The shares of Weir (LSE: WEIR) sank 150p, or 7%, to 2,106p during early trade this morning after the FTSE 100 member admitted third-quarter revenues and profits had come in “slightly below expectations“.
Weir, which makes slurry handling equipment for mining groups and pressure pumps for oil companies, claimed it had experienced “further project delivery delays” from its mining customers as well as “a more gradual-than-anticipated recovery” within its oil and gas markets.
The blue chip said underlying full-year pre-tax profits for 2013 on a constant currency basis were now expected to be between £425m and £435m. However, today’s statement added actual profits were likely to be between £8m and £12m lower due to adverse currency movements.
Some City experts had been forecasting 2013 profits of £450m before today.
Weir said its third-quarter had experienced an ‘order input’ up 7% on last year, with equipment orders down 4% and aftermarket orders up 15%.
The group also stated its net debt position had fallen during July, August and September, and was expected to reduce further during the rest of 2013.
Assuming pre-tax profits of £420m and a 26% tax rate, earnings may now be 145p per share for 2013. Following this morning’s price reaction, Weir’s shares could now trade at 14-15 times possible profits.
Projections for a 41p per share dividend issued before today could support a potential 2.7% income.
