By Abhiram Nandakumar
(Reuters) - Weir Plc (L:WEIR) said orders from its oil and gas business fell 23 percent in the first quarter, a smaller drop than was expected by the market, sending its shares up as much as 5 percent.
The Scottish industrial engineering firm, which expects the decline in orders to continue in the second quarter, said it would cut costs at its oil and gas segment by another 10 million pounds.
Companies serving the oil and gas industry have been feeling the pinch as exploration and production majors slash spending in response to the steep fall in crude prices.
Weir, which makes valves and pumps for the energy and mining industries, plans to cut another 125 jobs, mostly in its North American oil and gas business, and consolidate its service centres in the region, Andrew Neilson, Director of Strategy and Corporate Affairs told Reuters.
"We're getting to the point that it might start to impede our ability to respond to market recovery, if we cut it much more," Chief Executive Keith Cochrane said on a call with analysts, when asked if the company could withstand more job cuts.
After the latest round of cuts, Weir will have reduced its North American oil and gas headcount by about 27 percent. It first began taking cost-saving measures in November.
Swiss engineering group ABB Ltd (VX:ABBN) on Wednesday said it expected to add $50 million to the $200 million-$250 million in restructuring costs it announced earlier, on account of weakness at its oil and gas business.
Oilfield services companies Amec Foster Wheeler Plc (L:AMFW), Petrofac Ltd (L:PFC) and John Wood Group Plc (L:WG) are also planning to cut jobs.
Weir shares rose to 1842 pence on the London Stock Exchange. A Barclays (LONDON:BARC) analyst said the shares rose as the decline in Weir's oil and gas order input was much less than an expected drop of about 45 percent.
The company said first-quarter revenue on a constant currency basis fell, in line with the 9 percent decline in order input. Operating margin fell 400 basis points.
Weir said orders from its mining business rose 5 percent in the quarter and kept its revenue and operating margin forecast for the division.