WEIR - broker’s views conflicting but this is a high quality business

Net debt at 31 December 2008 expected to be lower than the half year figure of £261.7m with operating cash flow generation and the proceeds from the sale of the Materials & Foundries businesses being partially offset by an adverse foreign currency translation effect.A total of £625m of committed revolving credit facilities, expiring in 2011 in place.Full year outlook for profit from continuing operations before tax, intangibles amortisation and exceptional items to increase to around £174m (from £170m)Lots of conflicting opinion from analysts:Dresdner Kleinwort cuts Weir Group (WEIR.LN) target price to 550p from 1100p. Arbuthnot Securities upgrades Weir Group (WEIR.LN) to buy from neutral,Weir is a survivor and a winner – EvolutionetcBroker Daniel Stewart (‘DS’) is clearly keeping a close eye on things commenting that the number of active oil drilling rigs in the USA fell sharply (98 to 1,623 – that’s c6%) in the most recent survey by Baker Hughes, the US oil services company. Apparently the biggest week-on-week decline since the oil industry crisis in the mid 1980s bringing the fall to a total of 408 rigs (a 20% cut) since the peak of the market in early September 2008.DS went on to say that the reduced activity will have an impact on SPM, the US-based manufacturer of high-pressure well service pumps and related flow control equipment which Weir acquired in June 2007 for £328m. It is the largest element of the group’s Oil & Gas division, which they expect to produce just over one-third of the group’s profits for 2008. It’s obviously tough in the short term but WEIR is a high quality business.At current price shares are trading at under 7x 2009 full year estimates, gearing c30%, yielding c5% covered over 2x

Net debt at 31 December 2008 expected to be lower than the half year figure of £261.7m with operating cash flow generation and the proceeds from the sale of the Materials & Foundries businesses being partially offset by an adverse foreign currency translation effect.A total of £625m of committed revolving credit facilities, expiring in 2011 in place.Full year outlook for profit from continuing operations before tax, intangibles amortisation and exceptional items to increase to around £174m (from £170m)Lots of conflicting opinion from analysts:Dresdner Kleinwort cuts Weir Group (WEIR.LN) target price to 550p from 1100p. Arbuthnot Securities upgrades Weir Group (WEIR.LN) to buy from neutral,Weir is a survivor and a winner – EvolutionetcBroker Daniel Stewart (‘DS’) is clearly keeping a close eye on things commenting that the number of active oil drilling rigs in the USA fell sharply (98 to 1,623 – that’s c6%) in the most recent survey by Baker Hughes, the US oil services company. Apparently the biggest week-on-week decline since the oil industry crisis in the mid 1980s bringing the fall to a total of 408 rigs (a 20% cut) since the peak of the market in early September 2008.DS went on to say that the reduced activity will have an impact on SPM, the US-based manufacturer of high-pressure well service pumps and related flow control equipment which Weir acquired in June 2007 for £328m. It is the largest element of the group’s Oil & Gas division, which they expect to produce just over one-third of the group’s profits for 2008. It’s obviously tough in the short term but WEIR is a high quality business.At current price shares are trading at under 7x 2009 full year estimates, gearing c30%, yielding c5% covered over 2x