Feb. 26 (Bloomberg) -- Weir Group Plc rose to the highest price in more than 24 years as the U.K.’s biggest supplier of pressure pumps forecast a return to underlying growth this year, citing better prospects in its energy business.
Momentum increased in oil and gas last year and profitability in that business improved in the second half, the Glasgow, Scotland-based company said in a statement today. Operating profit in 2013 declined 4 percent to 467 million pounds ($780 million). That beat analysts’ average estimate of 462.4 million pounds, according to data compiled by Bloomberg. The shares advanced as much as 8.3 percent.
“We’re gaining traction in China where shale is starting to develop,” Chief Executive Officer Keith Cochrane said on a conference call. “It’s a tough world out there but there are lots of opportunities for us.”
The oil and gas business was helped by the acquisitions of drilling control company Mathena Inc. and mining supplier R Wales last year, which contributed 70 million pounds in revenue. Weir predicted revenue and profit growth this year on a constant currency basis with margins “broadly in line” with 2013 levels.
The stock rose as much as 194 pence to 2,546 pence, the highest price since September 1989. The shares were up 7.1 percent at 2,520 pence as of 11:19 a.m. in London, giving the company a market value of 5.36 billion pounds.
“The group remains well positioned to benefit from the long-term structural growth drivers in each of its principal end markets,” Cochrane said in the statement. Last year’s results were supported by a “robust performance” in Weir’s minerals business, according to the statement.
Weir recommended an 11 percent increase in the full-year dividend, with a final dividend of 33.2 pence.
The company’s operating margin rose to a record 19.2 percent from 19.1 percent a year earlier as it benefited from more than 40 million pounds in direct cost savings and “value chain” improvements including more efficient procurement. Total revenue fell 4 percent to 2.43 billion pounds.
Oil and gas aftermarket order intake, which includes upgrades to existing installations, improved in the fourth quarter, providing “clear evidence that the destocking during the second half of 2012 and the first half of last year has clearly returned to restocking,” Matthew Spurr, an analyst at Espirito Santo Investment Bank, said in a note. “Growth looking forwards will be heavily influenced by rig count activity post the recent U.S. cold snap.”
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