(Reuters) - Pipe and valve maker Weir Group Plc (L:WEIR) warned that profit would fall below market expectations due to weakness in its oil and gas markets, particularly in the Middle East, sending its shares down as much as 6.5 percent.
The Scottish company, which makes valves and pumps for the energy and mining industries, said increased competition in the Middle East combined with lower prices in North America had hurt trading in its oil and gas unit.
Engineering and oilfield services companies have seen revenues plunge as miners and energy exploration and production companies cut spending to weather weak oil and commodity prices.
However, oilservices companies exposed to the Middle East, such as Petrofac (L:PFC), have fared better through the downturn as national oil companies in the region have continued to ramp up production.
But unexpected weakness in that market, hurt Weir's oil and gas unit and overshadowed some higher activity in North America as rig counts have risen. Middle East accounted for about 15 percent of the company's revenue last year.
Weir said on Tuesday order input for its oil and gas unit fell 10 percent for the third quarter ended Oct. 31 as activity declined across its markets. This compares with an 16 percent first-half fall.
The oil services company said it now expected oil and gas unit to break even in the fourth quarter, rather than return to profitability over the period as it had previously forecast.
Crude is still trading below the $50 per barrel mark (LCOc1) that most producers say is their breakeven price.
Peer John Wood Group Plc (L:WG) forecast earlier this year that full-year core earnings would be about 20 percent lower, while Hunting Plc (L:HTG) gave downbeat forecast for the full year. Both companies are more focused on North America.
Weir shares were down 4.3 percent at 1,627 pence at 0937 GMT on the London Stock Exchange. The stock was the biggest percentage loser on the pan-European Stoxx 600 (STOXX) index.