By Scott Wright

WEIR Group has hailed the resilience of its core mining operation throughout the coronavirus pandemic, with chief executive Jon Stanton declaring that the engineer had “not missed a beat” to ensure supplies to customers were not interrupted by the crisis.

However, Mr Stanton said oil and gas prices remain too low to spark a revival in the US shale gas sector, which Glasgow-based Weir remains on course to exit.

First-half profits at Weir dropped by 27 per cent to £108 million as the company grappled with the fall-out from the pandemic and instigated a range of cost-saving measures.

The company, which said the uncertainty posed by the coronavirus means it is still too early to provide guidance on its full-year performance, has removed around 850 staff from the payroll since the pandemic struck and scrapped plans to pay dividends this year. In all it expects to make savings of around £75m from its cost base this year.

While around 5,000 of Weir’s office staff continue to work at home, it has 8,500 employees who continue to work every day in plants, foundries, and service centres to ensure its activities are maintained, Mr Stanton said.

“Our customers are in essential industries, and as an essential supplier we have had to figure out a way of keeping going,” he noted.

Explaining that the company has had to reconfigure how its factories operate to reflect social distancing and safety measures, Mr Stanton added that it has been a “Herculean effort” by staff.

He said: “We have kept our customers going, and that has really been showing on the mining side, which is now 80% of our business. We have not missed a beat in terms of being able to supply our customers.”

Within mining, orders were down 6% fall at Weir’s minerals division, which is focused on processing activity. That came against a backdrop of a global iron ore production falling 15% below pre-Covid levels, Weir said. The decline was more pronounced on the extraction side, with orders at its ESCO division, which supplies ground-engaging tools to the surface mining industry, down 17%.

Mr Stanton said there has been a pick-up in processing and extraction since the period end, with activity beginning to return to normal after mines in countries such as South Africa and Peru had closed. But he noted the outlook was still uncertain.

Mr Stanton said: “We don’t know what’s around the corner in terms of how the pandemic might play out from here, but clearly the first wave of disruption is largely behind us.”

Elsewhere, Mr Stanton said the oil price, which collapsed in the early weeks of lockdown as demand plunged, remains “below incentive level” to trigger a revival of shale activity in the US.

He said the price of West Texas Intermediate would need to get to $45 to $50 to change activity levels. “You can see that in the rig count, which has gone from close to 1,000 just over a year ago to 250,” he said.

“It is almost at record lows. I can’t see that changing very much unless there is a meaningful catalyst in the oil and gas price, which is difficult to see coming.”

Asked for an update on the company’s preparations to offload its oil and gas division, Mr Stanton said: “We need to understand when would be the best moment to maximise value. We can’t predict when that would be, but we have been very active in talking to participants to see how me might exit the business.

“The market backcloth makes it difficult, not impossible, to do anything in the short term.”

On dividends, Mr Stanton said the continuing uncertainty around coronavirus, which could yet result in production shutdowns, is the reason for caution in making payments to shareholders. The board will next formally review the current policy in February.

Shares closed down 9.5p at 1,200p.