the weir group plc, uk

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9 April 2004 COMPANY WATCH Pump Industry Analyst Thomas Industries Inc reported record earnings for the year ended 31 December 2003, on net sales that were an all time record for the company’s pump and com- pressor business. 2003 net income was US$37.3 million, up from US$32.7 million in 2002. Net sales for the year were US$376.8 million, well up on last year’s US$240.6 mil- lion. Net sales and net income for 2002 include only four months of contri- butions from Rietschle, which was acquired in August 2002. Looking ahead to 2004, CEO Timothy Brown said they are optimistic about the year ahead as they antici- pate additional operational improvements within the pump and compressor busi- ness. “Our priorities will be on growing sales and improving our operations with particular emphasis on reducing costs, improving on-time delivery and lower- ing our overall cost of quali- ty,” explained Brown. The company recently announced plans to shut its facility in Wuppertal, Ger- many, with an anticipated cost for the first three quar- ters of 2004 of US$3 million. The Wuppertal product line will be transferred to the new Memmingen facility by the end of June 2004. Thomas Industries Inc, USA Key Figures (US$ million) Quarter ended 31.12 2003 2002 Net Sales 99.6 85.4 Of Which: Pump and Compressor 99.6 85.4 Cost of Product Sold 66.1 55.8 Gross Profit 33.6 29.6 Operating Income 14.1 14.7 Of Which: Pump and Compressor 8.8 8.4 Net Income 8.5 8.7 Year ended 31.12 2003 2002 Net Sales 376.8 240.6 Of Which: Pump and Compressor 376.8 240.6 Cost of Products Sold 246.8 154.9 Gross Profit 129.9 85.7 Operating Income 60.1 54.5 Of Which: Pump and Compressor 36.7 31.7 Net Income 37.3 32.7 COMMENT The Weir Group plc, UK Key Figures 1 (£ million) Year ended 26.12 2003 2002 Turnover 793.4 841.7 Of Which: Engineering Products 428.9 429.2 Engineering Services 188.9 153.4 Order Input 727.4 675.4 Operating Profit 63.5 62.2 Pre-tax Profit 56.7 60.0 Profit attributable to The Weir Group 42.9 50.2 1 Continuing operations Weir’s 2003 performance was shaped by operational improvements, new product development and successful geographic expansion. These activities, together with the economic upturn that the company is beginning to see in a number of sectors, are expected to contribute to an improved 2004 performance. In 2003, turnover from continuing businesses in- creased 0.9% to £793.4 mil- lion. Operating profit before interest, tax, goodwill and exceptionals was £63.5 mil- lion compared with £57.7 million last year, a 10.0% gain. Engineering Products turnover, which includes Minerals, Clear Liquid and Valves & Controls, was in line with 2002 at £428.9 mil- lion, while operating profit increased 7.2% to £34.9 mil- lion, driven by the stronger performance from Minerals and an improved result from Clear Liquid. The results for Valves & Controls were affected by continued softness in the power and nuclear markets and one-off charges to ration- alize the French operations and to improve the UK busi- ness. Order input responded positively to new product and sales initiatives. The contin- ued softness in the US and European power markets was countered by extensive growth in Asia. Engineering Services’ turnover increased 23% to £188.9 million, resulting in an operating profit of £20.6 million against £15.3 million in 2002. The improvements reflect efforts to grow UK service operations and exploit opportunities in the key growth markets of North America, Australia and the Middle East. In 2003 Weir committed extensive funds to new prod- uct development. In the Clear Liquid Division new product lines included the Uniglide range and the new Rotojet VSR 2100 pump. A new range of pumps from the Minerals Division introduced specifically to boost market share in the Canadian oil sands industry has enjoyed encouraging initial results. COMMENT

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Page 1: The Weir Group plc, UK

9

April 2004

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Pump Industry Analyst

Thomas Industries Increported record earnings forthe year ended 31 December2003, on net sales that werean all time record for thecompany’s pump and com-pressor business.

2003 net income wasUS$37.3 million, up fromUS$32.7 million in 2002.Net sales for the year wereUS$376.8 million, well upon last year’s US$240.6 mil-lion. Net sales and netincome for 2002 includeonly four months of contri-butions from Rietschle,which was acquired inAugust 2002.

Looking ahead to 2004,CEO Timothy Brown saidthey are optimistic about

the year ahead as they antici-pate additional operationalimprovements within thepump and compressor busi-ness. “Our priorities will beon growing sales andimproving our operationswith particular emphasis onreducing costs, improvingon-time delivery and lower-ing our overall cost of quali-ty,” explained Brown.

The company recentlyannounced plans to shut itsfacility in Wuppertal, Ger-many, with an anticipatedcost for the first three quar-ters of 2004 of US$3 million.The Wuppertal product linewill be transferred to the newMemmingen facility by theend of June 2004. ■

Thomas Industries Inc,USA

Key Figures (US$ million)Quarter ended 31.12

2003 2002

Net Sales 99.6 85.4Of Which:Pump and Compressor 99.6 85.4

Cost of Product Sold 66.1 55.8

Gross Profit 33.6 29.6

Operating Income 14.1 14.7Of Which:Pump and Compressor 8.8 8.4

Net Income 8.5 8.7

Year ended 31.12

2003 2002

Net Sales 376.8 240.6Of Which:Pump and Compressor 376.8 240.6

Cost of Products Sold 246.8 154.9

Gross Profit 129.9 85.7

Operating Income 60.1 54.5Of Which:Pump and Compressor 36.7 31.7

Net Income 37.3 32.7

COMMENT

The Weir Group plc,UK

Key Figures1 (£ million)Year ended 26.12

2003 2002

Turnover 793.4 841.7Of Which:Engineering Products 428.9 429.2Engineering Services 188.9 153.4

Order Input 727.4 675.4

Operating Profit 63.5 62.2

Pre-tax Profit 56.7 60.0

Profit attributable to The Weir Group 42.9 50.2

1 Continuing operations

Weir’s 2003 performancewas shaped by operationalimprovements, new productdevelopment and successfulgeographic expansion. Theseactivities, together with theeconomic upturn that thecompany is beginning to seein a number of sectors, areexpected to contribute to animproved 2004 performance.

In 2003, turnover fromcontinuing businesses in-creased 0.9% to £793.4 mil-lion. Operating profit beforeinterest, tax, goodwill andexceptionals was £63.5 mil-lion compared with £57.7million last year, a 10.0%gain.

Engineering Productsturnover, which includesMinerals, Clear Liquid andValves & Controls, was inline with 2002 at £428.9 mil-lion, while operating profitincreased 7.2% to £34.9 mil-lion, driven by the strongerperformance from Mineralsand an improved result fromClear Liquid.

The results for Valves &Controls were affected bycontinued softness in thepower and nuclear markets

and one-off charges to ration-alize the French operationsand to improve the UK busi-ness. Order input respondedpositively to new product andsales initiatives. The contin-ued softness in the US andEuropean power markets wascountered by extensivegrowth in Asia.

Engineering Services’turnover increased 23% to£188.9 million, resulting inan operating profit of £20.6million against £15.3 millionin 2002. The improvementsreflect efforts to grow UKservice operations andexploit opportunities in thekey growth markets of NorthAmerica, Australia and theMiddle East.

In 2003 Weir committedextensive funds to new prod-uct development. In the ClearLiquid Division new productlines included the Unigliderange and the new RotojetVSR 2100 pump. A newrange of pumps from theMinerals Division introducedspecifically to boost marketshare in the Canadian oilsands industry has enjoyedencouraging initial results. ■

COMMENT