Investment Column: Weir looks fully valued after mixed performance

Weir's chief executive, Mark Selway, admitted yesterday that it was going to be "virtually impossible" to track down the £4.2m of "irregular" payments it made as a result of the UN's oil-for-food programme in pre-war Iraq. The engineering group anyway does not seem to have sustained much damage from its admission a month ago.

The shares, down 4.25p at 273.75p yesterday, are only a few pence below where they were when Weir revealed the payments. At least shareholders had something to cheer about in yesterday's half-time score.

Underlying profits crept up 4.2 per cent to £24.6m in the six months to June. That hid a mixed performance at the operating level, with the main division making pumps and valves seeing profits tumble by £2.85m to £13.6m. Weir had "issues" with a new product in the UK and with a supply chain in the US, which are now said to be sorted. There was a 25 per cent rise in orders to £452m.

With commodity prices soaring and an emphasis on growth markets such as the former Soviet Union and China, Weir should be on a roll. But with something north of £60m profits expected in the full year, the forward price-earnings ratio of 12 suggests Weir is fully valued.