Lower results knock Weir: Scottish engineer finds the going 'a bit mixed, a bit patchy'

WEIR GROUP, the Scottish engineer, provided evidence yesterday that the widely expected bounce in companies' profitability for the September reporting season may be accompanied by unpleasant surprises, writes Robert Cole.

The company's shares dropped 30p to 318p yesterday as the market, which had been anticipating good news, digested a fall in profitability and downbeat comments on trading.

Pre-tax profits were pounds 16.8m for the six months to 2 July, down from pounds 18.5m. Weir was hit by the pounds 2.8m cost of redundancies and by stagnant operating profits.

Weir makes a large number of engineered components for factory plant and large infrastructure projects such as power stations and water works.

Ron Garrick, the managing director, said: 'It's a bit mixed, a bit patchy. The FT-SE 100 index may have been storming through the 3,000 marker but out here in the sticks things are a little flat.'

His chairman, Lord Weir, said: 'Order input in the first half was generally very similar to the second half of 1992. In the second quarter bookings were in total somewhat below that achieved in the first quarter.'

Cost control meant 230 of Weir's 6,300 workforce lost their jobs. Operating profit was pounds 14.8m compared with pounds 14.6m, and prices were put under pressure. The operating margin fell from 7.5 per cent to 6.6 per cent as turnover rose to pounds 224m from pounds 195m.

Earnings per share fell from 8.2p to 7.4p. However, disregarding the redundancy costs earnings managed to increase from 8.2p to 8.4p.

Mr Garrick said trading since the end of the half-year period was little improved. However, full-year figures will include a contribution from Darchem, the engineering concern that Weir bought from William Baird, the textiles company, for pounds 16m at the end of July.

Weir had pounds 67m of cash on 2 July compared to pounds 52m at a similar point last year. While the Darchem acquisition has eaten into this, Weir is looking to make other purchases.

The interim dividend was raised to 1.9p from 1.75p. Weir paid 5.9p for the whole of 1992.