Weir, Scotland's biggest engineering company, revealed yesterday that it would no longer bid for lucrative contracts in Iraq after a deterioration of security there.
The Glasgow-based company, which makes pumps and valves used by the oil, mining and power industries, will instead concentrate its efforts in the Middle East on Saudi Arabia, Adu Dhabi and Dubai.
Mark Selway, the chief executive, said: "Realistically, until the security problems there [Iraq] have been sorted out we don't see us getting in there and doing large-scale business."
In 2005, Weir was among 2,253 companies found to have paid illicit kickbacks to Saddam Hussein's regime to win contracts from Iraq. The under-the-table payments were made before Mr Selway joined five years ago. "We did put our hands up immediately," he said. "It was only nickels and dimes really. But we put new processes in place to make sure it can't happen again. We've got a good structure in the way we go about doing business in those difficult regions."
Surging oil and commodity prices drove a 24 per cent jump in Weir's sales in the first half of this year. At £37.2m, profits before tax were 50 per cent higher than in that last year and better than even the most optimistic City forecast.
The order book is bulging, and analysts lifted their estimates for profits for the full year to about £82m from a consensus of £73m.
"Cracking set of results," Mr Selway said. "We have an increasingly positive outlook for the second half of this year. End markets are strong and we are seeing the benefit of restructuring coming through sooner than expected."
That restructuring has seen Mr Selway centre Weir on making pumps and valves for the booming oil, mining and power industries, sell 14 business, buy an Italian pump company, shift its two main plants and cut 480 jobs.
The company will pay an interim dividend of 3.75p, 6 per cent higher than in 2005. The shares rose 19p to 459p yesterday.Reuse content