WEIR Group has seen almost £350 million wiped off its market capitalisation in spite of cutting 650 jobs in a bid to lessen the impact of low oil prices.

The engineering company said around 22 per cent of its oil and gas workforce in North America will leave before the end of March with operations being concentrated on key hubs in Forth Worth, Texas, Houston and Oklahoma.

Weir, which makes valves and pumps, warned it was planning for at least two years of low prices and would keep reviewing operations.

Finance director Jon Stanton admitted the company had not anticipated $50 a barrel oil when it had made acquisitions to capitalise on the North America shale boom. It is also taking a $160m writedown on the value of operations there.

Mr Stanton said: "We have taken a very conservative set of assumptions and assumed the business is going to be down for two years before generally recovering and that is reflected in the write down we have taken."

The update, which saw underlying profits drop two per cent from £418m to £409m on flat revenue of £2.4 billion for 2014, failed to cheer investors.

Shares tumbled 163p, or 8.75 per cent, to 1700p, as Weir outlined it expects a substantial fall in both revenue and profit this year.

That reduced the market capitalisation from just short of £4bn to around £3.62bn.

On a constant currency basis Weir said revenue grew nine per cent and underlying profit before tax by seven per cent.

After taking off exceptional items, including restructuring costs and the write down, pre-tax profits fell from £431m to £149m.

Chief executive Keith Cochrane said: "We are adjusting our operations to reflect the market environment we are seeing. Obviously with the reduction in oil price it does mean there will be reduced activity and reduced requirement for our activity and services."

Mr Stanton said Weir's oil and gas business continued to perform well in the Middle East and Iraq while its services and downstream arms had also proven robust.

In minerals there is unlikely to be an increase in capital spending but production volumes, upon which around two thirds of Weir's revenue is based, is forecast to rise modestly.

Mr Stanton said: "If you look at minerals over the last couple of years its markets have been in choppy waters but the business has been incredibly resilient and we expect that to be the case [again]."

According to Mr Stanton the focus for the industrial and power division, which is exposed to a number of sectors including oil and gas, is to deliver on the cost saving programme which was announced last year.

While Weir is taking out costs across the group, a procurement drive is expected to deliver £50m savings on top of £46m already booked, Mr Stanton indicated that will not stop it from looking at acquisitions.

He said: "[Merger and acquisition] is a part of our strategy and that will continue to be the case. As we look at the current environment the challenges in oil and gas may well present opportunities in terms of acquisitions but it is difficult to call at the current stage.

"We will keep it on the radar screen. The key thing for us is to maintain our balance sheet strength."

However he did confirm that spending on certain activities key to the long term future of the business, such as research and development, have been essentially ring fenced.

Weir increased its dividend for the 31st year in succession, up five per cent from 42p to 44p.

Thomas Rands, from Investec, said: "The outlook statement reads more negatively then we expected with 'substantial reductions' in demand and associated pricing pressure. Weir is aggressively cutting costs including taking out 650 US posts in oil and gas, however, this will not be enough to offset the lower demand and price cuts."