Interim Management Statement

5 November 2012

THE WEIR GROUP PLC
INTERIM MANAGEMENT STATEMENT for the period to 2 November 2012

SET TO DELIVER DOUBLE DIGIT PROFIT GROWTH IN 2012

The Group's global presence and diverse end market exposure, together with targeted cost reductions, ensure it is on track to deliver full year 2012 profit before tax, amortisation and exceptional items in the range of £440m-£450m, within the range of our expectations in July and in line with current market consensus.  Conditions remained mixed across the Group's end markets, impacted by increasing global macro-economic uncertainty and resultant declines in certain commodity prices.  
   
As anticipated, revenue and profit growth moderated in the third quarter as a result of the lower opening order book and reduced activity levels at SPM and Mesa.  Group revenue and profits were ahead of the prior year quarter, benefiting from the impact of prior year acquisitions which continue to perform satisfactorily.  Group operating margins for the quarter were in line with both the prior year period and our expectations.  

Reported order input for the Group in the third quarter was 8% down on the prior year and 15% lower on a like for like basis.  As a result, reported order input for the 39 weeks increased by 2% (H1: up 8%) against the prior year period. On a like for like basis for the 39 weeks order input was 6% lower (H1: down 1%) with original equipment orders down 18% (H1: down 13%) and aftermarket orders up 6% (H1: up 11%).

MINERALS

The division's largest commodity exposures are in copper and gold markets, where relatively stable prices supported ongoing activity.  This was partially offset by softer trading conditions and selective destocking across iron ore and coal markets in Australia and Brasil and industrial unrest in the South African mining sector although strong activity levels continued across the rest of Africa.  

Order input for the third quarter was in line with revenues and increased by 2% over the prior year, giving total input growth for the 39 weeks of 8% (H1: 11%). Original equipment orders for the 39 weeks were up 6% (H1: 9%) with third quarter input broadly flat year on year as certain planned projects, particularly in Australia, were deferred.  Aftermarket input was up 10% (H1: 13%) as the division continues to benefit from its diverse global presence and growing installed base.

We continue to see a good pipeline of future original equipment opportunities, despite increasing customer caution regarding new greenfield projects, although third quarter input trends mean full year 2012 divisional revenues are now expected to be slightly below our July expectations with operating margin guidance unchanged.

OIL & GAS

Oil prices remained relatively robust in the quarter while US natural gas prices recovered somewhat from their lows in the first half of 2012.  US land rig count fell 6% in the quarter as oil activity flattened and gas continued to decline.  In Canada drilling failed to return to pre-Spring break levels and was 29% down year on year by the end of the quarter.  Downstream and Service markets continued to display positive trends in the period.

Third quarter like for like upstream input (SPM and Mesa) was broadly in line with the second quarter as the impact of lower market activity levels was offset by the benefits of our strategic initiatives and some customers returning to more normalised ordering patterns. Like for like upstream input for the 39 weeks was down 45% (H1: down 37%).  Pricing pressure remains largely unchanged and the benefits of our cost reduction actions supported margins in the third quarter in line with our expectations.

Reported divisional order input for the third quarter was down 28% on the prior year and decreased 47% on a like for like basis, within the range of our July expectations despite lower upstream activity levels and partly reflecting the exceptional levels of forward ordering seen in the third quarter of 2011.  Order input for the 39 weeks was down 15% (H1: down 7%) on a reported basis and on a like for basis was down 36% (H1: down 29%) with original equipment orders 59% lower (H1: down 53%) and aftermarket orders down 8% (H1: flat).

Full year like for like upstream revenues are now expected to be around US$800m, in the middle of the range of our previous expectations.  Although market conditions remain challenging with short order lead times ensuring visibility remains limited, our full year divisional revenue and margin expectations remain unchanged.

POWER & INDUSTRIAL

Good progress continued to be made in challenging global markets with continued success in emerging markets.  Order input for the quarter was up 16% on the prior year quarter and 12% higher on a like for like basis.  Input for the 39 weeks was up 20% (H1: 22%) and 14% ahead on a like for like basis (H1: 15%).  

Full year divisional revenue and margin expectations remain unchanged.

NET DEBT

Net debt at 28 September 2012 was in line with that reported at 29 June 2012.  In line with seasonal trends the Group is expected to be cash generative in the fourth quarter, such that we expect a reduction in year end net debt in line with previous expectations.

Notes:

1. Financial information is given for the 39 weeks ended 28 September 2012 

2. Order input is reported on a constant currency basis  

3. H1 refers to the financial period 26 weeks ended 29 June 2012 

4. Third quarter refers to the financial period 13 weeks ended 28 September 2012 

5. Where growth is provided on a like for like basis, like for like is defined as the comparison of current year results to the equivalent prior year period for those businesses that have been part of the Group throughout the current and prior year reporting period, on a constant currency basis 

A conference call for analysts and investors will be held at 8 a.m. (UK time) on Monday 5^th November to discuss this statement.   Participants can join the call on [phone] using the conference ID 45344449.  A recording of this conference call will be available until Monday 12 November on [phone] using the conference ID 45344449.

Contact details:
The Weir Group PLC
Andrew Neilson, Head of Corporate Affairs and Strategy	Tel. [phone] (Mobile: [phone])
Jonathan Milne, Communications Manager	Tel. [phone] (Mobile: [phone])
Maitland	Tel. [phone]
Peter Ogden
Rowan Brown

This information includes 'forward-looking statements'.  All statements other than statements of historical fact included in this release, including, without limitation, those regarding the Weir Group's financial position, business strategy, plans (including development plans and objectives relating to the Company's products and services) and objectives of management for future operations, are forward-looking statements. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Past business and financial performance cannot be relied on as an indication of future performance.

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Source: The Weir Group PLC via Thomson Reuters ONE

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