Interim Management Statement

THE WEIR GROUP PLC

9 May 2012

INTERIM MANAGEMENT STATEMENT for the period 31 December 2011 to 8 May 2012¹

The Weir Group PLC will today announce that, supported by a strong performance during the first quarter, it continues to expect a year of further good progress in line with previous guidance for the Group overall.  Over the year the impact on the Oil & Gas division of the rapidly changing pressure pumping market will be offset by strong trading in the Minerals and Power & Industrial divisions.

The Group's first quarter performance benefited from a strong opening orderbook, a positive contribution from acquisitions and significant input growth, including record quarterly orders for the Minerals and Power & Industrial divisions.  As expected, input from upstream pressure pumping activities fell as lead times reduced and the movement of equipment from gas to oil and liquids rich shale formations impacted customer activity levels.  

Order input² was up 14% against the prior year period on a reported basis and up 5% on a like for like³ basis.  Original equipment orders were up 14% (up 1% like for like) and aftermarket orders up 15% (up 9% like for like).

Strong revenue growth was achieved in the quarter driven by both organic growth and a first contribution from recent acquisitions.  Operating profits are up on the prior year period and together with operating margins are in line with our expectations.  Although we remain vigilant given current macro-economic uncertainty and the rapidly changing pressure pumping market, this performance underpins our confidence in delivering further good progress in 2012 in line with our previous guidance for the Group overall.

MINERALS

Order input for the 13 weeks was up 18% against the prior period and ahead of our expectations.  Original equipment input was 31% higher as a number of larger projects reached the order commissioning stage.  Aftermarket input was up 10% against the prior period.

Original equipment activity increased in Africa and South America with a number of notable contract wins, including the first orders for the organically developed screens range.  Input from the Canadian oil sands markets remained strong supported by a number of brownfield expansions.  High activity levels, combined with the benefits of a growing installed base and strong growth across the product portfolio supported positive aftermarket trends.  We continue to see a good pipeline of future opportunities with recent market uncertainty not impacting customer production levels or our view on global mining capital expenditure trends and as a result expect divisional revenues to be ahead of current market consensus.  Our guidance for divisional operating margins remains unchanged.

OIL & GAS

Reported order input was down 5% on the prior year period and decreased 26% on a like for like basis. Original equipment input was 21% lower (46% down on a like for like basis) driven by changing conditions in the pressure pumping market.  Aftermarket input was up 14% against the prior period (3% down on a like for like basis). Input from Seaboard and Novatech was up 13% on the equivalent pre-acquisition prior year period.  Integration of each business is progressing as planned.
Like for like upstream input was down 32% with conditions in the North American pressure pumping market changing rapidly as the movement of rigs and completion equipment from dry gas to oil and liquid rich formations accelerated.  Combined with the previously indicated reduction in lead times and unwinding of 2011 forward orders, this uncertain market environment led to materially lower original equipment frac pump orders and the cancellation of $72m of orders placed in 2011.  Falling utilisation as customers moved equipment from dry gas to liquid rich basins, some of which require lower pressure hydraulic fracturing, also contributed to overstocking of certain aftermarket products in the supply chain.  We expect the current dislocation to be a transitional phase with total US land rig count forecast to remain around current levels for the balance of the year, supported by continued strong oil prices.

We now expect full year revenues from SPM and Mesa to be slightly lower than 2011 and below our prior guidance.  Materially lower original equipment frac pump activity, particularly in the second half, will be partially offset by strong growth across the broader portfolio as we introduce innovative new products and add targeted manufacturing and service capacity.  This means in 2012, including acquisitions, we expect original equipment frac pumps will represent only 10%-15% of divisional revenues compared to 30% in 2011.  A focus on operating efficiencies and an increasing aftermarket mix means that our upstream margin expectations remain unchanged.

Both Downstream and Service operations recorded positive input growth in the period and continue to trade in line with expectations.  Divisional margin expectations remain unchanged.

POWER & INDUSTRIAL

Order input for the 13 weeks increased 35% on a reported basis and 27% on a like for like basis and ahead of our expectations, underpinned by a strong performance from American Hydro and the benefits of strategic initiatives to accelerate growth across global valve markets.  This included the award of a substantial landmark nuclear control valve contract in the Middle East for delivery across 2013-14.  Excluding large nuclear original equipment orders, like for like input growth was 17%.  Quotation activity remains strong and a growing order book provides confidence in the medium term outlook for the division. We continue to expect good profit progression in 2012 with divisional operating margin expectations unchanged.

NET DEBT

Net debt at 30 March 2012 was higher than that reported at 30 December 2012, primarily reflecting completion of the acquisition of Novatech LLC.  On 22 February the Group issued US$1 billion of fixed rate notes, with a weighted average maturity of 9.6 years.

Notes:

1. Financial information is given for the 13 week quarter ended 30 March 2012 

2. Order input is reported on a constant currency basis  

3. Where growth is provided on a like for like basis, like for like is defined as 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 Wednesday 9 May to discuss this statement.   Participants can join the call on [phone] using the conference ID 77284562.  A recording of this conference call will be available until Tuesday 15 May on [phone] using the conference ID 77284562#.

Contact details:
The Weir Group PLC
Vicky Ferrier, Head of IR & Communications	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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