In an update, the FTSE 250 engineering group said while trading in January and February had been in line with expectations, an oil price crash in March and the escalation of the pandemic meant the external environment had “changed rapidly”.
Weir said its Minerals and ESCO business had seen a slowdown in original orders in March to date, although the longer-term project pipeline remained active.
Meanwhile, its oil & gas business had seen activity slow in North America as a result of lower oil prices and reductions in capital expenditure, with the company saying its expected “continued sequential declines in activity” through the year, with exploration and exploration & production spending expected to fall 30% year-on-year compared to previous estimates of 10%.
In a bid to mitigate the effects of the downturn, Weir said it had introduced an additional US$30mln cost reduction plan in its oil & gas business, which includes a 25% reduction in its North American workforce.
The company is also implementing a recruitment freeze and restrictions of spending to reduce its 2020 outflows.
Weir added that it is planning for “a number of potential downside scenarios of varying severity which consider: widespread disruption to our operations and supply chain; deferment of original equipment orders; and, reduced aftermarket demand”.
“As in prior downturns, we expect the business to continue to be highly cash generative and to benefit from working capital inflows if volumes decline”, the firm said.
The shares dropped 4.3% to 696.6p in early deals on Thursday.