Weir Group warns of job losses as oil and gas orders fall by a fifth

Glasgow-based engineering giant Weir Group has announced plans for more cost-cutting measures including redundancies after being rocked by a 23 per cent fall in orders for its oil and gas business.

The company, which makes valves and pumps for the energy and mining industries and is one of Scotland’s biggest employers, said oil and gas orders were hit during the first quarter of 2015 as global oil prices continue to languish around $50 a barrel.

Weir said it is a trend that it expects to continue over the next three months as it plans to cut 125 jobs, mostly in its North American oil and gas business, where it also said it plans to consolidate its service centres in pursuit of cost savings of £10m.

The news saw Weir’s share price up nearly 5 per cent higher by mid-morning today.

In a trading statement, Weir said oil prices had led to significant reductions in activity levels.

In more positive news the statement revealed Weir’s minerals division saw orders rise year-on-year by 5 per cent between January and April in line with expectations.

However, Weir warned that mining end markets continued to be challenging, with iron ore prices falling further in the first quarter.

Chief executive Keith Cochrane said: “While mining markets remained subdued, the performance of the minerals division once again demonstrated its resilience.

“Trading conditions in oil and gas markets were challenging through the quarter with a steeper decline in the North American rig count than the market had anticipated.

“Oil and gas activity levels are still falling and we expect a further decline in divisional revenues in the second quarter.

“In response the group is taking further actions to support profitability, including additional workforce reductions and service centre consolidations.”