The company, which focuses on the natural resources sector, said tight financing conditions for operators in the North American oil and gas markets intensified in the third quarter leading to an accelerated slowdown in demand for pressure pumping equipment.
The Oil & Gas division's orders in the third quarter were 32% lower than in the same period of 2018, as a result of which the division was only moderately profitable in the quarter; worse still, the division's profitability is expected to head further south in the final quarter of the year.
The Minerals division made a better fist of things despite “a mixed short-term commodity price outlook”.
The pipeline of expansion projects was strong with the long-term outlook for copper, gold and iron ore remaining supportive, Weir said.
Nickel projects were accelerated while further lithium projects are expected to be deferred until demand catches up with recently added supply. Overall, miners continued their focus on increasing the productivity of their existing assets supporting demand for integrated solutions with short payback periods although there were some project approval delays due to customer caution over the impact of trade tensions on the outlook for global growth.
Divisional orders for the third quarter were up 17% compared to the prior year. Full-year expectations for the division remain unchanged.
ESCO, the manufacturer of excavators, dredgers and other “ground engagement” bits of equipment that Weir acquired in 2018, saw divisional orders in the third quarter rise 9% year-on-year on a pro forma basis. Full-year expectations for this division also remain unchanged.
At the group level, orders in the third quarter from continuing operations were up 4% year-on-year but unchanged on a like-for-like basis.
Net debt at 30 September was little changed from the end-June level.
Weir continues to expect strong second-half cash generation supported by a working capital inflow relative to the position at the end of June.
“The growth delivered in Minerals and ESCO reflects our integrated solutions strategy and the continued strength of our after-market business model,” declared Joe Stanton, the chief executive of Weir.
“Our project pipeline in mining remains encouraging but in the third quarter, we saw some project approvals deferred due to negative macro sentiment. In North American oil and gas markets, demand was impacted by an intensified focus on cash preservation in the quarter. In response we have undertaken a c.£30mln cost reduction programme in this division to support competitiveness in the short-term,” he added.
The shares fell 1.2% to 1,415p on the trading update.
Broker Shore Capital reiterated its 'sell' recommendation and said it expected to cut its full-year profit before tax forecast by around 2-3% following the warning of difficult trading in the Oil & Gas division.