- Email: [email protected]
The Weir Group plc, UK
Pump Industry Analyst
April 2003
Roper Industries Inc, USA
The Weir Group plc, UK
Key Figures (US$ million) Three months ended 31.1 2003
2002
138.3
146.5
36.5
36.7
Cost of Sales
66.9
68.0
Gross Profit Of Which: Industrial Technology
71.4
78.5
16.4
16.3
Selling, General and Admin
55.6
53.6
Operating Profit Of Which: Industrial Technology
18.8
28.4
6.9
6.8
Income from Operations
15.9
24.9
8.0
(11.5)
149.4
149.9
39.6
42.8
Net Sales Of Which: Industrial Technology
COMPANY WATCH
Key Figures (£ million) Year ended 27.12
Net Earnings/(Loss) Bookings Of Which: Industrial Technology
8
2001 926.7
Operating Profit
62.2
62.7
Pre-tax Profit
59.4
35.4
650.9
679.8
1.9
(66.0)
Order Input Cash in Hand
COMMENT Roper’s new, market-focused operating segment structure is designed to better serve its customers and capture significant internal and external synergies. The company says its existing business managers have responded well to the new structure, teaming up with Roper’s segment leaders to develop operational improvement initiatives designed to drive top-line and bottom-line performance. Roper currently expects that these initiatives could generate as much as US$15 million in annualized cost savings. Among the cost reduction efforts being made in the Industrial Technology segment is the opening of a production facility in Shanghai, China, which should yield cost savings starting
2002 841.7
Turnover
in the third quarter. In addition, the collaboration of sourcing among segment brand centres is expected to produce additional cost savings starting in the second quarter. Industrial Technology’s net sales were US$37 million in the first quarter, or roughly flat with net sales in the year-ago period. Quarterly bookings of US$40 million were 8% lower than the prior year period, but first quarter 2002 numbers included annual blanket OEM orders that are being replaced with quarterly orders as well as a large order for a new application that was subsequently cancelled. First quarter operating profit increased slightly, reflecting the benefits of cost actions taken over the past four quarters. ■
COMMENT Engineering Products, which includes the Minerals, Clear Liquid and Valves and Controls divisions, saw 2002 operating margins grow to 7.6% (7.2% in 2001) despite a 3% reduction in turnover to £429.6 million. This growth was driven by stronger performances in Minerals and Valves and Controls, which offset the effects of reduced volumes in the Clear Liquid pump operations and increased competition in most product areas. Minerals, in particular, had an excellent year growing its order book, margins and cash flow despite continued softness in the US and Europe markets. South American operations continued to produce year on year growth in both sales and profits, building strong relationships with the region’s mining majors. Engineering Services achieved a 13% increase in turnover to £150.7 million. Operating profits of £15.2 million were up 26%. Weir Engineering Services grew sales by 29% mainly due to its hydro refurbishment and asset management activities and the valve services activities which were trans-
ferred to this business from the Valves and Controls division. Techna’s turnover was down 1.3% at £105.0 million, while operating profit at £5.0 million was down 50.0% (£10.1 million in 2001) due to the timing of contract completions and their impact on profit taking in 2001 which was not repeated in 2002. Weir says its key management focus for 2003 will be to ensure that the changes they have initiated are fully implemented to yield their potential. At the same time the company says it will continue to invest in new products and in growth sectors of its business. Weir acknowledges that the current economic and geopolitical uncertainty makes it particularly difficult to predict the outlook for the year ahead. Currently the Minerals, Clear Liquids and Valves divisions are experiencing ongoing market and competitive pressure. The Services Division is continuing to experience strong enquiry levels whilst Techna (formerly Contracting) remains affected by the deferment of large capital projects. ■
April 2003
Roper Industries Inc, USA
The Weir Group plc, UK
Key Figures (US$ million) Three months ended 31.1 2003
2002
138.3
146.5
36.5
36.7
Cost of Sales
66.9
68.0
Gross Profit Of Which: Industrial Technology
71.4
78.5
16.4
16.3
Selling, General and Admin
55.6
53.6
Operating Profit Of Which: Industrial Technology
18.8
28.4
6.9
6.8
Income from Operations
15.9
24.9
8.0
(11.5)
149.4
149.9
39.6
42.8
Net Sales Of Which: Industrial Technology
COMPANY WATCH
Key Figures (£ million) Year ended 27.12
Net Earnings/(Loss) Bookings Of Which: Industrial Technology
8
2001 926.7
Operating Profit
62.2
62.7
Pre-tax Profit
59.4
35.4
650.9
679.8
1.9
(66.0)
Order Input Cash in Hand
COMMENT Roper’s new, market-focused operating segment structure is designed to better serve its customers and capture significant internal and external synergies. The company says its existing business managers have responded well to the new structure, teaming up with Roper’s segment leaders to develop operational improvement initiatives designed to drive top-line and bottom-line performance. Roper currently expects that these initiatives could generate as much as US$15 million in annualized cost savings. Among the cost reduction efforts being made in the Industrial Technology segment is the opening of a production facility in Shanghai, China, which should yield cost savings starting
2002 841.7
Turnover
in the third quarter. In addition, the collaboration of sourcing among segment brand centres is expected to produce additional cost savings starting in the second quarter. Industrial Technology’s net sales were US$37 million in the first quarter, or roughly flat with net sales in the year-ago period. Quarterly bookings of US$40 million were 8% lower than the prior year period, but first quarter 2002 numbers included annual blanket OEM orders that are being replaced with quarterly orders as well as a large order for a new application that was subsequently cancelled. First quarter operating profit increased slightly, reflecting the benefits of cost actions taken over the past four quarters. ■
COMMENT Engineering Products, which includes the Minerals, Clear Liquid and Valves and Controls divisions, saw 2002 operating margins grow to 7.6% (7.2% in 2001) despite a 3% reduction in turnover to £429.6 million. This growth was driven by stronger performances in Minerals and Valves and Controls, which offset the effects of reduced volumes in the Clear Liquid pump operations and increased competition in most product areas. Minerals, in particular, had an excellent year growing its order book, margins and cash flow despite continued softness in the US and Europe markets. South American operations continued to produce year on year growth in both sales and profits, building strong relationships with the region’s mining majors. Engineering Services achieved a 13% increase in turnover to £150.7 million. Operating profits of £15.2 million were up 26%. Weir Engineering Services grew sales by 29% mainly due to its hydro refurbishment and asset management activities and the valve services activities which were trans-
ferred to this business from the Valves and Controls division. Techna’s turnover was down 1.3% at £105.0 million, while operating profit at £5.0 million was down 50.0% (£10.1 million in 2001) due to the timing of contract completions and their impact on profit taking in 2001 which was not repeated in 2002. Weir says its key management focus for 2003 will be to ensure that the changes they have initiated are fully implemented to yield their potential. At the same time the company says it will continue to invest in new products and in growth sectors of its business. Weir acknowledges that the current economic and geopolitical uncertainty makes it particularly difficult to predict the outlook for the year ahead. Currently the Minerals, Clear Liquids and Valves divisions are experiencing ongoing market and competitive pressure. The Services Division is continuing to experience strong enquiry levels whilst Techna (formerly Contracting) remains affected by the deferment of large capital projects. ■