GLASGOW-based engineering company Weir Group is on track to increase its dividend for the 30th consecutive year in 2013 after posting a 12% rise in pre-tax profit to £443 million for last year.
The specialist pumps company's revenues, up 11% at £2.5 billion, or 4% on a like-for-like basis, were weaker than the City had expected but its earnings were stronger, prompting the share price to rise to a new high.
Chief executive Keith Cochrane said the company had overcome both "indigestion" in the US shale gas sector, where a glut has put new drilling on hold, and a reduction in new mine openings by catering to the after-sales market and providing new equipment to existing mines.
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Weir announced a final dividend of 30p to be distributed on May 31, taking its full-year payout to 38p, 15% up on last year.
Mr Cochrane said Weir plans another double-digit rise next year taking the run of increases to 30 consecutive years, as the company has rebuilt from its near-collapse in the early 1980s. However, he said the dividend payouts would leave money for acquisitions.
"We view acquisitions as being about accelerating what would be an organic growth strategy," he said. "Acquisitions will continue to be part of the story."
Weir told investors it expected low single-digit revenue growth and stable margins in 2013. It said lower profits in the first half of the current year would be offset by growth in the remainder of 2013.
There was a big divergence in performance during 2012, with the minerals arm seeing a 7% rise in orders and its power business posting an 18% gain, while in oil and gas new business was down 22% or -41% if acquisitions were stripped out.
Mr Cochrane insisted Weir's recent purchases of companies in the shale sector were not ill-timed, adding that it was "very much consistent with the strategy to extend our market position".
He said low gas prices were already beginning to spark demand from the likes of power stations that would feed through to increased business.
He added that fracking was now being explored outside the US in territories such as Russia, China, Australia and the Middle East.
Mr Cochrane said: "As we move forward into 2014/2015 we would expect original equipment markets to come back to a greater degree."
Meanwhile, he hailed a record underlying performance at its minerals arm, as it benefited from so-called brownfield development, where miners invest in existing sites. "We think planned capital expenditure will continue to grow," he said.
Mr Cochrane denied Weir was reliant on an unsustainable after-market after it accounted for 57% of orders in 2012, up from 52% in the previous year. He said: "The after-market is going to be a major driver of growth in 2013 and beyond."
He added: "We have got a big backlog of original equipment we have sold over the past few years that has yet to go into service. There is an 18-month or two-year time lag before that goes into operation and we can cater to it in the after-market."
Weir Group's employee numbers remained flat at around 14,000 although at its Glasgow head-quarters the workforce rose from 50 to around 60.
Weir's shares soared 158p, or 7.3%, to £23.22.
Gavin Nicol, Weir's director of operations support and development, took the opportunity to sell 10,890 shares, the vast bulk of his holding, to net £241,000.