orders from the oil and gas industry fell 34% in the first quarter, and, as expected, the month of April was also weaker amid record crude price declines.
Capital expenditure is expected to halve in the North American market, the engineering and services group noted.
The engineering group, in its first quarter update, nonetheless said its oil and gas division was “slightly above breakeven” in the first quarter and it is expected to be cash positive for the year.
That will come as the firm rolls out an additional £12mln worth of cost saving measures in the division.
Across the group, the company is taking cash preservation actions totalling some £140mln in the first half of the year including the withdrawal of the 2019 final dividend, £75mln of cuts from workforce, travel and discretionary spending actions, the suspension of bonus schemes, and executive pay rises have been withdrawn.
Weir said it had £500mln immediately available through committed facilities and cash balances, plus it is approved for £300mln under the UK government’s COVID Corporate Financing Facility (CCFF).
The company highlighted that in its mining industry unit demand remains robust though conversion remained slow.
Chief executive Jon Stanton, in a statement, said: “our mining-focused businesses delivered a very resilient performance, underpinned by the critical nature of our technology to miners’ ongoing operations.
“In Oil & Gas, we have once again acted quickly to protect the business as it navigates the steep downturn in market conditions.
“While there remains a high degree of uncertainty over the full impact of Covid-19, we are taking a prudent approach to managing costs and conserving cash and are ready with a range of further actions should market conditions require them.”
Supporting the communities in which it operates, Weir has donated PPE and oxygen supplies to local health authorities, and the firm’s 3D printing facilities have been used to manufacture face mask components.
Published at Tue, 28 Apr 2020 07:18:00 +0000-Weir Group confirms slump in oil and gas orders