WEIR Group saw its shares fall by nearly seven per cent after the engineering giant warned that pricing continues to be low in the US oil and gas market, wiping around £300 million from its stock market value.

However the Glasgow-based company declared that it was now at the beginning of a “cyclical upturn” in its main oil and gas and minerals markets, reporting that first quarter order input had leapt by 15 per cent.

Weir reported that oil and gas rose orders 50 per cent in the first quarter, driven by “significant growth” in North America. It said its mining division had seen a 13 per cent rise in after-market orders and a four per cent increase in orders for original equipment. But its flow control division saw orders fall 11 per cent, amid challenging conditions in its downstream and power markets. It expects that trend to continue throughout 2017 because it is “later cycle”.

Addressing shareholders at a routine annual meeting, at which the board received just one question from shareholders, chief executive Jon Stanton said 2016 had been “one of the most challenging the business had experienced in decades.” Amid the severe downturn in the oil and gas market, Weir, whose exposure to the sector lies largely with shale gas production, saw profits tumble by 22 per cent last year to £170m in2016, while revenue fell by 11 per cent to £1.84 billion.

Mr Stanton declared yesterday that, with order input rising in the final quarter of 2016 and building that momentum into the first quarter of this year, “the worst of the downturn appears to be over... but we should always learn our lessons.”

Speaking after the meeting, Mr Stanton said the recovery of the US shale market, driven by oil prices partially coming back, was reflected by the rig count – a key barometer of activity – doubling after slumping to a post-war low of 380 last year. The count had tumbled from a high of 1,900 in 2014.

Mr Stanton said its customers, such as pressure pumpers and oil field services companies, as well as exploration and production companies, “are getting back to work”. But he noted that pricing remains a big issue, stating that he believes it will be the “last thing that comes back” in terms of the recovery.

“You’ve got a market at the moment that still has excess capacity because our customers are ‘refurbing’ and putting their kit back to work, but the overall pressure pumping [industry] in the US is probably only 50 per cent utilised,” he said.

“Until that tightens up it is quite difficult to get pricing back down through the supply chain. Equally, among the equipment manufacturers like Weir, there’s still quite a lot of excess capacity as we soak up the demand that comes through. Again, until that starts to tighten and we see lead times push out, it’s quite difficult to get pricing.”

Adding that Weir is “pushing really hard” with customers, he said: “It’s a question of being patient.”

Weir has made cost savings of £170m since 2014 as it has grappled with the effect of the plunge in oil prices, which led it to make around 2,000 redundancies. Asked whether the redundancy process had concluded, he responded by saying that the company was hiring again. Some workers who had left have returned to work for the company, Mr Stanton said.

The Weir boss added the company remains open to continue growing through acquisitions. “Ultimately it is opportunistic,” he said. “You need a willing buyer and seller to enable anything to happen. We remain interested and we will see what becomes available.”

Shares in Weir closed down 138p at 1,945p.