StockMarketWire.com - The Weir Group traded in line with expectations in January and February, in spite of three facilities in China being closed due to coronavirus.

In March, however, the company has said the 'significant reduction' in oil prices and escalation of the global Covid-19 pandemic has rapidly changed the external environment.

The three facilities in China are now back to full operating capacity, but in recent days Weir has seen increasing interruption at some of its other operations and supply chains as governments step up their efforts to control the spread of Covid-19.

The main impact so far has been in the US, UK, South Africa, Peru and Malaysia.

The group said: 'We anticipate further disruptions as we move forward, although the extent and duration remains unknown. From a customer perspective, with the exception of South Africa, we have seen most mining operations continue, albeit subject to some restrictions.'

In Oil & Gas, the group has taken immediate action in response to the expected incremental activity declines with an additional $30m annualised cost reduction plan, which includes a further 25% reduction in the division's North American workforce and periodic furloughs.

In addition, it has implemented cost reduction measures across the company, including a recruitment freeze and restrictions on all discretionary spending. It is also curtailing all non-essential capital expenditure so that spending in 2020 will now be significantly lower than previous guidance suggested, and working capital will be managed so as to minimise the normal seasonal outflow in the first half of the year.

The Group currently has immediately available liquidity of c.£500m through committed facilities and cash balances.

The Group's leverage at 31 December 2019 was 2.4 times net debt to EBITDA, against a financial covenant of 3.5 times.


At 8:09am: [LON:WEIR] Weir Group PLC share price was +50.2p at 787p



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