Download - Weir Group plc, UK
CO
MPA
NY
PR
OF
ILE
6
Pump Industry Analyst July 2006
Key Figures* (£ million)Weir Group plc Year ending on or near 31.12
2005 2004 2003 2002 2001
Revenue 789.4 690.1 690.7 685.2 714.8Of Which:Engineering Products 524.7 439.0 428.9 429.2 564.9Engineering Services 216.7 198.7 188.9 153.4 149.9
Cost of Sales 570.7 499.2 488.5 497.3 517.1
Gross Profit 281.7 190.9 202.2 188.0 197.7
Profit from Continuing Operationsbefore Tax 37.5 55.9 51.3 59.4 53.6
Profit for the Period 26.0 44.1 42.9 50.2 40.5
*From continuing operations
Weir Group plc, UKProfileThe Weir Group manufactures specialist equipment and provides engineering services for the mining and minerals processing, defenceand nuclear industry, oil and gas exploration, power generation and water treatment. Weir operates in three segments. The EngineeringProducts segment comprises the manufacture of pumps and valves for flow control applications. The Engineering Services segment pro-vides equipment maintenance, process support and asset management services. The Defence, Nuclear & Gas segment comprises theremaining defence and liquid gas handling businesses, which were previously included in the Techna Division.
Contact DetailsCEO: Mark W Selway Tel: +44 141 6377111Address: Clydesdale Bank Exchange Fax: +44 141 221 9789
20 Waterloo St E-mail: [email protected] G2 6DB, UK Web: www.weir.co.uk
Recent Events• During 2005, Weir acquired Italian pump manufacturer Gabbioneta.
AnalysisThe Weir Group saw its revenue from continuing operationsincrease 14.4% to £789.4 million in fiscal 2005, a year of restruc-turing that has seen it reduce its role in filtration activities. Revenuefrom Engineering Products increased 13% to £505.6 million in2005 (2004: £446.5 million) due to continued strong demand fromthe Group’s core mining, oil and power markets and good levels oforganic growth in its pumps and valves products. The planned with-drawal from the water and wastewater and subsea oil and gas mar-kets by its two restructured UK businesses saw a planned contrac-tion of those two businesses of £22.1 million, while the acquisitionof specialist pump manufacturer Gabbioneta contributed £10.9 mil-lion to revenue in the last quarter. The Engineering ServicesDivision experienced a testing year in 2005 with the combinationof lower UK sales, higher than anticipated start-up costs in its US-based global parts business and the lack of progress in Iraq impact-ing its performance. Sales at £215.3 million were 4.3% above 2004.Operating profit from continuing operations before restructuringcosts at £66.3 million (2004: £59.0 million) was 12.3% above2004, with group subsidiaries contributing £57.1 million (2004:£52.0 million) of the total and joint venture and associate compa-nies the remaining £9.2 million (2004: £7.0 million). The gain onsale of non-core businesses, including the Techna desalinationactivities, more than offset the trading losses incurred by thesecompanies prior to their disposals. The net effect on the profit andloss for the year was a profit of £2.3 million.
Restructuring and divestments have been key features of theWeir Group’s recent activities, with the sales lessening thecompany’s involvement with the filtration industry. In earlyJuly 2005, the Group announced the sale of the desalinationand water treatment businesses of its Techna division toVeolia Water Systems, with the proceeds re-invested in itscore operations. The divested companies included WeirWestgarth in the UK, Weir Entropie in France and Weir Envigin South Africa. Together they represented nearly 7% of theWeir Group’s total sales. At the end of calendar 2004, thethree desalination and water treatment businesses reportedlosses of £0.2 million on turnover of £46.9 million. Grossassets at 31 December 2004 were £33.9 million. “The chang-ing dynamics of the desalination market towards larger scaleprojects and a move from design and build to ownershipmakes this an area unattractive to the Weir Group,” theGroup’s chief executive officer, Mark Selway, said at thetime. In fiscal 2006, Weir expects to execute the final stagesof its current five-year plan. The company believes that its2005 corporate and restructuring activities, coupled toimproving operational performances, will provide a solidplatform for delivering improved margins and increasedrobustness of future earnings. ■
COMMENT
