On Friday (August 14th), the Glasgow-based Weir Group saw share prices fall 1.6 per cent after a broker downgrade as commodity prices continue to fall.
Investment bank Liberum Capital lowered the engineering group's target stock price from £14.50 to £13.30. Analysts now believe that a fast recovery in oil and gas is "unlikely" due to the global oversupply of oil.
The International Energy Agency says that the oil glut is growing at "breakneck speeds". They estimate that supply is currently outstripping consumption by around three million barrels a day.
Last month, Weir, which primarily manufactures valves and pumps, reported a 40 per cent fall in first-half pre-tax profit.
Profit for the six months to June fell to £108 million from £182 million during the same period last year. In addition, overall first-half revenue fell by 13 per cent to £1 billion.
The company said that North American upstream activity had been hit by the downturn in the oil and gas markets. At the time, the company said it expected its financial performance to improve in the second half.
Weir has been working to improve its "cost competitiveness". Since November 2004, the firm has cut its North American oil and gas workforce by 32 per cent. It says the strategy should deliver annualised savings of £85 million by the end of this year.
Weir's power and industrial division also saw an 11 per cent drop in overall orders year-on-year.
Commenting on the six-month results, chief executive Keith Cochrane said: "This is the most severe downturn in oil and gas markets for nearly 30 years and as a result North American upstream activity has reduced substantially."
He acknowledged this has had a "significant impact" on the group's interim performance and said the firm was working to respond to the conditions effectively.
"However, with the normal seasonal bias of the Minerals and Power and Industrial divisions, increased restructuring benefits, further cost savings and a good contribution from recent acquisitions, we expect a meaningful sequential improvement in our financial performance in the second half of 2015, alongside continued strong cash generation," he added.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.