WEIR Group has highlighted the “accelerated recovery” of the fracking industry in the US, but shares were dragged down by a 13 per cent fall in profits in its minerals division.

Overall pre-tax profits at the Glasgow-based engineering group climbed by 12 per cent to £92 million for the six months to June 30, boosted by sterling weakness. Stripping out currency gains, profits were down eight per cent to £82m.

Interim revenue pushed past £1 billion, driven by 69 per cent growth in North America, which generates around 40 per cent of Weir’s revenue, however this growth was offset by its minerals and flow control divisions.

Chief executive Jon Stanton said its oil and gas, and minerals division were “transitioning from an intense downturn into a recovery and growth phase”.

Mr Stanton, who last October replaced Keith Cochrane at the helm of the group, said the company was seeing “really good” momentum in these two core divisions.

Shares were off two per cent, having jumped eight per cent earlier in the month when Weir forecast higher earnings based on the rapid recovery of the shale gas industry in North America.

Revenue in its oil and gas division was up 53 per cent to £314m, boosted by currency gains. Weir noted that an average West Texas intermediate oil price of $50 per barrel through the period was above incentive levels for a number of North American shale basins. This led to a tightening in upstream markets, with the US land rig count increasing by 70 per cent.

Having halved staff numbers in this operation to 1,000, Weir added 300 staff in the period as order input more than doubled.

“It is a market that has bounced back very strongly, and tightened quicker than anyone anticipated,” said Mr Stanton. “Just as we responded proactively and rapidly in the downturn we’ve done the same as the market has started to recover.”

Mr Stanton said advances in technology and efficiency improvements had moved the cost curve down in shale production.

“It is in a very competitive place going forward which is why for us the long-term fundamentals look very good,” he said.

Weir said that it backed the “safe and responsible development” of shale energy in the UK and said: “We believe the UK’s expertise in the oil and gas supply chain could give it a competitive advantage as shale energy develops internationally.”

Weir said international markets remained challenging with new investment subdued, continued pricing pressure and project delays common.

In its minerals division, operating profit fell 13 per cent to £105m as total revenue was flat at £686m, after currency gains were eliminated.

Capital investment by miners fell for a fifth year, although Weir said sustaining expenditure on maintenance and productivity improvements had started to recover after a period of under-investment.

Mr Stanton said that after a “bumpy ride” mining customers were pushing production on the back of strong commodity prices.

“Overall capital expenditure is falling modestly. What is growing is the sustaining and replacement capex, which is a real sweet spot for us, helping our customer optimise existing mine sites or reduce their cost per tonne,” said Mr Stanton.

He said Weir had taken on an additional 150 sales and engineering staff to help customers increase throughput on brownfield sites. “We’re seeing momentum and growth and I expect that to be the environment that we’re in over the course of the next two or three years.”

Mr Stanton said margins were “a bit soft” because of investment in people, technology reconfiguring manufacturing capacity and the supply chain, “so that we are ready to take full advantage of those market themes”, adding that margins would “come back strong in the second half”.