Weir reaffirms guidance after strong third quarter

(Sharecast News) - Weir Group reaffirmed its full-year guidance after reporting a robust third-quarter performance on Tuesday, citing increased demand in both greenfield and brownfield mining projects. The FTSE 100 engineering firm said order intake rose as it secured £51m in large greenfield orders for major projects, including the Reko Diq copper and gold site in Pakistan and OCP's phosphate initiatives in Morocco.

It reported 15% growth in original equipment (OE) orders, driven by its focus on sustainable solutions like the 'Enduron' high-pressure grinding rolls (HPGR), as customers increased investments in energy transition projects.

Aftermarket (AM) orders in minerals also rose by 3%, reflecting growth in hard rock mining and production expansions, though ESCO AM orders were down slightly due to the timing of large dredge and oil sands orders.

Weir's 'performance excellence' programme had generated £19m in cumulative savings, positioning the company well on its path to a £60m target by 2026.

The initiative included technology rollouts such as the 'Nexsys GET' system and 'NEXT' intelligent solutions, both aimed at optimising customer operations and reducing downtime.

For the full year, Weir said it expected constant currency revenue and operating profit growth, with an operating margin of about 18% and cash conversion rates between 90% and 100%.

Net debt narrowed in the third quarter, supported by positive free operating cash flow and foreign exchange tailwinds.

As Weir anticipated further order growth in the final quarter of the year, it was optimistic about long-term mining demand, supported by global decarbonisation and economic growth trends.

"We are capitalising on growing interest for our sustainable solutions with major orders received for the Reko Diq project and the OCP expansion as well as good momentum on brownfield projects," said chief executive officer Jon Stanton.

"These orders demonstrate Weir's mining technology leadership and our unique opportunity to provide transformative solutions for sustainable mining as the energy transition gathers pace."

Stanton said aftermarket orders were in line with expectations, and reflected high levels of activity in core mining markets with the mine-specific factors seen in the first half moderating.

"Going into the fourth quarter we expect orders to continue to develop positively, and we reiterate our 2024 guidance of growth in constant currency revenue and operating profit, together with achievement of our margin and cash conversion targets."

Reporting by Josh White for Sharecast.com.