Weir ready to cash in on UK's new generation of nuclear power plants

Mark Selway: When the UK government’s nuclear power programme goes ahead, Weir will be a beneficiary

Published Date: 13 August 2008
By Erikka Askeland
Business correspondent

GOVERNMENT plans to build a new generation of nuclear power stations could provide a further boost to the fortunes of Weir Group, which has revealed a big rise in half-year turnover and operating profits.
Revenues at the group's growing power generation division were up 10 per cent to £100 million, the interim results showed yesterday.Already boosted by growth in China and North America , the generation arm of the Glasgow-based firm is set to gain further as the government presses ahead with building more nuclear stations.Yesterday Weir chief executive Mark Selway predicted that, when the UK government's nuclear power programme went ahead, Weir would be a beneficiary.Selway said: "A number of governments are recognising they either need to upgrade (nuclear] facilities, or build new facilities. "Our customers are people like Areva and GE and we tend to be specified because of specialist nature of the product we produce."Weir has already produced nuclear safety valves for a newly built factory in Massachusetts in the US as well as in China.It provides the devices through supplying key nuclear build sub-contractors, including French business Areva, a partner of British Energy suitor EDF, and General Electric."Weir is picking up business outside UK and one day, presumably, there will be business in the UK as well, if the government gets its act together," said Michael Blogg, engineering analyst with Arbuthnot Securities.Yesterday was the first time Weir Group reported under its new divisional structure. Power and industrials is one division. Minerals is another and oil and gas makes the third.Overall group revenue was up 46 per cent to £632m while operating profits, before amortisation and tax, nearly doubled to £84.7m. However, profits after tax were down to £108.5m from £117.9 million a year earlier, affected by the group's active disposal and acquisitions programme. Revenues in the group's largest division, minerals, was up 29 per cent to £340m while operating profits increased 45 per cent to £53.4m.Turnover in the division was boosted almost £20m by CH Warman, the African pumps company it acquired at the end of last year. Operating profits for the oil and gas division were £27.8m, up an impressive 266 per cent thanks to the "high margin" Texas pumps business it bought last year, SPM. With its new RBS-backed debt facilities hoisted from £475m to £550m, Weir has anywhere from £250m to £300m for further acquisitions. Selway said he did not expect a deal the size of SPM, which cost them £328m, although he said he will acquire new businesses in the form of some "lumpy bolt-ons".