Glasgow engineer Weir (WEIR) is in the market’s black books on Thursday after hinting at pricing pressure and softening industry demand. That some equipment orders have already been put back is adding to the feeling that the company is facing tough times ahead.
This is reflected in the company’s share price slumping more than 7% in early trade today to £16.59, making them among the biggest losers across the entire FTSE All Share index. Only chemicals firm Sirius Minerals (SXX) is harder hit (down 13%), after it warned of ballooning costs on a major project.
‘August activity levels supporting our Oil & Gas aftermarket business remained as expected, albeit with initial signs of pricing pressure,’ the company says today. But there was a ‘considerable softening in demand’ for original equipment and some order book delivery deferrals, Weir says.
PICKS, SHOVELS AND PUMPS
Weir sells tools and equipment to the resources industry - mining groups and oil and gas producers, for example. It has benefited from the emergence of a substantial industry in the US for shale gas, to which it is major provider of pumps.
Weir is today embarking on its annual roadshow, where it will catch up with major investors and analysts to spell out its plans and hopes for the next year or so.
It is expected to go into some detail about the current condition of its North American oil and gas markets, and will likely want to show off ESCO, the Portland, Oregan-based mining tools business it bought in a $1.29bn deal in April.
Ordinary investors will have to wait for updates to filter out from those conversations, so it could be wild ride for the share price in the meantime.
