Weir Group (LON:WEIR) posted a 22 percent fall in profits on Wednesday, however it saw marked improvement in the fourth quarter.
The company, which is part of the FTSE-250 Index saw half year pre-tax profits fall to £170 billion, down from £219 million a year previously, as it felt the effects of the downturn in the commodity markets, with continual plunges in oil prices in particular proving
Whilst first-half revenues ultimately fell by 2 percent to £1.845 billion, the company reported a return to growth in the fourth quarter of 10 percent, benefiting from evidence of recovery across the mining, oil and gas markets.
With regards to operating profit, the company’s minerals business created £217 million for the year, compared to £192 million in 2015. Conversely, its struggling Oil and Gas division suffered an operating loss of £9 million in 2016, a contrast from the £52 million profit in 2015.
The Oil & Gas unit was unprofitable as operating margins turned to minus 2.2% from positive 9.6% a year earlier, while margins within the Minerals unit improved year-on-year to 19.5% from 19.2%.
Group chief executive, Jon Stanton stated: “Oil & Gas extended its technology leadership amidst difficult end markets and Flow Control benefited from its recent restructuring which supported margins in challenging downstream energy markets.”
He continued: “At a group level, we expect to deliver strong cash generation and good growth in constant currency revenues.
“Profit growth will be further supported by foreign currency translation benefits, partly offset by incremental investments in people and technology.”
In addition, across its operations in North America, the company said that its oil & gas division managed to break-even during the quarter, with an expected return to “modest profitability” as commodity markets continue to recover.
Following an extended period of negotiation and speculation, the Organization of the Petroleum Exporting Countries (OPEC) announced a commitment to reducing oil output to counteract over-saturation within the market. Earlier this month, oil prices experienced a recovery driving higher amid the agreement, despite continued pressure from U.S production.
Despite the difficult results, Weir announced they intend to maintain its interim dividend at 44p per share.
As a result of the disappointing performance figures, shares in Weir Group were down 2.92 percent as of 10.59AM (GMT).