Engineering group Weir has warned over a hit of up to £20 million after revealing it will wind down its business in Russia due to the Ukraine war.
The Glasgow-based group had already announced last month it was suspending its operations in the country.
But it said “given the evolution of the situation in Ukraine and Russia”, it has now decided to fully exit from Russia by the end of the year.
It said the loss of sales from the move will likely impact this year’s underlying earnings by up to £20 million, while it added there could also be write downs as a result in 2022 although it is looking into the “recoverability” of its Russian assets.
We continue to successfully manage the disruption in global supply chains from Covid-19 and the impact of inflation
Jon Stanton, Weir
The group’s Russian business employs 267 staff, most of whom work in its minerals division.
Weir said: “We remain focused on their welfare during this difficult time.”
Its update showed an otherwise record quarter for the group, with orders up 15% in the first three months of 2022 thanks to “very strong demand” in the aftermarket.
Chief executive Jon Stanton hailed an “excellent start to the year”.
“We continue to successfully manage the disruption in global supply chains from Covid-19 and the impact of inflation,” he added.
The group said it expects to deliver “strong constant currency revenue and profit growth in 2022, in line with our previous expectations, adjusted for the impact of loss of sales in Russia”.
Its chairman of eight years, Charles Berry, also stood down on Thursday, as previously announced, to be replaced by senior independent director Barbara Jeremiah.
Analysts at Shore Capital said full-year City consensus expectations for Weir are likely to be trimmed by up to 6% after the decision to pull out of Russia.
But they added: “Population growth, the convergence of living standards in developing economies, urbanisation, ore grade decline and decarbonisation all point in Weir’s favour as demand for essential mining commodities is growing/required.”