REG - Weir Group PLC - Q1 Trading Update

WeirAnnouncement

Thu 07:02

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RNS Number : 9423F  Weir Group PLC  24 April 2025

 

 

 

The Weir Group PLC trading update for the first quarter ended 31 March 2025(1)

Strong demand on high levels of mining activity

2025 full year guidance reiterated

 

Pipeline for brownfield solutions converting as expected; Group OE orders(2)
+5%

•     Positive demand for large equipment orders, including £18m for
GEHO(®) pumps

•     Strong momentum in OE orders for brownfield and sustainability
projects

Improving activity levels driving positive aftermarket demand; Group AM
orders(2) +5%

•     Minerals aftermarket +9% - commissioning of newly installed base

•     ESCO core GET growth +4% - mine specific challenges alleviating

Performance Excellence programme and Micromine acquisition on track

•     Benefits from functional transformation reflecting as planned

•     Additional lean and capacity optimisation projects support 2026
target of £80m cumulative savings

•     Micromine acquisition expected to close the week commencing 28
April

FY outlook: 2025 guidance reiterated

•     Strong order book and positive activity levels in AM

•     Growth in constant currency revenue, operating profit and
operating margin

•     Free operating cash conversion of 90% to 100%

Jon Stanton, Chief Executive Officer, commented:

"I'm delighted with our performance in the first quarter. We began the year
with a record pipeline, which is converting in line with our expectations as
customers capitalise on supportive prices for commodities enabling the energy
transition. I am especially pleased with the growth in aftermarket orders
which reflect the strength of our business model as newly installed equipment,
particularly HPGRs, are commissioned.

As we near the completion of our acquisition of Micromine, I look forward to
welcoming their team to Weir. Through our combined digital technology
offering, we are well positioned to drive further productivity and
sustainability impact across the global mining industry.

Looking forward, we are executing well against the commitments set out in our
equity case. We expect orders to continue to develop positively, and we
reiterate our 2025 guidance of growth in constant currency revenue and
operating profit, together with achievement of our margin and cash conversion
targets."

 

First quarter review

Group

Overall, we see positive momentum in demand as we support our customers in
accelerating sustainable mining. Underlying demand for OE within brownfield
projects continues at strong levels, with customers choosing Weir products as
they debottleneck and expand. In the first quarter, we received several large
OE orders for our market leading products, including: ESCO(®) buckets,
WARMAN(®) centrifugal pumps, and GEHO(®) positive displacement pumps.

During the quarter, Group OE orders(2) increased +5%.

Increases in mine production and installed base expansion supported strong
growth in Minerals AM orders(2) (+9%). In ESCO, AM orders(2) were slightly
lower (-2%), with positive momentum for core GET in both mining and
infrastructure markets offset by the timing of orders for our dredging
solutions.

In total on a constant currency basis, year-on-year Group orders increased +5%
in the first quarter. Year to date book-to-bill increased to 1.11.

We realised benefits from our functional transformation project over the
quarter, bringing cumulative Performance Excellence programme savings to
£35m. Projects across the capacity optimisation and lean processes pillars
are progressing at pace, leaving us firmly on track to deliver our 2026 target
of £80m cumulative savings.

We are working toward completion of the acquisition of Micromine announced
alongside our full year results. As expected, we anticipate the acquisition to
close the week commencing 28 April.

Finally, we continue to monitor and adapt our business to the latest trade
tariff announcements around the world. Across the business, we have already
taken steps to adjust our global supply chain, including redirecting US
originated orders to our manufacturing sites in country, and proactively
addressing pricing with our customers. We believe these actions combined will
mitigate known potential impacts of increasing global tariffs, albeit the
broader economic impact of current US trade policy remains uncertain.

Minerals

·      OE orders(2) +6%; driven by demand for debottlenecking and
brownfield expansion solutions

·      AM orders(2) +9%; reflecting ore production growth and installed
base expansion

In OE, demand was primarily driven by debottlenecking and expansion projects
at existing mine sites. Several large equipment orders were booked in the
quarter, including £18m in orders for our GEHO(®) pump solutions to be
delivered to a high-grade nickel expansion project in Indonesia. We continue
to grow our market share with four completed mill pump trials in the quarter,
three of which were successfully converted to WARMAN(®).

Aftermarket demand grew strongly driven by overall positive ore production
trends. In particular, demand for HPGR tyres increased alongside the continued
ramp up of newly commissioned greenfield projects during the quarter.

ESCO

·      OE orders(2) stable; continued demand for mining attachments

·      AM orders(2) -2%; growth in core GET offset by oil sands and
dredge orders

Demand for OE was stable in the quarter as we continue to see good levels of
demand for our mining buckets and first-fit lip systems.

Aftermarket orders declined as good momentum in both mining and infrastructure
GET (+4% YTD) was offset by the timing of large dredge orders in the prior
year. We continue to gain further market share with 34 net major digger
conversions, five Nexsys(TM) bookings, and further growth in our installed
base of Motion Metrics systems during the quarter.

Net debt

As expected, we remain on track to deliver strong cash generation, with net
debt levels following normal seasonal patterns. Post acquisition of Micromine,
net debt to EBITDA is expected to be below 2.0x at December 2025 and below
1.5x by year end 2026, in line with our capital allocation policy.

Outlook

We have had a strong start to the year, mining markets are positive, and the
business is executing well. Robust demand for our OE solutions and AM spares,
as well as £20m of incremental Performance Excellence savings from our lean
and functional transformation initiatives, means we currently see full year
trading in line with expectations for growth in constant currency revenue,
operating profit and operating margin. We expect to be able to mitigate the
effect of trade tariffs on our guidance albeit the broader economic impact of
current US trade policy remains uncertain.

We expect free operating cash conversion of between 90% and 100%.

Further out, the long-term value creation opportunity for Weir is compelling.
The fundamentals for our business are highly attractive. In addition, we
expect the benefits of Performance Excellence will drive further margin
expansion and move our operating margins sustainably beyond 20%, while our
strong cash generation and balance sheet give us optionality to compound total
shareholder returns.

Notes:

1.             Financial information is given for the three months
ended 31 March 2025, unless stated otherwise.

2.             Orders are reported on a constant currency basis at
March 2025 average exchange rates.

 

Analyst and investor conference call

A conference call for analysts and investors will be held at 0800 BST on
Thursday 24 April 2025 to discuss this statement. Participants can join the
call by registering in advance by visiting www.global.weir/investors
(https://www.global.weir/investors) and following the link on the page. A
recording of this conference call will be available until Thursday 1 May 2025.

 

 Enquiries:
 Investors: Philip Carlisle  +44 (0)141 308 3617
 Media: Sally Jones          +44 (0)141 308 3666
 CDR: Kevin Smith            +44 (0) 7710 815924

                             Weir@cdrconsultancy.com

 

About The Weir Group PLC

 

Founded in 1871, The Weir Group PLC is one of the world's leading engineering
businesses with a purpose to make its mining and infrastructure customers'
operations more sustainable and efficient. Weir's highly engineered technology
enables critical resources to be produced using less energy, water and waste
while reducing customers' total cost of ownership. The Group is ideally
positioned to benefit from structural trends that support long-term demand for
its technology including the need for more essential metals to support
economic development and carbon transition. The Group has c.12,000 employees
operating in over 50 countries with a presence in every major mining region of
the world. Find out more at www.global.weir (http://www.global.weir) .

Weir's ordinary shares trade on the London Stock Exchange (ticker: WEIR LN)
and its American Depositary Receipts trade over-the-counter in the USA
(ticker: WEGRY).

Appendix 1 - Group quarterly order trends

                     Reported organic growth
 Division            2024 Q1                      2024 Q2                      2024 Q3                     2024 Q4                     2025 Q1
 Original Equipment              -9%                          -15%             19%                                     -7%                         6%
 Aftermarket                     4%                           -1%              3%                                      15%                         9%
 Minerals                        0%                           -5%                          8%                          9%                          8%

 Original Equipment              -16%                         -23%             -18%                                    10%                         0%
 Aftermarket                     5%                           -1%                          -2%                         -2%                         -2%
 ESCO                            3%                           -4%                          -3%                         -1%                         -2%

 Original Equipment              -9%                          -16%                         15%                         -5%                         5%
 Aftermarket                     4%                           -1%                          2%                          10%                         5%
 Group                           1%                           -4%                          5%                          7%                          5%
 Book-to-bill        1.11                         0.97                         1.01                        0.95                        1.11

 

                     Quarterly orders(2) £m
 Division            2024 Q1  2024 Q2  2024 Q3  2024 Q4  2025 Q1
 Original Equipment  115      105      147      108      122
 Aftermarket         321      344      325      372      349
 Minerals            436      449      472      480      471

 Original Equipment  12       16       10       15       12
 Aftermarket         168      152      149      151      165
 ESCO                180      168      159      166      177

 Original Equipment  127      121      157      123      134
 Aftermarket         489      496      474      523      514
 Group               616      617      631      646      648

 

 

Appendix 2 - 2025 Q1 order bridges (as reported)

 

                        Minerals                                                                           ESCO                                                                               Group
 Group orders           OE                         AM                          Total                       OE                         AM                          Total                       OE                          AM                          Total

 (£m)
 2024 Q1 - as reported  118                        328                         446                         12                         167                         179                         130                         495                         625
 Organic                            6%             9%                          8%                          0%                         -2%                         -2%                         5%                          5%                          5%
 Structure                          0%                         0%                          0%                          0%                         0%                          0%                          0%                          0%                          0%
 Currency               -3%                                    -3%                         -2%                         1%                         1%                          1%                          -2%                         -1%                         -1%
 Total                  3%                                     6%              6%                          1%                                     -1%                         -1%             3%                                      4%              4%
 2025 Q1 - as reported  122                        349                         471                         12                         165                         177                         134                         514                         648

 

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