WEIR Group has declared that it is well positioned to capitalise on the drive to net zero as it reaffirmed its guidance for revenue and margin expansion this year.
The Glasgow engineering giant reported that orders, revenue, and margins had grown in the first quarter amid strong demand for equipment from the mining industry.
It saw growth of 22 per cent for original equipment orders, with after-market orders flat compared with the first quarter of last year – in line with expectations. Weir said the opening three months of 2022 had been a “peak quarter for infrastructure and included a contribution from pre-buy in ESCO (US mining tools division) and orders from Russia”.
Chief executive Jon Stanton said: “The value creation opportunity for Weir is compelling. The mining industry needs to produce more critical metals to support the transition to net zero and must extract these in a more sustainable way. Our leading global brands, engineering capability and technology-led strategy means we are well placed to capitalise.
“This opportunity, together with our Performance Excellence programme, underpins our growth, margin expansion and cash conversion targets. Our strong execution and order book growth in the first quarter reinforces our confidence in achieving our 2023 guidance. We are on track to deliver another year of growth in revenues and our operating margin target of 17%.”
Weir, which employs around 12,000 people in more than 60 countries, said demand for its mining spares and expendables had been driven in the first quarter as customers had been incentivised to maximise ore production, highlighting commodity prices “well above miners’ cost to produce, and ongoing tightness in physical inventories and strong end market demand”.
“Miners are responding by accelerating production from existing assets, as large projects remain slow to convert,” the company said. “These factors, together with the ongoing effect of declining grades and more complex ore bodies, drove demand for mining spares and expendables.
“Demand was strong across most hard rock mining territories, and in particular Asia Pacific and South America where recent market share gains and installed based growth drove incremental demand. The growth in our mining aftermarket business again demonstrates our inherent resilience driven by non-discretionary spend on spare parts.”
Mr Stanton has regularly highlighted that Weir is well positioned to supply technology that can help miners reduce energy and water use, and to support the sector as it extricates metals such as nickel, copper, and lithium that are essential for the electrification of the world economy.
Mulling the outlook, Weir said order book growth is being driven by high levels of activity and demand for its aftermarket spares, and brownfield original equipment solutions.
“Our guidance for 2023 is reiterated and we expect to deliver growth in constant currency revenue, profit, and operating margin,” Weir said.
“We are on track to deliver our target of 17% operating margin in 2023, supported by operational efficiencies and early benefits from Performance Excellence. We expect free operating cash conversion of between 80% and 90%.”
The company added: “Further out, the long-term fundamentals for mining and our business are highly attractive, underpinned by decarbonisation, GDP growth and the transition to sustainable mining. We have a clear strategy to grow ahead of our markets, with specific growth initiatives underpinning our ambition to deliver through-cycle mid-to-high single digit percentage revenue growth.”
All resolutions at the Weir Group annual general meeting, held at its head office in Glasgow yesterday afternoon, were passed.
Shares in Weir close down 20.29p at 1,872.71p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here