Engineering news
Glasgow-based engineering company Weir Group plans to cut a further £40 million of costs this year after seeing its annual profits almost half.
The company posted pre-tax profit of £220 million for the year ended 1 January 2015, compared with £409 million in 2014.
It reported revenue of £1.9 billion for the year, compared with £2.4 billion a year earlier.
The firm saved £110 million during 2015 by closing smaller manufacturing operations in the US, Australia and Europe and consolidating 12 oil & gas service centres. Its workforce was reduced by about 1,600. However, the company incurred exceptional charges of £365 million.
Weir Group said it plans to realise £100 million savings in 2016 from the disposal of non-core assets.
Chief executive Keith Cochrane said: “Despite market challenges which are unprecedented in recent years, Weir has delivered a resilient performance in Minerals, maintained leadership and market share in Oil & Gas, and created an additional platform for growth with the new Flow Control division. As Weir has always done, we adapted quickly to market conditions. Costs were aggressively reduced while the cash generative nature of the business supported continued investment in our strategic priorities.
“Given ongoing market conditions, 2016 will be another challenging year. As a result, we are planning for a further reduction in constant currency Group operating profits, driven primarily by lower activity levels in upstream oil and gas markets. We will continue to invest for the medium term supported by our aftermarket-focused business model, further cost reduction initiatives, non-core asset disposals and a clear focus on cash generation, to ensure we benefit fully and quickly when markets improve."
The company reported a 17% increase in its R&D investment – this includes developing Internet of Things solutions for the mining, oil and gas, and power sectors with Microsoft.