By Scott Wright

WEIR Group has revealed it has suspended its operations in Russia and Ukraine as the military conflict intensifies.

Chief executive Jon Stanton told The Herald the engineering giant had managed to move its 30 employees in Ukraine to safety following the start of the Russian invasion last week.

Mr Stanton said Glasgow-based Weir’s operations in Ukraine and Russia, where it directly employs 270 people, have been halted while the war continues to unfold, with decisions on the future of the business divisions still to be taken.

Weir supports the iron ore mining industries in both Ukraine and Russia, and is also involved in copper, gold and diamond mining in Siberia.

The company told the City there remains “significant uncertainty” over the future of its operations in Ukraine and Russia, while stating that both countries represent a relatively limited part of its overall business. Describing its “overall exposure” to the two markets as “small”, Weir said its operations in the countries accounted for around two per cent of the total group in terms of net assets, and less than five per cent of the company’s revenue and operating profits.

Mr Stanton said: “The first priority is to absolutely make sure we look after our people, the people in Ukraine who have done a great job frankly of developing that market recently. They are all safe and well; we have got them out of Kyiv by and large, either to other parts of Ukraine, or some to Poland, and we know where they all are. It has just been so shocking to see your colleagues in a country that is being aggressively invaded, and people killed by a neighbour. You can’t say enough how much that shocked the team.”

Mr Stanton noted that Weir has a much bigger business in Russia, which has been a strong growth market for the company, than it does in Ukraine. As companies in the west take steps to reduce the business they do with and in Russia, Mr Stanton said operations in both Russia and Ukraine are “effectively paused at the moment”.

He said: “We are not taking orders or shipping anything. We are working through what is clearly a very dynamic and active situation, working through the sanctions and the banking system: paying our people, for example, is one of the things we are trying to figure out.

Mr Stanton added: “We will continue to look after our people [and] we are going to actively assess the situation. Everything is on hold at the moment, but we will see how it plays out and make a decision and say more in due course.

“The business is effectively suspended. We are taking our time to decide what we do in the future.”

The update on Russia and Ukraine came as Mr Stanton hailed the performance of Weir in 2021 against the backdrop of Covid and global supply chain challenges, in areas such as freight and logistics and extended lead times.There was also a major a cyber-attack on the company in the fourth quarter of the year.

Weir reported a pre-tax profit of £209 million for 2021, up 18 per cent on the year before, as revenue from continuing operations dipped by 2 % to £1.9 billion.

And Mr Stanton signalled that the company was confident of delivering further profits and revenue growth this year, despite ongoing supply chain challenges, even if it was unable to do business in Russia and Ukraine for the rest of the year. Highlighting his conviction in the long-term demand for Weir’s technology, Mr Stanton said there had been “huge pull” on Weir’s equipment that helps miners reduce water and energy usage. He added that its prospects for the long term are encouraging because of the wider move to electrification, which will continue to put battery metals such as cobalt, copper, nickel, and lithium in high demand.

Mr Stanton said that, outwith events in Ukraine and Russia, he was “very optimistic” for the future for its key mining markets around the world. “We saw during 2021 our markets evolve very positively,” he said. “We saw momentum gather through the year as production picked up post-Covid and things got back to normal. The effect of stimulus spending coming through in North America and Europe has been a positive, and momentum just gathered as we went through the year.”

He added: “The thing that actually probably pleased me more was the strong operational performance across the business, because it was not a straightforward year.”

Mr Stanton said Weir had identified the source of the ransomware attack, the cost of which will come in at the lower end of the £25m to £40m previously forecast. And he said Weir had since stepped up investment in its cyber defences, noting that the current Russian aggression in Ukraine had heightened the threat.

Mr Stanton noted: “The good thing was we had invested a lot in our capability in that space. We caught it quickly, we responded immediately. We had to take quite extreme action which was disruptive to the business. But we worked through that and we didn’t engage with the threat actor. We didn’t pay a ransom, which I’m proud of. It has taken us a while to get back to normal but we are pretty much there now.”

Weir declared a full-year dividend of 23.8p per share. Shares surged in the company yesterday, closing up 158p, or 10.4%, at 1,678.5p.